Control accounts question?

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I need some help regarding a question to do with control accounts.<BR>Basically, the question is asking whether you need to subtract/add amounts to agree with the purchases ledger control account based on information ommitted from the accounts.<BR>I dont understand what the question means, does it mean that 'add' means to debit and 'subtract' means to credit? Also, must the additions/subtractions, equal the sum of £55946 at the bottom of the list.<BR><BR>Example - Total list of creditor balances £55946<BR><BR>a) a creditor balance of £553 had been listed as £535<BR><BR>Adjustment for a) add/subtract??????<BR><BR>I can not process this in my mind.<BR><BR>I hope this is clear! Thanks in advance.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Control accounts question?

    There is no straight forward rule that means if you need to add an amount it is necessary a Debit or Credit entry as it can be either depending on the type of account ie expense, income, asset, liability etc<BR><BR>The question is stating that the creditor control account has been understated by £18 pounds (the difference between the two amounts) which means this amount therefore needs to be added to the creditors control account. In order to add the amount you need to enter the transaction on the credit side therefore increasing the overall amount. Obviously if you were working on the Debtors Control account, then to "add" an amount would require a debit entry. <BR><BR>As you are trying to reconcile the creditor control account to the list of individual creditor accounts then yes the idea is that both totals are the same.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Control accounts question?

    Quite good explanation of jbs275.<BR><BR>I think you should have got it right now. In Accounting add/substract does not refer to debit/credit as such. Adding an amount to creditors account should be a credit and substracting an amount to debtors account should be a credit. So, it depends on the type of account as explained by 'jbs275'.<BR><BR>Any more queries is welcomed.<BR><BR>Velen
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Control accounts question?

    I'm only saying the same as everyone else, just this way of thinking of it is much easier:<BR><BR>DR balance = Asset or expense (two are linked)<BR>CR balance = Liability or source of income (two again are linked to each other)<BR><BR>To obviously to increase the value of an asset (in this case debtors) DR the account.<BR><BR>When I was learning, I was told to think about what is happening to the bank/cash, and then work out the opposite side from that but to me this is not much use.<BR><BR>It's something that will come with time and experience - hang on in there !

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