A sales ledger control account has a debit balance. What does this balance normally represent?
Correct answer: A. The amount owed by customers
- A. The amount owed by customers
- B. The amount owed to suppliers
- C. The total cash held by the business
- D. The total value of goods returned
Explanation
A debit balance in the sales ledger control account normally represents trade receivables, meaning amounts owed by customers. Amounts owed to suppliers are represented by a credit balance in the purchases ledger control account.
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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.
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More Bank Reconciliation and Control Accounts questions
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?
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?
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?
A purchases ledger control account has a debit balance at the end of an accounting period. What does this balance normally indicate?