Control account
In one sentenceAn account in the general ledger that gathers the balances of a group of detail accounts, such as the customers account, which equals the sum of each customer's balance.
Simply put
Instead of filling the general ledger with hundreds of customer names, you put one account in it called “Customers” and track each customer in a separate sub-account.
The golden rule: the control account balance always equals the total of its sub-account balances. If they differ, there is a posting error that must be found.
Worked example
A distribution business has three credit customers at the end of the month.
First customer's balance12,000 SAR
Second customer's balance8,000 SAR
Third customer's balance5,000 SAR
12,000 + 8,000 + 5,00025,000 SAR
The “Customers” control account balance should be25,000 SAR
Formula: Control account balance = Total balances of its sub-accounts
Don't confuse it with
Sub-accountA sub-account tracks one party or item in detail, while the control account gathers them all into one figure.