Is purchase ledger control account a debit or credit?

Part of the period end bookkeeping process is to reconcile the balance on the accounts payable control account in the general ledger to the total of the balances each of the supplier accounts in the subsidiary ledger. If the balances do not agree then it means there must be an error in one or both of the ledgers. The purchases journal is totalled for the accounting period, and used to make a double entry posting to the general ledger. The purchases are posted to the debit side of the purchases account, and to the credit side of the accounts payable control account. The use of accounts receivable and accounts payable control accounts creates an accounting system where only the general ledger is self balancing. The subsidiary accounts receivable and payable ledgers have only one sided entries and therefore do not self balance.

• 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.
• Purchases Ledger Control Account is a summary account which checks the arithmetical accuracy of the Purchases Ledger.
• Instead, this information is recorded directly within the general ledger.
• If the discrepancy is significant, then actions such as stock counts can be triggered in order to validate stock and correct the balance sheet and clear the control account.
• The use of accounts receivable and accounts payable control accounts creates an accounting system where only the general ledger is self balancing.

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Accounts Payable Control Account

Day books are just a list of credit transactions (in this case goods and services purchased) and are not part of the double entry process. It can get confusing trying to understand all the different accounting processes and terms. So it’s understandable that a purchase ledger and a sales ledger can get mixed up. The next main type of accounts payable transaction is the payment of cash to the supplier for the outstanding invoice. The information posted to the accounts receivable control account and the source of that information are shown in the table below.

• In a small business the accounts can be kept in one accounting general ledger and a trial balance can be extracted from that ledger.
• Reasons for discrepancies include stock losses and gains yet to be “journaled” and the control account measures the differences and provides financial visibility and control of the value of those.
• The subsidiary ledger allows for tracking transactions within the controlling account in more detail.
• Reconciling the PLCA to the Purchases Ledger will reduce the risk that an error is made when recording credit transactions with suppliers and calculating the amounts owed to suppliers.
• The ledger is useful for segregating into one location a record of the amounts a company spends with its suppliers.
• A purchase ledger is basically a breakdown of all the purchase invoices you have received and whether or not they have been paid.

As detailed previously, the contra amount will be debited to the Purchases Ledger Control Account and credited to the Sales Ledger Control Account. We will also record the contra in the other business’ ledger accounts in the Purchases Ledger and the Sales Ledger. An illustration of how a contra is recorded can be seen in section 3.02 of this course.

B2: 3.05 The Purchases Ledger Control Account

The accounts payable control account or purchases ledger control account, is an account maintained in the general ledger used to record summary transactions relating to accounts payable. The balance on the accounts payable control account at any time reflects the amount outstanding and due to suppliers by the business for credit purchases. Under a manual double-entry bookkeeping system, the totals from the books of prime entry are posted to the General Ledger accounts but individual transactions are posted to supplier accounts in the Purchases Ledger.