A control account is used in a general ledger while detailed customer or supplier accounts are kept in subsidiary ledgers. Which feature is a major advantage of this arrangement?
Correct answer: B. It provides an independent check on ledger records
- A. It removes the need for source documents
- B. It provides an independent check on ledger records
- C. It guarantees that no accounting error occurs
- D. It records only cash transactions in detail
Explanation
The control account total can be compared with the total of the individual subsidiary ledger balances, helping to identify errors or omissions. It does not eliminate source documents or guarantee that every accounting error is prevented.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Bank Reconciliation and Control Accounts
Bank reconciliation explains differences between the cash book and bank statement through unpresented cheques, outstanding deposits, bank charges, direct payments, credited amounts and recording errors. Control accounts summarise receivables and payables ledgers, and their balances are reconciled with individual accounts to locate discrepancies.
Practise Bank Reconciliation and Control Accounts
34 free Bank Reconciliation and Control Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Bank Reconciliation and Control Accounts questions
Which source normally provides the total of credit purchases posted to the purchases ledger control account?
A purchases ledger control account has an opening credit balance of Rs. 60,000, credit purchases of Rs. 220,000, payments to suppliers of Rs. 180,000, returns outward of Rs. 12,000 and discounts received of Rs. 8,000. What is the closing balance?
In a sales ledger control account, which item is normally recorded on the debit side?
A sales ledger control account has a debit balance. What does this balance normally represent?
The cash book shows a favourable bank balance of Rs. 31,500. Bank charges of Rs. 1,200 and a direct credit of Rs. 4,000 are not yet recorded in the cash book. Unpresented cheques are Rs. 6,500 and deposits in transit are Rs. 3,000. What balance should appear on the bank statement?
A cheque payment is entered twice in the bank column of the cash book, but the bank records the payment only once. What correction is required?