Purchase Ledger Control Account is generally credited. It is credited if its balance increases & debited if its balance decreases. To begin with, let me first help you analyze the meaning of the term Purchase Ledger Control Account. Meaning of Purchase Ledger Control Account Purchase Ledger ContRead more
Purchase Ledger Control Account is generally credited. It is credited if its balance increases & debited if its balance decreases.
To begin with, let me first help you analyze the meaning of the term Purchase Ledger Control Account.
Meaning of Purchase Ledger Control Account
Purchase Ledger Control Account (PLCA) is a summarized ledger of all the trade creditors of the entity. This Control Account typically looks like a “T-Account” or a replica of an Individual Trade Payable (Creditor) account. But instead of containing transactions of invoices, returns, and payments related to one creditor, it contains summarized transactions of invoices, returns, and payments related to all the creditors in the business.
Purchase Ledger Control Account is also referred to as “Trade Creditors Control Account”.
The balance of the PLCA should equal the sum of balances of the individual supplier accounts. If discrepancies arise, then it should be investigated.
Is Purchase Ledger Control Account a debit or credit?
Purchase Ledger Control Account indicates the total amount a business entity owes to its suppliers at a particular point of time. Therefore, it is a “short-term liability” for the business entity and forms part of the balance sheet.
As per the Modern approach of accounting – Credit the increase in liability, Debit the decrease in liability.
PLCA is a liability, therefore it is generally credited. It will be credited if its balance increases & debited if balance decreases. Also, it will generally show a credit balance.
Example of Purchase Ledger Control Account
Suppose following were during the year transactions with the Creditors ABC Inc. & XYZ Inc. along with the outstanding balance as at 31/12/20×1.
| Particulars | ABC Inc. | XYZ Inc. |
| Opening balance | 90,000 | – |
| Credit Purchases | 140,000 | 330,000 |
| Discount received | 20,000 | 30,000 |
| Purchase returns | 15,000 | 10,000 |
| Payment made | 45,000 | 60,000 |
| Interest expense on overdue amount | – | 20,000 |
| Outstanding balance as at 31/12/20×1 | 150,000 | 250,000 |
Purchase Ledger Control Account for the year 01/01/20×1 to 31/12/20×1 will be presented as follows-
The balance of PLCA ie. 400,000 is equal to the sum of the balance of individual outstanding creditors ie. 150,000 + 250,000 = 400,000.
You can see that the transactions which increase the balance of PLCA are credited & decrease the balance are debited. Also, it is depicting a credit balance.
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Sales Ledger Control Account is generally debited. It is debited if its balance increases & credited if its balance decreases. First, let me help you understand the meaning of the term Sales Ledger Control Account. Meaning of Sales Ledger Control Account Sales Ledger Control Account (SLCA) is aRead more
Sales Ledger Control Account is generally debited. It is debited if its balance increases & credited if its balance decreases.
First, let me help you understand the meaning of the term Sales Ledger Control Account.
Meaning of Sales Ledger Control Account
Sales Ledger Control Account (SLCA) is a summarized ledger of all the trade debtors of the entity. This Control Account typically looks like a “T-Account” or a replica of an Individual Trade Receivable (Debtor) account. But instead of containing transactions of invoices, returns, and receipts, etc related to one debtor, it contains summarized transactions of invoices, returns, and receipts, etc related to all the debtors of the business.
Sales Ledger Control Account is also referred to as “Trade Debtors Control Account”.
The balance of SLCA should equal the sum of balances of the individual customer accounts. If discrepancies arise, then it should be investigated.
Is Sales Ledger Control Account a debit or credit?
Sales Ledger Control Account indicates the total amount owed to a business entity by all its customers at a particular point of time. Therefore, it is a “short-term asset” for the business entity and forms part of the balance sheet.
As per Modern approach of accounting – Debit the increase in asset, Credit the decrease in asset.
SLCA is an asset, therefore it is generally debited. It will be debited if its balance increases & credited if balance decreases. Also, it will generally show a debit balance.
Example of Sales Ledger Control Account
Suppose following were during the year transactions with the Debtors Sugar Inc. & Chocolate Inc. along with the outstanding balance as at 31/12/20×2.
Sales Ledger Control Account for the year 01/01/20×2 to 31/12/20×2 will be presented as follows-
The balance of SLCA ie. 535,000 is equal to the sum of the balance of individual outstanding debtors ie. 265,000 + 270,000 = 535,000.
You can see that the transactions which increase the balance of SLCA are debited & decrease the balance are credited. Also, it is depicting a debit balance.
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