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Control Account Purpose

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Control Account Purpose

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 16, 2015 at 2:02 pm #276660
    Sir Insanity
    Participant
    • Topics: 28
    • Replies: 44
    • ☆☆

    Why is it C NOT B?

    Which one of the following is not the purpose of a receivables ledger control account?

    B A receivables ledger control account helps to locate errors in the trial balance
    C A receivables ledger control account ensures that there are no errors in the personal ledger

    The answer is C.

    I know that the control account helps prep of trial balance easier etc but how come it can locate errors in a trial balance?

    Any thoughts?

    October 16, 2015 at 3:11 pm #276670
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    If you watch the lectures on Books of Prime Entry, then you will see that the double entries are to the Receivables Ledge Control Account. It is not the purpose of any of the t-accounts to find errors in the trial balance.
    (Certainly if an entry is made wrongly, the trial balance will not balance, but that is not the purpose of the t-accounts.)

    The purpose of the control account is to serve as a check (control) on the individual balances in the receivables ledger.

    October 16, 2015 at 3:24 pm #276672
    Sir Insanity
    Participant
    • Topics: 28
    • Replies: 44
    • ☆☆

    Yes, I agree.

    But the question asks for the statement which is *not* the purpose of the control account. The answer is C, so I wanted to know how, seeing as C is right (that is, is NOT the purpose), how B is wrong (that is, how can it be a purpose?). I also thought that the answer should be B ie the account doesn’t locate errors in the Trial Balance.

    And I’d like to thank you overall for your immense help! It means a lot. 🙂

    October 16, 2015 at 3:45 pm #276680
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    Oops – you are right. And I think the better answer is B 🙂

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