What is the principal purpose of a control account in a general ledger?
Correct answer: B. To summarize transactions recorded in a subsidiary ledger
- A. To replace the need for a trial balance
- B. To summarize transactions recorded in a subsidiary ledger
- C. To record only cash transactions of the business
- D. To calculate the depreciation of fixed assets
Explanation
A control account summarizes the total entries from a subsidiary ledger, such as the sales ledger or purchases ledger. Its balance can be compared with the total of individual subsidiary accounts to help detect errors.
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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.
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.
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More Bank Reconciliation and Control Accounts questions
A customer pays money directly into the business bank account, but the business has not yet recorded it in the cash book. What is the correct treatment?
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Which item is normally recorded on the credit side of the sales ledger control account?
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A business has opening trade receivables of Rs. 80,000, credit sales of Rs. 300,000, receipts from customers of Rs. 250,000, sales returns of Rs. 10,000, discounts allowed of Rs. 5,000, and bad debts of Rs. 8,000. What is the closing trade receivables balance?