Control Account Terminologies - SS1 Accounting Lesson Note
A control account is a summary account in a company's general ledger that aggregates the balances of a group of related sub-accounts.
By keeping track of the balances of related sub-accounts, it provides a high-level overview of the company's financial position and helps identify any errors or discrepancies that need to be corrected. Some common terminologies associated with a control account include:
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General Ledger: The main accounting record that contains all the financial transactions of a company.
Sub-Accounts: Individual accounts that make up a control account. They are used to track specific transactions and balances.
Debits and Credits: Debits increase assets and expenses, while credits increase liabilities, equity, and revenue.
Balance: The difference between the total debits and the total credits in an account. A positive balance means there are more debits than credits, while a negative balance means there are more credits than debits.
Trial Balance: A report that lists the balances of all the accounts in the general ledger. It is used to ensure that the total debits equal the total credits.
Reconciliation: The process of comparing the balances in the control account to the balances in the sub-accounts to ensure they match. Any discrepancies need to be investigated and corrected.