Question

act16 Explain the benefits of maintaining control accounts. Conduct independent research as needed. (150–200 words)

Answer 1

Followings are the benefits of maintaining control accounts;

1. Control accounts are very helpful for the management in decision making because with the help of control accounts management can get summarized information about all transactions of a business entity.

2. Control accounts are helpful in division and specialization of accounting work. As a result accounting work will be performed in more specialized and controlled manner and it will lead to more efficient & accurate accounting work.

3. Contol accounts are very helpful in preparation of financial statements. In other words we can say that financial statements can be prepared quickly and more accurately.

4. Control accounts helpful in more efficient internal control system. Hence internal control system will be improved and more accurate.

5. Control accounts helpful in speedy accounting process because in case of control accounts accountant does not need to handle individual accounts that is why management will get quick & speed accounting information.

6. Control accounts are very useful in identifying errors in subsidiary ledger, so it will be helpful in identifying such errors.

7. Control accounts provide proper checking mechanism.

8. Bulky details are removed that is why information system becomes more speedy & accurate.

9. Control accounts will be more helpful in making proper reconciliation between cost and financial accounts etc.