9706 · 1.4.4
Control accounts — FAQ
Frequently asked questions for 9706 Control accounts. Direct answers first, then deeper explanation — then practise with marking.
Are control accounts part of the double-entry system?
No, they are memorandum accounts prepared outside of the double-entry system. Their purpose is to act as an independent check on the subsidiary ledgers. While the totals used to prepare them (e.g., total credit sales) come from the double-entry system, the control accounts themselves are a separate reconciliation tool.
If the control account balance agrees with the schedule of balances, does this guarantee there are no errors?
Not necessarily. It only confirms arithmetical accuracy between the two sets of records. It would not reveal errors of omission (a transaction missed from both), errors of original entry (the same wrong amount posted to both), compensating errors, or errors of principle. It is a check, not a complete proof of accuracy.
Why is 'discounts allowed' a credit in the Sales Ledger Control Account? I thought it was an expense.
Discounts allowed is an expense for the business, which is recorded with a debit in the Discounts Allowed account in the general ledger. However, within the Sales Ledger Control Account, its function is to reduce the total amount owed by customers. Since the SLCA is an asset account with a normal debit balance, any reduction (like a payment, return, or discount) must be a credit entry.