- This topic has 3 replies, 3 voices, and was last updated 4 years ago by
.
- Posts
Hi There, I am struggling to understand control accounts and how they translate to Assets, Liabilities, Equity, Income, Expense….etc). I grasp the concept of over and under absorption rate and needing to be posted and accounted for. A previous post referenced internal account for business – the scope of this course – and external reports (i.e. Balance Sheets – aka Statement of financial position?), Profit and Loss). I can’t picture or imagine the reporting or types of accounts requiring debit and credit entry when referencing the control accounts and how they map to a internal business reports
Are these reports also Balance Sheets and Profit and Loss Statements? Is the cost of production the same as a cost of goods or cost of sales report? What type of account is the Production Overhead Control Account? Is it an asset? This is not clear at all. This Production Overhead Control account seems to be mapping to a Balance Sheet. Can you clarify this?
Don’t understand how one would set these up in a computerized accounting system in Quickbooks.
Would love some clarification.
Best,
MurrayIn Management accounts control accounts are hardly relevant – they can be used to simply accumulate the total of the overheads together (although this is rarely examined).
Control accounts in general are used in financial accounting and are explained in detail on our free lectures for Paper FA.
In management accounting we do not normally produce a Statement of Financial Position (and never in the Paper MA exam) – this again is financial accounting (Paper FA). For management accounts we do produce a profit statement, but it is purely for management purposes and does not have to be the layout required for financial reporting (and will often report a different profit anyway as explained in my lectures).
Quickbooks automatically produces control accounts (for example, the receivables account is simply an account showing the total receivables, and Quickbooks will also automatically produce a list of the individual debtors making up that total). However we only give advice on passing the exams, we are not able to give other ‘work’ advice.
The free lectures for both Paper MA and Paper FA cover everything needed to be able to pass each of those exams well.
Hi, please i need answer to this question that has been bothering me for some time.
1. On 1st January 2013, Bode & Sons had the following balances in his books:
#
Sundry Debtors (Receivables) 9,658
Sundry Creditors (Payables) 7,420
Sales Ledger Credit Balances 725
Purchases Ledger debit balances 583
During the year ended 31st December 2003, the following transactions took place:
#
Discount allowed 670
Credit sales (turnover) 25,186
Cash received from debtors (receivables) 18,948
Discount received 1,635
Purchases returns 872
Credit purchases 16,296
Bills payables accepted 4,500
Sales return 937
Cash paid to creditors (Payables) 9,850
Bad debts written off 618
Bills receivable accepted 5,200
Sales and purchases ledger transfer 464
The sales ledger credit balances and purchases ledger debit balances on 31st December, 2013 were #1.290 and #924 respectively.
You are required to prepare:
a. The sales ledger control account
b. The purchases ledger control account2. Mr Seun had the following balances in his books on 1st July, 2018.
#
Sundry creditors (payables) 9,724
Sundry debtors (receivables) 14,581
Debit balances in Purchases Ledger 660
Credit balances in Sales Ledger 902
The following transactions took place during the month of July
#
Bad debts written off 627
Payment to creditors (payables) 28,368
Discount allowed 1,593
Sales returns and allowances 840
Bills payable accepted 15,129
Received from debtors (receivables) 32,708
Discounts received 1,838
Purchases returns and allowances 749
Credit Sales (turnover) 37,906
Bills receivable accepted 8,351
Sales and purchases ledger transfer 1,498
Credit purchases 47,317
The following balances also existed in the books on 31st, July, 2018
Purchases ledger debit balances #856
Sales ledger credit balances #1,279
You are required to prepare:
a. The Sales Ledger control account and
b. The Purchases Ledger Control Account for the month of July 2018.We do not provide full answers to full questions.
You must have an answer in the same book in which you found the question and so you should ask about whatever it is in the answer that you are not clear about and then I will explain.
(If you do not have an answer because you have been set these as homework, then we certainly do not do your homework for you 🙂 )Everything needed to be able to answer both of these questions is explained in detail (with examples) in my free lectures on control accounts. The lectures are a complete free course for Paper FA.
In addition, although you can be tested on control accounts in the exam, you cannot be asked questions like this because you cannot be required to write up any t-accounts in the exam!!!
- You must be logged in to reply to this topic.