What is the purpose of the Sales Ledger Control Account?

• A. To summarise the total balances of all customers and reconcile the debtors’ ledger with the general ledger.
• B. To record cash receipts from customers.
• C. To list all purchases from suppliers.
• D. To calculate gross profit on sales.

Answer: (A)

The Sales Ledger Control Account is a single summary of all customer balances and the link between the debtors’ ledger and the general ledger. Each credit sale is posted to the individual customer’s account in the sales ledger and also to the Sales Ledger Control Account in the general ledger; when a customer pays or returns goods, those postings reduce both the specific customer account and the control account. The total shown in the control account should equal the sum of all individual customer balances, so the control account acts as a check that the detailed records fit the general ledger. If there’s a mismatch, it signals posting errors or omissions that need investigating.

This isn’t where cash receipts are recorded—that occurs in the cash book—nor is it where purchases from suppliers are listed or gross profit is calculated.