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    Control Accounts Past Paper Question Theory

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    mariyamnasha2006
    Accounting

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    Control Accounts Past Paper Question Theory

    Uploaded by

    mariyamnasha2006
    3 views3 pages
    Accounting

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    Control Accounts Past paper question theory

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    Accounting

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views3 pages

    Control Accounts Past Paper Question Theory

    Uploaded by

    mariyamnasha2006
    Accounting

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    June 2022 Q4 (e):

    (e) Evaluate whether it is possible to avoid all irrecoverable debts


    Points for being able to avoid irrecoverable debts

     Marvin could only make cash sales. However, a proportion will need to be made on credit
    or sales will decline substantially. The proportion on credit runs the risk of irrecoverable
    debts.
     Marvin should ensure the careful financial selection of customers to whom he intend to sell
    goods on credit this should reduce irrecoverable debts.
     Speedy invoicing and credit control will pressure debtors to pay regularly.
     Could encourage them for prompt payment by offering some discounts.
     Could also charge some rate of interest for delayed payment or for overdue
    Points for not being able to avoidable irrecoverable debts
     Marvin may have to sell some goods on credit to maintain the sales volume, running the
    risk of debts being irrecoverable.
     Marvin should ensure that sufficient resource are applied to the collection of debts
    through credit control procedures.
     Regular customers circumstances may change making it more likely that they could
    become bankrupt and their debt will be irrecoverable.

    Decision
    All recoverable debts can’t be avoided as long as there are credit sales. However, it could be
    minimized with proper credit control policy
    ______________________________________________________________________________

    1|Page
    May 2021 Q. 3 (e)
    (e) Evaluate whether preparing a trade receivables ledger control account ensures
    that the books are correct.
    Positive points for ensuring that books are correct
     If the control account total is equal to the individual totals of the ledger accounts it is prima-
    facie evidence that the books are correct.
     Provides evidence for further investigation to find differences.

    Negative points not ensuring that books are correct.


     Errors of omission will not be detected.
     Other errors not affecting trial balance such as errors of commission will not be detected
    through control accounts
     Control account itself may contain errors.
    _____________________________________________________________________________________________

    May 2019 Q. 2 (b) (e)


    (b) State two possible reasons why Mel has a credit balance on her
    account.
     Pay for goods in advance
     Paid twice/overpaid
     Returns of goods after the payment made.
     Set off/Contra from trade payable account.
     Error in recording

    (e) Evaluate the use of control accounts.


    Points in favour of control accounts
     Control accounts Check on accuracy of ledger by ensuring that total of individual accounts in
    ledger equal corresponding summarised entries.
     Control accounts can assist in locating errors when differences are discovered they are
    ‘narrowed down’ to particular ledgers.
     Total balances of trade receivables and trade payables available immediately which can assist
    the preparation of financial statements, which Speeds up preparation of financial statements.

    2|Page
     Help reduce fraud as differences have a greater chance of being discovered with the
    separation of duties in posting the ledger. Usually the control accounts are prepared by senior
    accounts.
     Checks arithmetic accuracy of the ledger account it controls-sales ledger and purchases
    ledger

    Points against control accounts


     Control accounts can be prepared by business following double entry, which requires
    investment of time in preparation.
     Higher level of skilled staff required to prepare. Hence, expensive for ordinary businesses
     Errors not revealed by the trial balance would not be detected by control accounts

    __________________________________________________________________

    3|Page

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