Edexcel IGCSE Accounting: Trial balance and control accounts (4AC1)

This guide teaches sections 3.1 Trial balance and 3.2 Control accounts of Topic 3, Introduction to control processes, in the Pearson Edexcel International GCSE in Accounting (4AC1) specification, Issue 1, October 2016. Topic 3 belongs to Paper 1, Introduction to Bookkeeping and Accounting, which draws exclusively on topics 1 to 3. Paper 2 builds on the same skills. All figures in this guide are in dollars ($) and every business is invented.

Links: 4AC1 Accounting course hub, printable 4AC1 checklist, free diagnostics. For condensed recall use the revision notes. For exam-style questions with worked answers use the practice questions.

What the specification asks you to do

Section	Outcome	Covered under
3.1a	Explain the purpose of a trial balance	Purpose of a trial balance
3.1b	Prepare a trial balance	Preparing a trial balance
3.1c	Understand the limitations of a trial balance	Limitations
3.2a	Explain the purpose of control accounts	Purpose of control accounts
3.2b	Prepare a trade receivables control account and a trade payables control account	Two worked control accounts

Purpose of a trial balance

A trial balance sets out the balance of every ledger account at one date, in two columns: debit balances on the left and credit balances on the right. Double entry puts every transaction on the debit side of one account and the credit side of another for the same amount. If every entry was made and balanced correctly, the two columns must total the same.

The purposes are:

• To check the arithmetical accuracy of the double entry. Agreeing totals show that debits and credits are equal.
• To supply the figures for the financial statements. The income statement and the statement of financial position take their figures from it.
• To help locate errors. If the totals differ, the size of the difference narrows the search.

Preparing a trial balance

Take the closing balance of each ledger account and place it on the side where it sits. Use these rules.

Debit column	Credit column
Assets: premises, equipment, inventory, trade receivables, bank (if positive), cash	Liabilities: trade payables, loans, bank overdraft
Expenses: wages, electricity, insurance	Income: sales, discount received
Purchases, returns inwards, discount allowed	Returns outwards
Drawings	Capital

Example: Yarrow Lane Bakery, trial balance as at 31 March 2026.

Account	Debit	Credit
Premises	85,000
Ovens and equipment	18,400
Inventory at 1 April 2025	3,100
Purchases	49,600
Returns inwards	1,250
Wages	21,300
Electricity	2,850
Insurance	1,400
Drawings	10,800
Trade receivables	4,750
Bank	6,320
Cash	380
Sales		104,900
Returns outwards		1,900
Trade payables		5,200
Bank loan		15,000
Discount received		640
Capital		77,510
Total	205,150	205,150

Notes on the method:

1. Unless the question gives it as a ledger balance, closing inventory is not in the trial balance. The inventory line is the opening figure, because closing inventory is counted at the year end and dealt with in the financial statements.
2. Give each account one entry only. The balance is the net figure, not the individual transactions.
3. Add each column separately, and show the totals on one line at the foot.
4. Put a bank overdraft in the credit column, because the business owes the bank.

Limitations of a trial balance

Agreeing totals show only that total debits equal total credits. They do not show that every entry is right. The following errors leave the totals equal, so the trial balance cannot reveal them.

Error	Example	Why the totals still agree
Omission	An invoice for 420 is never recorded	No debit and no credit were made
Commission	A 290 sale to Ashby is debited to Alder’s account	Right class of account, wrong person
Original entry	A 380 receipt is entered as 830 on both sides	Both sides use the same wrong amount
Reversal	A rent payment is credited to rent and debited to bank	The two entries are on the wrong sides, but equal
Compensating	Sales is overcast by 200 and wages is overcast by 200	One error cancels the other
Principle	A new oven is debited to purchases, not equipment	Right amount, wrong type of account

Other limits are that the trial balance gives balances at one date only, and it says nothing about whether the amounts are fair.

Errors that do make the totals differ include a one-sided entry (the debit was posted but the credit was not, or the reverse), a different amount on each side, an addition error in a ledger account, and a balance carried down wrongly. For example, a sale of 380 credited to sales with no debit entry makes the credit column bigger by 380. A difference tells you that a mistake exists and gives you its size. It does not tell you where the mistake is. Section 3.3, Correction of errors, covers how to correct these errors and use a suspense account.

Purpose of control accounts

A business with many customers has many accounts in the receivables ledger. It buys from many suppliers, so it has many accounts in the payables ledger. A control account is a summary account for the whole ledger. It is built from the totals of the books of original entry, not from the individual customer or supplier accounts. The purposes are:

• To check the accuracy of the ledger. The closing balance of the control account is set against the sum of the separate customer or supplier balances. If they agree, the ledger is probably right.
• To locate errors. A difference shows the error is in that ledger, so the search is narrower.
• To help prevent fraud. If one person keeps the ledger and another prepares the control account, a concealed fraud is harder.
• To give totals quickly. The control account shows the total of trade receivables or trade payables without adding every account. That helps when preparing the statement of financial position.

Trade receivables control account: layout and sources

Trade receivables are people who owe the business for goods sold on credit. The account is a total version of the receivables ledger, so entries that increase what customers owe go on the debit side and entries that reduce it go on the credit side.

Debit side (increases)	Source of the total
Opening balance b/d	Previous period
Credit sales	Sales day book
Dishonoured cheques	Cash book

Credit side (decreases)	Source of the total
Returns inwards	Sales returns book
Cash and cheques received from customers	Cash book (bank column)
Discount allowed	Cash book (discount column)
Irrecoverable debts written off	Journal
Set-off (contra) with the payables ledger	Journal
Closing balance c/d	Balancing figure

Worked example: Orrin Bell Hardware, year ended 30 June 2026

The records show: customers owed 24,600 at 1 July 2025; credit sales were 96,400; returns inwards were 3,150; cheques and cash received from customers were 82,300; discount allowed was 1,480; irrecoverable debts written off were 900; a customer’s cheque for 640 was dishonoured; and 1,200 owed by a customer was set off against what the business owed that same person as a supplier.

Trade receivables control account
Debit		Credit
Balance b/d	24,600	Returns inwards	3,150
Sales	96,400	Bank	82,300
Bank (dishonoured cheque)	640	Discount allowed	1,480
		Irrecoverable debts	900
		Payables control (contra)	1,200
		Balance c/d	32,610
	121,640		121,640

Check: the credit entries before the balance total 89,030, and 121,640 less 89,030 is 32,610. The balance carried down becomes the trade receivables line in the statement of financial position, provided it agrees with the ledger.

Suppose the list of individual balances in the receivables ledger adds to 32,520. The difference is 90. The bookkeeper might look for a transposed figure, such as a balance of 540 copied as 450. The control account is correct if its entries are right, so the list is suspect first.

Trade payables control account

Trade payables are suppliers the business owes for goods bought on credit. The account is a total version of the payables ledger. Entries that increase what the business owes go on the credit side. Entries that reduce it go on the debit side.

Credit side (increases)	Source
Opening balance b/d	Previous period
Credit purchases	Purchases day book

Debit side (decreases)	Source
Returns outwards	Purchases returns book
Payments to suppliers	Cash book
Discount received	Cash book (discount column)
Set-off (contra) with the receivables ledger	Journal
Closing balance c/d	Balancing figure

Worked example: Tellis Cycles, year ended 30 June 2026

At 1 July 2025 the business owed suppliers 18,900. During the year, credit purchases were 71,250, returns outwards were 2,640, payments to suppliers were 64,800, discount received was 1,215, and 860 owed to a supplier was set off against a balance that supplier owed Tellis Cycles as a customer.

Trade payables control account
Debit		Credit
Returns outwards	2,640	Balance b/d	18,900
Bank	64,800	Purchases	71,250
Discount received	1,215
Receivables control (contra)	860
Balance c/d	20,635
	90,150		90,150

Check: 2,640 + 64,800 + 1,215 + 860 = 69,515, and 90,150 less 69,515 is 20,635.

The two examples use the contra the same way. The set-off reduces both control accounts, because the business no longer expects to receive, nor needs to pay, that amount.

What stays out of a control account

• Cash sales and cash purchases, because they never pass through the ledgers.
• Purchases and sales of non-current assets, even if on credit, because they are not trading transactions.
• Depreciation and other expenses.
• The provision for irrecoverable debts. Only irrecoverable debts actually written off appear.
• Any amount that does not change what customers owe or what suppliers are owed.

A customer who overpays has a credit balance in the receivables ledger. The control account closing balance is the net figure, so the debit balances less any credit balances in the ledger should equal it. Read the question to see how it wants such balances shown.

Common errors

1. Putting the opening trade payables balance on the debit side. Payables are credit balances, so b/d is credit.
2. Using cash sales in the receivables control account.
3. Reversing the sides for returns inwards and returns outwards.
4. Showing dishonoured cheques on the credit side. The customer owes again, so it is a debit.
5. Entering the provision for irrecoverable debts instead of the amount written off.
6. Leaving out the contra, or entering it on only one control account when the question asks for both.
7. Putting the closing inventory in a trial balance. Only the opening figure belongs there.
8. Placing drawings in the credit column. Drawings reduce the owner’s stake, but the account holds a debit balance.

Next steps

Work through the revision notes, then try the practice questions. Use the 4AC1 course hub and the checklist to track coverage.

Frequently asked questions

What is the purpose of a trial balance in Edexcel IGCSE Accounting? A trial balance checks the arithmetical accuracy of the double entry, supplies the figures for the financial statements and helps locate errors. It lists every ledger balance at one date, with debit balances on the left and credit balances on the right.

Why is opening inventory, not closing inventory, in the trial balance? Closing inventory is counted at the year end and dealt with in the financial statements, so the inventory figure in the ledger is the opening balance. Unless the question gives closing inventory as a ledger balance, it does not appear in the trial balance.

What is a control account? A control account is a summary account for a whole ledger, built from the totals of the books of original entry. Its closing balance is compared with the total of the individual customer or supplier balances to check the ledger.

Which side does a dishonoured cheque go on in a trade receivables control account? A dishonoured cheque goes on the debit side, because the customer owes the money again. Entries that increase what customers owe are debits and entries that reduce it are credits.

What is left out of a control account? Cash sales and cash purchases, sales or purchases of non-current assets, depreciation and other expenses, and the provision for irrecoverable debts stay out. Only irrecoverable debts actually written off are included.

Official syllabus

Pearson Edexcel International GCSE in Accounting (4AC1) specification, Issue 1, October 2016, published by Pearson Education Limited – Topic 3 Introduction to control processes, sections 3.1 Trial balance and 3.2 Control accounts.