What is a Control Account in Accounting? Definition, Types, and purpose

If the trial balance does not actually balance, only the accounts whose control account does not reconcile need to be checked for errors. The details of a control account will be found in a corresponding subsidiary ledger. The control account keeps the general ledger clean of details, but contains the correct balances used for preparing a company’s financial statements. A financial controller is a higher-level finance https://accounting-services.net/account-balance-definition/ position that takes the responsibility over the financial reporting process. Not quite an executive-level position at most companies, a controller oversees many of the processes that come together to deliver financial statements. A controller also works with the external audit team, assists internal managers will budget preparation, and identifies areas of opportunity to mitigate risk and employ cost savings.

Suppose that on December 31, 2020, the total debtors in the general ledger of ABC manufacturing company valued at $180,000 as break-up is shown. 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. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with.

Control account definition

Further, it elaborates the total amount owed by all customers in a given time frame. It contains aggregated total for the transactions that are posted in the subsidiary ledger. It is also called a controlling account because it enables us to perform reconciliation control on the ending balance.

• The subsidiary ledger tracks the individual balances of the accounts, and the total is reported in the respective control account.
• They serve as a summary report of the total balances for each subledger, and allow for a streamlined analysis of a company’s balance sheet without all of the clunky details contained in each subledger.
• With double-entry accounting systems, accounts receivable and accounts payable are the most most common types of control accounts.
• Transactions are entered daily, monthly, or within a particular duration in the individual creditors’ account.
• Because the control account only reviews the end balance, there is less risk of miscalculation.
• They are summarized and posted to the control account that in turn appears in the GL.
• Further, it elaborates the total amount owed by all customers in a given time frame.

Listing each debtor account individual account would clutter a general ledger, so those accounts could be listed in a subledger and consolidated in a control account. 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 controlling account definition be shown in the control account. A controller’s role is heavily (if not exclusively) rooted in dealing with actual transactions. Overseeing both revenue and expense reporting, a controller often does not deal in theory. Meanwhile, an FP&A director leverages historical data to devise future plans that may or may not materialize.

Types of Control Accounts

Instead, further information will be stored in the Accounts Receivable subsidiary ledger. 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.

• In common use, control accounts refer to those that would, under ideal circumstances, balance to zero.
• This account contains aggregated totals for transactions that are individually stored in subsidiary-level ledger accounts.
• Therefore, this account enables individuals to reconcile the total balance of the subsidiary ledger with the aggregate balance to be applied within the trial balance.
• More over, each account type can have hundreds of smaller accounts called subsidiary accounts.

A creditors control account acts as the holding account of purchased credit notes and invoices before they are deposited in the bank account. The other accounts for which control account can be used are equipment, machinery, and inventory of a business. Further, it’s advisable that a control account be prepared for the account balance with a higher number of transactions. However, before using specific balance calculated, we need to apply control and ensure the accuracy of the balance. We need to apply control because these accounts are expected to have a massive number of transactions. In the accounting cycle, the first step is posting entries in the books of accounts.