B2: 3.01 Control accounts

There are numerous accounts found in a General Ledger that can include the word “Control” in their name; e.g.

  • The Bank Control account
  • The Cash Control account
  • The Sales Ledger Control account
  • The Purchases Control account
  • The VAT Control account
  • The Wages Control account

In order to understand why the word “control” is included in the names of some ledger accounts we must consider the purpose of a control account.

What is the purpose of a control account?

A control account is an account where the balance is regularly checked against other evidence to help ensure that the balance is correct. By having and using control accounts we reduce the risk that errors will be made and at the same time increase the chance that any errors that are made will be identified and corrected.

What evidence can be used to check the balances on control accounts?

Control accountEvidence
Bank Control accountBank statements
Cash Control accountCounts of cash actually held
Sales Ledger Control accountCustomer balances in the Sales Ledger
Purchases Ledger Control accountSupplier balances in the Purchases Ledger
VAT Control accountVAT records and VAT returns
Wages Control accountPayroll records
Control accounts and the evidence used to check their balances

Control account reconciliations

At the end of an accounting period such as a week, or a month, an accountant will compare the balance on its control accounts against the other evidence held. If the balance agrees to the other evidence then the control account has been reconciled and we can be confident that it is correct. If however, the balance does not agree to the other evidence then we would investigate, find out why there is a difference and, if necessary make corrections to our records.


At the end of March, a bookkeeper calculates the balance of its Cash Control account on 31st March to be £418. The bookkeeper then counted the notes and coins held by the business which added up to £388. As these two numbers do not match the bookkeeper would investigate to discover why this difference of £30 has occurred.

The bookkeeper then finds that a cash payment of £30 to a supplier was not recorded in the business’ Cash Book. This error is then corrected which reduces the Cash Control account balance by £30 to £388.

The Cash Control account has now been reconciled as at 31st March and the bookkeeper has a greater level of assurance that the business’ books are correct.

%d bloggers like this: