(54)-BALANCING AND AGREEING CONTROL ACCOUNTS

Balancing and Agreeing control Accounts

The control account should be balanced regularly (at least monthly) and the balance on the account agreed with the sum of the individual debtors or creditors balances extracted from the sales or bought ledger respectively.

It is one of the sad facts of an accountant’s life that more often than not the balance on the control account does not agree with the sum of balances extracted, for on or more of the following reasons.

• An incorrect amount may be posted to the control account because of a miscast of the total in the book of prime entry. The nominal ledger debit and credit posting will than balance, but the control account balance will not agree with the sum of individual balances extracted from the sales ledger or purchase ledger. A journal entry must than be made in the nominal ledger to correct the control account and the corresponding sales or expense account.
• A transposition error may occur in posting an individual’s balance from the book of prime entry to the memorandum ledger.
• A transaction may be recorded in the control account and not in the memorandum ledger, or vice versa. This requires an entry in the ledger that has been missed out which means a double posing if the control account has to be corrected, and a single posting if it is individual’s balance in the memorandum ledger that is at fault.
• The sum of balance extracted from the memorandum ledger may be incorrectly extracted or miscast. This would involve simple correcting the total of the balances.