The Meaning and Purpose of Control Accounts, Including Examples

The controller of an organization may partake in the recruiting, selection and training of staff as the controller often has a variety of finance or accounting managers reporting directly to them. The position requires appraising job results, leading employees and performing disciplinary actions as necessary. However, if Taylor or anyone else wants to find out the amount that a specific customer still owes for their credit purchases, or when they bought the item, that won’t be shown in the control account. Accounting control systems do not work under one size fits all scenarios. Research on the relationship between business strategies and accounting-based control systems finds organizational design and corporate culture to play a significant role in a business's success. Consensus agrees that to maximize firm performance, accounting control systems should be designed specifically to suit the unique business strategies of different entities.

  • All individual balances have been transferred to creditors' control accounts.
  • In a small business the accounts can be kept in one accounting general ledger and a trial balance can be extracted from that ledger.
  • The subsidiary accounts receivable and payable ledgers have only one sided entries and therefore do not self balance.

We need to apply control because these accounts are expected to have a massive number of transactions. Control accounts provide a résumé of all the individual accounts in the sales and purchases ledger. They give us a total which can be presented in a business’ statement of financial position.

She has over 2 years of experience in writing about accounting, finance, and business. Accounting learners can get accounting and business analysis certifications from ExamLabs. It’s an online platform to practice your skills, give exams and get certified fast in you field of interest. A CFO or VP of Finance are often higher-level positions that are on the executive team. Meanwhile, a controller is usually a lower-level position that is less involved in strategic planning or external affairs and mostly involved in internal reporting. A comptroller is typically a more senior position that is more commonly found in government or nonprofit organizations.

Controlling account

Doing this allows you to produce a trial balance and balance sheet without all of the transactions displayed. The balance of the control account should always be equal to the balance in the subsidiary ledger accounts. Accounts payable and accounts receivable control accounts are the most frequently used control accounts, although inventory and fixed asset control accounts can also be used. Control accounts are crucial elements of double-entry accounting and form the basis of the general ledger. Functioning as a summary of total balance for the subledger, they provide a focused analysis of a business’s balance sheet.

The typical level of activity in a control account is on a daily basis. For example, all payables entered during one day will be aggregated from the subsidiary ledger and posted as a single summary-level number into the accounts payable control account. The use of accounts receivable and accounts payable control accounts creates an accounting system where only the general ledger is self balancing. The subsidiary accounts receivable and payable ledgers have only one sided entries and therefore do not self balance. As only a section of the accounting system is self balancing such a system if sometimes referred to as a sectional balancing system.


For larger companies, controllers report up to a CFO or other executive. According to Glassdoor, a controller makes a median of roughly $156,000 per year. This includes $111,000 per year of base pay and almost $45,000 in additional forms of compensation. If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee. For example, Jim’s hardware store invoiced two customers for a total of $700.

In addition to catching errors, control accounts can also help you review the general ledger. When specific control accounts do not balance, you know that they need to be checked. The subsidiary ledger allows for tracking transactions within the control account in further detail. Individual transactions appear in both accounts, but only as an ending balance in the control account.

In contrast an accounting system in which all ledgers are individually balanced is referred to as a self balancing system. Alternatively, the control account may be called the controlling or adjustment account. Companies that sell products on credit may have many transactions in their accounts receivables sub-ledger. A sub-ledger contains details of those transactions, while a control account keeps track of the balance.

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Financial Controller Roles, Duties, Skillset, Career Path

So, to trace the balance of the specific party, we need to analyze the subsidiary ledger/party-wise ledger. Accounting software will automatically categorize data and create control accounts and subledgers, allowing for simple data segmenting, as well as accurate accounting practices. Subsidiary accounts are integral when it comes to recording company transactions. Control accounts, meanwhile, offer the opportunity for financial analysis by just showing the balances of each account. It’s basically a summary that provides clear and accessible insight into financial performance.

Advantages of Control Account

Following are the accumulated balances of the figures that impact the ending balance of accounts receivables. It serves the purpose of the reconciliation that increases our confidence in the ending balance of accounts receivables. To do so, we get accumulated balances that affect the movement of accounts.

In general, especially for larger companies, there are differences between controllers and other high-ranking financial positions. Last, it is not an industry requirement to obtain a Certified Public Accountant (CPA), Certified Management Accountant (CMA), Chartered Financial Analyst (CFA), or any other type of licensure. For many, these licensures will help and may be a preferred requirement for the role. For larger public companies, controllers will often be required to have at least a CPA license.

Accounting Ratios

The cost ledger control account balance should be equal to the cost ledger net total entries.This account is used to complete double entries. A debit is made to this account when sales are made, and a credit is made when net profits or losses are transferred from costing profit and loss accounts. It represents the net total of all the balances in the impersonal account at the end of the particular period. A control account works as an adjusting and controlling account that summarizes and sums up balances of all subsidiary accounts’ information of a specific account type in a general ledger. Subsidiary accounts are used to provide support and detailed information on a related account type. Most commonly, control accounts are used for two areas within a company.

Those ledgers usually contain a vast number of transactions that should be separated into different subsidiary ledgers rather than clogging up the general ledger with too much information. A company can have hundreds or thousands of customers with current accounts receivable balances. All of these balances are recorded in separate A/R subsidiary accounts. The total of all of these accounts is carried forward into the A/R control account, which appears in the general ledger and the financial statements. When monitoring your business’s general ledger, you may have an accounts receivable control account.

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