A difference between the control account balance and the total of the individual balances means at least one error. The skill is to decide, for each error, whether it sits in the control account or in a customer account, then correct that figure only. Questions often give a short schedule of errors and ask for the corrected balances.
This lesson uses individual balances and totals, and belongs to control accounts.
What is the order of attack?
- Write down both figures and the size of the difference.
- Take each error in turn and ask one question: which record is wrong, the total in the control account or an individual account?
- Decide the direction. Is the figure too high or too low, and what correction fixes it?
- Apply each correction to the right figure only.
- Check that the corrected figures agree. If they do not, re-read the errors, because one may be missing or have the wrong sign.
Worked example
At the end of the month, Teluk Bakery’s receivables control account shows a debit balance of RM 18,400. The list of balances from the sales ledger totals RM 18,150, a difference of RM 250. Three errors are found.
| Error | Which record is wrong | Effect |
|---|---|---|
| The sales day book was overcast by RM 100 and the total was posted to the control account | Control account | Control too high by 100 |
| A cheque for RM 180 from Nur was credited twice in her account | Customer account | List too low by 180 |
| A credit note for RM 30 was posted to the control account but left out of the customer’s account | Customer account | List too high by 30 |
Corrected control balance: 18,400 − 100 = RM 18,300.
Corrected list total: 18,150 + 180 − 30 = RM 18,300.
The two figures now agree at RM 18,300, so the difference is explained: the control account was RM 100 too high, and the net effect of the customer account errors is RM 150, since 180 − 30 = 150. The total gap was 100 + 150 = RM 250, which matches the difference at the start.
The mistake to watch for
A common slip is to apply an error in the wrong direction.
Mistaken answer: the student adds the RM 30 credit note to the list total instead of subtracting it, giving a corrected list of RM 18,360.
The control account says RM 18,300, so a gap of RM 60 remains.
A gap equal to twice an item is a strong clue that one item has been added when it should have been subtracted. The credit note was missing from the customer account, so that account was too high and the correction is a deduction.
Check yourself
Work on paper first, then open each answer.
1. The control account shows RM 6,500 and the list of balances totals RM 6,380. A sales invoice of RM 120 was entered in the sales day book but never in the customer’s account. Does this explain the difference? Which figure changes?
Show answer
The control account is correct, as the invoice is in the day book total. The customer account is missing the invoice, so the list is too low by 120. Corrected list = 6,380 + 120 = RM 6,500, which equals the control account. Yes, it explains the difference.
2. The sales returns total of RM 90 was posted twice to the control account, and the control balance was RM 5,000. Find the corrected control balance.
Show answer
Returns are credits, so posting them twice made the control balance too low by 90. Corrected balance = 5,000 + 90 = RM 5,090.
3. For each error, say whether it changes the control account, the list of balances, or neither. (a) The sales day book was undercast by RM 200. (b) An invoice of RM 60 was posted to the wrong customer’s account. (c) A customer’s account was added up wrongly.
Show answer
(a) Control account only. The day book total, which is posted to the control account, was wrong. (b) Neither. Each wrong account is corrected, but the total of the list does not change. (c) List only. The control account was not involved.
Where this leads next
Once tracing errors feels methodical, try the control accounts practice set for mixed questions. The same reasoning applies to the suspense account and correcting errors and to bank reconciliation. The double-entry and ledger trainer lets you test each correction.
Some students can follow this method when it is laid out, but lose it when the errors arrive unsorted. A teacher in online one-to-one Accounting tuition can help you build your own checking order.