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The accounts receivable control account is an account in the general ledger which maintains summary postings relating to accounts receivables. The account, which is sometimes referred to as the sales ledger control account, is used to allow the detail of customer transactions to be kept in a separate subsidiary personal account ledger which is not part of the double entry bookkeeping system.
Accounting transaction analysis is part of the accounting cycle, and is the name given to process involved in using information from accounting source documents to firstly identify whether the transaction is an accounting transaction, and then applying the basic bookkeeping rules of debit and credit to break down the transaction into its component parts.
Financial statements are multipurpose documents used by many different parties for different reasons. For this reason financial statements need to be based on a generally agreed accounting framework or structure so that all parties understand how they are produced. Accounting assumptions can be considered to be the foundations on which the framework is based.
When a business has only a small number of accounting transactions then the double entry bookkeeping postings can all be maintained in a single ledger know as the general ledger. As the business expands the number of transactions and accounting staff increases and it becomes impractical to maintain one ledger due to its large size, and the problems of access to the ledger by multiple staff. The solution is to sub-divide the ledger.
In a small business the accounts can be kept in one accounting general ledger and a trial balance can be extracted from that ledger. In a larger business, where the transactions are too many to be managed by one person, subsidiary ledgers such as the accounts receivable ledger (sales ledger) and the accounts payable ledger (purchase ledger) will be opened.
Accounting errors can occur in double entry bookkeeping for a number of reasons. Accounting errors are not the same as fraud, errors happen unintentionally, whereas fraud is a deliberate and intentional attempt to falsify the bookkeeping entries. An accounting error can cause the trial balance not to balance, which is easier to spot, or the error can be such that the trial balance will still balance due to compensating bookkeeping entries, which is more difficult to identify.
Journal Entries are used to record transactions in the Journal.
Most accounting transactions pass through what is called a book of prime entry before they reach the general ledger. Books of prime entry include for example the cash book, purchases day-book, and sales day-book.
There are however entries which do not go through a book of prime entry which are recorded in the Journal using Journal Entries.
The accounting assumptions are supplemented by a number of accounting concepts, which act as guides on how particular business transactions should be reported in financial statements, and allow them to be objective (not subject to bias or influenced by personal feelings or opinions).