The reasons for possessing control accounts are as follows:
one.Verify on the precision
They provide a check out on the accuracy of entries manufactured in the personalized accounts in the product sales ledger and buy ledger. premium account dispenser is quite easy to make a miscalculation in publishing entries, because there may well be hundreds of entries to make. Figures may possibly get transposed. Some entries may possibly be omitted entirely, so that an bill or a payment transaction does not appear in a individual account as it ought to. By comparing:
o The total equilibrium on the debtors account with the whole of personal balances on the personal accounts in the revenue ledger.
o The complete harmony on the lenders account with the complete of individual balances on the individual accounts in the buy ledger.
It is feasible to identify the simple fact that problems have been made.
2.Area of problems
It could also assist in the location of mistakes, where putting up to the control accounts are created everyday or weekly, or even month to month. If a clerk fails to record an bill or a payment in a individual account, or makes a transaction error, it would be a formidable process to find the mistake or errors at the stop of a yr, say, given the hundreds or 1000's of transactions throughout the calendar year.
By making use of the control account, a comparison with the person balances in the income or buy ledger can be produced for every week or working day of the thirty day period, and the mistake found a lot far more speedily than if accounts did not exist.
three.For inside examine
In which there is a different of clerical bookkeeping responsibilities, the manage account provides an interior examine. The individual putting up entries to the accounts will act as examine on a diverse particular person whose work it is to put up entries to the sales and obtain ledger accounts.
4.A lot more simply and quickly
To supply debtors and collectors balances far more rapidly for generating a demo stability or stability sheet. A single stability on a handle account is naturally anticipated easier and speedily than a lot of person balances in the revenue or buy ledger.
This signifies also that the amount of accounts in the double entry bookkeeping technique can be retained down to a manageable measurement, considering that the personalized accounts are memorandum accounts only and the manage accounts rather supply the accounts needed for a double entry technique.