This article seeks to explain what is total or control account , and the reasons/advantages of maintaining same.
- Also known as Control account.
- A Total account is an account where we debit and credit the total amounts of all the transactions the TOTAL AMOUNTS OF ALL THE TRANSACTIONS which have been debited and credited in detail to individual ledger accounts.
- Individual Total Account of a particular ledger is therefore a control account for that ledger since the balance of the Total Account AT ANY TIME should equal to the sum of the balances of ALL the individual accounts within that ledger. It therefore provides a check on the accuracy of such balance.
- Control /Total Account for Total Debtors A/c = Sum of all the Individual debtor accounts
- Control/Total Account for Creditors A/c=Sum of all the Individual Creditor accounts.
|Reasons/Advantages Of Having Total /Control Accounts:
- The Control accounts serve as an independent check/internal check on the accuracy of the Ledgers.
- Control Accounts can assist Management to safeguard against fraudulent entries if there is a proper segregation of duties by making sure the person taking charge of the Ledgers do not prepare the Control Accounts.
- To prepare the Trial Balance, it is quicker to extract the total/control accounts of the trade debtors and trade creditors account instead of extracting the details of the individual balances of the individual trade debtors and trade creditors accounts.
- Control Accounts facilitate the location of errors. For example, at any time the closing balance of the Trade Debtors Control Account must equal to the sum of the individual trade debtors accounts balances. Hence, if the two totals do not agree, we can quickly know that there must errors in either the Sales Ledger or the Control Account.