CONTROLLING ACCOUNTS
6. A controlling account is one which exhibits a summary of all of the accounts in a ledger, or of all accounts of the same class.
The sales account, with which the student has been made acquainted, exhibits net sales, while a sales controlling account exhibits a summary of all accounts in the sales ledger. The debits to the sales controlling account represent the total debits to customers' accounts as shown by the sales book or the journal. The credits to the sales controlling account represent the total credits to customers as shown by the cash book and the journal. This account is variously styled Sales Ledger Account, Accounts Receivable Account, or Sales Controlling Account.
A purchase controlling account exhibits a summary of all accounts in the purchase ledger. It is called a Purchase Ledger Account, Accounts Payable Account, or Purchase Controlling Account.
These controlling accounts are kept in the general ledger and show at all times the totals of accounts receivable and accounts payable, without the necessity of listing the individual balances. At the end of the month statements of the balances of the accounts in purchase and sales ledgers are made, and the totals of these balances must agree with the balances of the controlling accounts.
The operation of these controlling accounts demonstrates one of the most apparent advantages of the division of the ledger. If an error is made in posting to an account in the sales ledger it is discovered as soon as the statement of the sales ledger is made, and can be located without referring to purchase or general ledger accounts. Without the ledger division and the use of controlling accounts, there would be nothing to assist in locating an error in the trial balance in any particular section of the ledger.