Sales and Purchase Ledger Control Accounts

You record all your transactions, let HMRC know what you have been trading and pay national insurance and taxes. Here is everything you need to know about a purchase ledger account. The purchase ledger is also known as the purchase subledger or purchase subaccount. If the purchasing volume is relatively low, then there is no […]

You record all your transactions, let HMRC know what you have been trading and pay national insurance and taxes. Here is everything you need to know about a purchase ledger account. The purchase ledger is also known as the purchase subledger or purchase subaccount. If the purchasing volume is relatively low, then there is no need for a purchase ledger. Instead, this information is recorded directly within the general ledger.

Day books are just a list of credit transactions (in this case goods and services purchased) and are not part of the double entry process. As was the case with the SLCA, additional transactions can appear in the PLCA which would be recorded using a journal and then posted to the General Ledger and the relevant supplier accounts in the Purchases Ledger. Control accounts are mainly used to help identify errors in the subsidiary ledgers, but the use of them gives a business a number of additional advantages. The next main type of accounts payable transaction is the payment of cash to the supplier for the outstanding invoice. Cash purchases are recorded cash book but not in the purchases ledger. So cash purchases should not be entered in the P L Control account which checks the arithmetical accuracy of the purchases ledger.

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If the balances do not agree then it means there must be an error in one or both of the ledgers. The cash book is totalled for the accounting period, and used to make a double entry posting to the general ledger. The cash payments are posted to the credit side of the cash control account, and to the debit side of the accounts payable control account. Those subledgers are totaled for each reporting period, and the totals make up the balance of the accounts receivable control account. In other words, the accounts receivable control account reflects the total amount that a company is owed, while the its subledger shows how much each individual customer owes. The purchases journal is totalled for the accounting period, and used to make a double entry posting to the general ledger.

A control account exists for both creditors and debtors and is used to ensure that there are no errors in the ledgers (that any sub-ledgers match up with the general ledger). Control accounts are an element of the double-entry bookkeeping method and are used to check the totals found in a company’s balance sheet. So cash sales should not be entered in the S L Control account which checks the arithmetical accuracy of the sales ledger.

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A sales ledger includes an account for each customer, the same as a purchase ledger. However, it records the money you receive for products and services you sell and what’s still owed. This then gets included in your annual accounts and on your balance purchase ledger control account sheet as accounts receivable. They would write up the purchase invoices and any payments in a thick leather-bound book. The total amount of invoices that get included within the purchase ledger that haven’t been paid are important for trade creditors.

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