Control account
A control account is a general-ledger summary account — typically receivables or payables control — whose balance must equal the total of the individual customer or supplier balances in the subsidiary ledger.
See it move
A receivables control account opens the month at €6,000. Credit sales add €9,000; cash received of €7,500, discounts allowed of €200 and sales returns of €300 are deducted. The closing balance is €6,000 + €9,000 − €7,500 − €200 − €300, which is €7,000, matching the individual customer balances in the subsidiary ledger.
The formula
Variables
- Opening control account balance (€)
- Closing control account balance (€)
- Credit sales for the period (€)
- Cash received from customers (€)
- Discounts allowed (€)
- Sales returns (€)
- Irrecoverable debts written off (€)
Gives the closing balance of a receivables control account for a period, which must equal the total of the individual customer balances in the subsidiary ledger.
Check yourself
A payables control account has an opening credit balance of €4,500. During the month, credit purchases total €8,200, payments made to suppliers total €7,900, and purchase returns total €350. What is the closing balance of the payables control account?