Role of control accounts in business

Although not all organizations are in a position to prepare control accounts, this is a tool of paramount importance especially when the business has grown in size and the number of customers and suppliers have increased. Some of the roles played by control accounts are;

  1. It helps in confirming the arithmetic correctness of transactions posted in the individual ledger accounts

  2. It acts as a summary of the total account balances to be posted in the trial balance at the end of the financial period

  3. It is a tool for detecting and preventing errors and frauds in the respective accounts

  4. It facilitates delegation of duties to clerks responsible of maintaining debtor and creditor accounts

  5. It quickens the process of preparing the final accounts of the business. The control accounts provide the balances to be used in the preparation of statement of financial position for it avails only a single figure which is an aggregate of derived from the subsidiary ledgers.

Illustration One

From the following accounting information of Boers ltd on 31/12/2019, prepare both the debtors’/receivable and creditors’/payables control accounts as at that date.





Comment for entrepreneurs/learners;

1.    Debit and credit balances brought forward (bal. b/f), whether main or minor as indicated above, implies that they are balances brought down (bal. b/d) from the previous accounting period. Therefore, those bal. b/d are recorded in the new year as opening balances brought forward as indicated in illustration one. In preparation of the respective control account, they should be recorded as instructed by the examiner. That is;

-   If the balance brought forward (bal. b/f) is of debit in nature, whether main or minor, it should be recorded in the respective control account in that manner. The same thing applies to the case of credit balances brought forward (bal. b/f).

2.   The minor debit and credit balances brought down as indicated in the information (eg question) given should be indicated in the respective control account below the total values.


NB: This implies that those balances were reflected in the respective control account as balance carried down (bal. c/d-balancing figure). So as a learner either in secondary school doing accounting option or commercial college student taking professional accountancy course, you should consider recording the minor balance as either debit or credit balance brought down in the respective control account and before balancing the control account, reverse the same entries and record them as credit and debit balances carried down (bal.c/d). After that, you can compute the main debit or credit balance as per each control account.

3.   In case an entrepreneur buys another business with incomplete accounts, he or she should follow the number 1 and 2 steps above to determine the missing control account item.


Illustration two

The end of year control account related transaction balances of Boaz Ltd disclosed the following information on 31/12/2019





Prepare debtors/receivable control account and creditors/payable control account for the year ended 31/12/2019


About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.