1.3.2 Control

What is meant by control?

Control refers to the various ways that a business manages that a business is managed to ensure financial targets and plans are achieved. 

Control in this context means if management activities and operations do not go according to plan then corrective actions are taken. 

This is known as management accounting control and it ensures all operations of the business are effective and efficient. 

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Control as an overall function

Control as an overall function of accounting has a different meaning. 

In this sense, it means that the accounting info system is designed to ensure that fit-for-purpose records and reports are maintained. 

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Accounting Control

An accounting control to ensure correct records are kept is a bank reconciliation to ensure that the amount of cash reported on the balance sheet is correct.  

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A second accounting control

Second accounting control is to have two distinct systems of record-keeping to track all credit suppliers and customers in a business. 

  • The one system involves up-to-date, accurate records of individual accounts of credit suppliers and customers. 
  • The other one involves an aggregate record of all the accounts for credit suppliers and customers, each in one combined account. 

For example, the total of all balances for each individual credit customer account is different from the summary account that gives you the overall balance for total receivables in the business, then it will need to be investigated as an error has been made.  

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