The reasons for possessing control accounts are as follows:
one.Check on the precision
They offer a check on the accuracy of entries manufactured in the personal accounts in the income ledger and buy ledger. It is quite effortless to make a error in posting entries, simply because there may well be hundreds of entries to make. Figures may well get transposed. Some entries may be omitted entirely, so that an invoice or a payment transaction does not seem in a personalized account as it ought to. By evaluating:
o The total equilibrium on the debtors account with the complete of person balances on the individual accounts in the sales ledger.
o The whole equilibrium on the creditors account with the whole of individual balances on the personalized accounts in the purchase ledger.
It is possible to identify the simple fact that glitches have been produced.
2.Location of mistakes
It could also assist in the spot of glitches, where publishing to the handle accounts are produced day-to-day or weekly, or even month-to-month. If Free account dispenser fails to record an invoice or a payment in a personal account, or makes a transaction mistake, it would be a formidable task to track down the error or glitches at the end of a year, say, offered the hundreds or hundreds of transactions during the yr.
By using the manage account, a comparison with the specific balances in the sales or acquire ledger can be made for every single 7 days or working day of the thirty day period, and the error found a lot more speedily than if accounts did not exist.
3.For interior check out
The place there is a separate of clerical bookkeeping obligations, the handle account gives an inside check out. The person putting up entries to the accounts will act as examine on a distinct man or woman whose task it is to put up entries to the revenue and obtain ledger accounts.
4.More merely and quickly
To offer debtors and collectors balances much more swiftly for making a demo balance or stability sheet. A solitary equilibrium on a handle account is obviously envisioned less complicated and rapidly than numerous person balances in the revenue or obtain ledger.
This signifies also that the amount of accounts in the double entry bookkeeping technique can be held down to a workable dimensions, considering that the personal accounts are memorandum accounts only and the management accounts alternatively supply the accounts necessary for a double entry method.