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What is a Control Account? Definition Meaning Example

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This process is made more accessible by having control accounts for each subsidiary account listed in the general ledger. Before posting the transactions to the subsidiary or primary account, the control account clarifies and rechecks each account and its transactions to ensure accuracy. Control accounts, such as those for sales and debtor ledgers, summarise transactions entered into individual accounts. Discrepancies or errors are corrected before posting to the main ledger.The purpose of control accounting is to ensure accurate reconciliation and to produce clean financial reports. Control accounts for accounts receivable must match the subtotals of the customer balances in the sub-ledger. It is, therefore, necessary to correct an error in the books if it does not.

  • There are a handful of reasons to use control accounts in accounting.
  • At last, you can make a controlling account by putting ending balances of subsidiary accounts.
  • Activities now considered illegal include cross-border securities broking, securities lending, fund sales and investment consulting, according to the notice.
  • The total for all the accounts is taken and put into the A/R control account.
  • The general ledger can have hundreds of accounts from asset and liability accounts to income and expense accounts.
  • If at any time the control account and the subsidiary ledger are not in balance, the subsidiary ledger will need to be reconciled to locate and correct the error.

For example, on this page, you can configure Windows Hello, change your local account password, and enable other features like Dynamic lock. Now transfers all the individual accounts’ debtor’s balance to the debtor’s account. During the Mauryan Empire in India, Chanakya wrote a manuscript similar to a financial management book. There are few precise details regarding the maintenance of a sovereign state’s books of accounts in his book Arthashastra. Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries.

The cost ledger control account balance should be equal to the cost ledger net total entries.This account is used to complete double entries. A debit is made to this account when sales are made, and a credit is made when net profits or losses are transferred from costing profit and loss accounts. It represents the net total of all the balances in the impersonal account at the end of the particular period.

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Low dollar value control accounts or Level of Effort (LOE) accounts may be candidates for exclusion. Control Account (CA) is a management control point at which budgets (resource plans) and actual costs are accumulated and compared to earned value for management control purposes. In this post, we’ll explore a detailed definition of control accounts, explain how it works and run through some examples.

A control account is a general ledger account containing only summary amounts. The details for each control account will be found in a related (but separate) subsidiary ledger. If Jim had any returns or customer discounts, he would also post them in the control account to make sure that the subsidiary accounts and the control account remain in balance. Control accounts are most commonly used by large organizations, since their transaction volume is very high.

In the “Accounts” section, you’re also going to find the “Your Microsoft account” page, but it only includes details about your Microsoft 365 subscription. (ii) It makes possible the division of accounting work among ledger keepers, thereby resulting in specialisation in work. She is a Business Content writer and Management contributor at, where she contributes a business article weekly. She has over 2 years of experience in writing about accounting, finance, and business. Double Entry Bookkeeping is here to provide you with free online information to help you learn and understand bookkeeping and introductory accounting. GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with.

A debtor control account, a creditor control account, and a stock control account are all control accounts. A general ledger contains these kinds of control accounts for summarising business activities within the general ledger. Control accounts are excellent, but they have one major disadvantage. Even though they may give you complete control, they require more work. Control account managers are responsible for monitoring these accounts. It is not a good idea for the person in charge of your general accounts to also be in charge of your control accounts.


A control account is a summarised account that maintains the records of the individual accounts in the ledger, and that is clarified and re-verified regularly. As a result of following this procedure, the management can create control over the ledger posting, which prevents the possibility of fraud and misrepresentation. They help clean up a company’s financial statements, and provide a way to fact-check the ledgers. Great accounting software has many of these features built in, making accounting easier on you. If you found this article to be helpful, be sure to check out our resource hub!

An Example of a Control Account

This way the ledger only has one accounts receivable account instead of hundreds. If more information is needed for a specific customer, the subsidiary accounts and records can always be reviewed. As you can see, control accounts drastically clean up the ledger and make it easier for accountants and bookkeepers to use. Under the self-balancing system, all three ledgers, including the main ledger, are independently self-balanced. When only a section of the group of the ledgers is balanced, we refer to it as sectional balancing.


However, additional control accounts may be necessary depending on the company’s size, type, and industry. It’s essential to ensure that each aspect of your business has a control account since it comprises the general ledger used for financial reporting. With accounting software, the process of creating control accounts and subledgers can be simplified. In addition to catching errors, control accounts can also help you review the general ledger. When specific control accounts do not balance, you know that they need to be checked.

A control account is a summarized account used to maintain records of individual accounts included in the ledger. The control account helps to clarify and verify information from a subsidiary ledger. Using a control account like this enables management to have more control over ledger posting, which helps to prevent fraud and misrepresentation. expenses vs. assets: what is the difference help keep the general ledger clean and allow hundreds of accounts to be listed under a single figure. If something goes wrong and the balances don’t line up, having a control account makes it easier to spot and correct the problem. There are many benefits to using these accounts as part of your accounting system.

Terms Similar to Control Account

If someone needs information about a specific customer, then they can check the subsidiary accounts or records to learn more. (i) Control accounts provide a summary of transactions recorded in various subsidiary ledger. Similarly, a control account is also maintained for each of the other subsidiary ledger. The objective of opening a control account for cost ledger is to complete the double entry and to make the cost ledger self-balancing. Suspense accounts contain the difference between the total debit and credit of control accounts, whereas control accounts contain receivables and payables to or from subsidiary accounts. Accounting software facilitates accurate data segmentation by automatically categorising data and creating control accounts and sub-ledgers.

There are numerous control accounts which can be used, but the two main ones used by most businesses are the receivables control account and the payables control account. Control accounts are typically used in larger organizations that have hundreds or even thousands of transactions. Control accounts are part of double-entry accounting, which states that any debit posted to the general ledger will have a corresponding credit posted to the general ledger as well.

Control accounts, meanwhile, offer the opportunity for financial analysis by just showing the balances of each account. It’s basically a summary that provides clear and accessible insight into financial performance. While they may provide complete control, they also require more labor. The people who would monitor these accounts are called control account managers. While this may seem small, it is still a task that has to be taken on. You don’t want the person in control of your general accounts in control of the control accounts, as well.

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