Debitoor Dictionary

Accounting terms explained in a simple way

What is the Purchase Ledger Control Account?

The balance on the purchase ledger control account - also referred to as the 'trade creditor control account' - should equal the balances on the individual supplier accounts

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The purchase ledger control account, or trade creditor control account, is part of the balance sheet and shows at any given time how much you owe to your suppliers. All of the individual transactions posted to your supplier ledger are included in this account, so any invoices, credit notes and payments are recorded.

Control accounts are an element of the double-entry bookkeeping method and are used to check the totals found in a company’s balance sheet.

Purpose of a control account

A control account exists for both creditors and debtors and is used to ensure that there are no errors in the ledgers (that any sub-ledgers match up with the general ledger).

The purchase ledger control account should be reconciled each month end making sure it reflects the same balance at the same time as your Aged Creditor report which shows the individual balances outstanding to your suppliers. If there is a difference then this should be investigated.

Purchase ledger control accounts in accounting

The practise of ensuring that the amount in the control accounts and the amounts in the general ledger match is known as ‘reconciliation’. This is typically performed by an accountant who can conduct a thorough investigation of the different amounts.

They must also ensure that the amount listed in the control account is the total of each of the amounts owed by a business to each supplier.

Control accounts in accounting software

More advanced accounting softwares can provide a company with the option to create and manage a purchase ledger control account/trader creditor control account, but these types of programs are typically designed to be used by accountants.

Many online software options today designed for small businesses and those just starting out do not include these extra accounts as they can cause undue complications in managing the financial accounts of a small business.

In Debitoor accounting & invoicing software, the double-entry bookkeeping method is built-in, meaning that when you enter an expense, you can also enter payments on the expense for specific suppliers. The payments show up automatically on internal financial statements that can be generated with a click.