Maintaining Financial Records and Preparing Accounts- Control Accounts

agg25

Has anyone got a good way remembering where to put everything on the control accounts at the beginning part of the Maintaining Financial Records and Preparing Accounts exam paper. I keep putting things on the wrong sides.

Thanks

donnas1977

I find that DEAD CLIC helps me remember what should go where


D -Debit balances
E -Expenses accounts
A -Assets accounts
D -Drawings account

C -Credit balances
L -Liabilities accounts
I -Income accounts
C -Capital accounts

good luck with exam.

sdv

agg25 wrote: »

Has anyone got a good way remembering where to put everything on the control accounts at the beginning part of the Maintaining Financial Records and Preparing Accounts exam paper. I keep putting things on the wrong sides.

Thanks

Try to think things through

on control account you will have

1 opening balance - Is it CR-editor's control a/c then it will be on CR side. If it is DEbtors control a/c then it will be in the DR side. (creditors = Credit, Debotrs = Debit)

2 Closing balance - opposite side to opening balance

3 Receipts from Debtors - In the bank a/c, rceipts are on the debit side, therefore in the control a/c it will be on CREDIT side, (REDUCING debtors)

4 Payment to creditors - in the bank a/c, payments are on credit side, therefore in the control account it will be on DEBIT side (REDUCING creditors)

5 Sales - In the sales a/c, sales are on credit side, therefore in control a/c it has to be on DEBIT side (INCREASE debtors = Debit)

6 Purchases - In the purchases a/c, purchases are on debit side, therefore in control a/c it has to be on CREDIT side (INCREASE creditors = Creditors)

7 Discount Recived. = work it out!

8 Discount Allowed - work it out!

Hope this helps, quite honestly you need to parctice control accounts time and time again.
If you want to practice on a spread sheet interactive exercises PM me your e-mail with a request and I will e-mail them to you.

Jonno1

Debits = (P)urchases (E)xpenses (A)ssets
Credits = (R)evenue (L)iability (S)ales

Gives PEARLS.

For control accounts, take the opposite entry as what you would expect things to be : thus Sales from the perspective of the firm are credit items, but from debtors they are debit items. Similarly purchases from the perspective of the firm are debit items, but from creditors they are credit items. The 'left hand' side of the debtors control account gives sales/credit sales, the 'right hand' side gives the degree to which debtors have paid the firm for their sales, as stated by the balance c/d at the end of the month to signify remaining debtors, and offset by things like discounts received. The opposite is said for the creditors control account.

I learned all this by picturing the T account in my head and memorising the which side (L/R)represented sales/purchases and which side represented the payments to be made for these sales/purchases. I also memorised the linkages to other accounts via a diagram in one of the text books.

speckled_00

I always go back to the Bank entry. Receipts at the bank are DR and therefore the double entry of that is a CR in the Sales Ledger Control. Which then means that the Sales must be DR.

If you know this, you'll then know that Payments at the Bank are CR as they're the opposite to Receipts, and therefore the double entry of the payment is DR in the Purchase Ledger Control, which means the Purchases are then CR. Possibly a strange way of remembering but it works for me and you really only need to remember it one way around, cos you can work the other way out by doing to opposite!

If you forget the Bank Entries - the way I remember is if you draw a T account, and put R for receipts on the left, and P on the right for payments, it looks like RIP - morbid I know but I bet you remember!

Mikeey

Are you doing a CBA or paper exam? If you are doing the CBA then the computer calculates the balance of the control accounts for you, so you can therefore tell whether they are on the correct side if they do not balance at the end.