Test: Control Accounts - Year 11 MCQ

The sales ledger control account consolidates all transactions related to trade receivables, providing a summary of amounts owed by credit customers.

A credit balance can occur when customers prepay, overpay, or when refunds are owed due to returned goods.

Information for a sales ledger control account is derived from the sales journal and cash book, summarizing credit sales, receipts, refunds, and discounts.

A debit balance in a sales ledger control account indicates that credit customers have paid more than they owe, resulting in a positive balance owed to them.

The layout of a sales ledger control account closely resembles that of a trade receivables ledger account, summarizing transactions related to credit sales and receipts.

Control accounts consolidate and summarize transactions related to trade receivables or payables, facilitating error detection and reconciliation with subsidiary ledgers.

Control accounts help identify errors by comparing their balances with those in subsidiary ledger accounts, such as sales or purchases ledgers.

Contra entries in accounting are transactions that offset each other within the same account, typically involving adjustments without actual monetary exchange.

The information for a purchases ledger control account primarily comes from the purchases journal and cash book, summarizing credit purchases, payments, refunds, and discounts.

A debit balance in a purchases ledger control account can occur when the business overpays credit suppliers, receives refunds, or returns purchased goods, resulting in a positive balance owed to them.