Topic 6 - Control accounts Flashcards
1
Q
What is a trial balance used for?
A
Used to check the arithmetical accuracy of all double entry records.
2
Q
What is a control account user for?
A
Used to check the arithmetical accuracy of double entry in a particular ledger.
3
Q
What is a bank reconciliation statement used for?
A
Used to check the accuracy of the cash book.
4
Q
What is a control account?
A
A summary/total account that is used to check upon the accuracy of the entries in the individual accounts in a particular ledger.
5
Q
What is the purpose of a trial balance?
A
- Check accuracy
- Identify important accounting information
- Prepare financial statements
6
Q
What are the limitations of a trial balance?
A
- Does not reveal all errors that may exist
- Does not help locate exact place of error
7
Q
What is the purpose of a control account?
A
- Checking device
- Localise errors
- Prevent fraud
- Information for management
- Compiling financial statements
8
Q
What are the limitations of a control account?
A
- Considerable additional work and cost required
- Errors not revealed by trial balance will not be revealed by the control account
