How to Create Control Account for Accounts Payable and Link Supplier Subsidiary Accounts

Overview:

A Control Account serves as a summary account in your general ledger, consolidating the detailed transactions recorded in subsidiary accounts. For Accounts Payable, the Control Account reflects the total amount owed to suppliers, while the subsidiary accounts track individual supplier transactions. Setting up and linking these accounts in QNE Software ensures accuracy in financial reporting and streamlines reconciliation processes.

This article provides a step-by-step guide on how to create the Accounts Payable control account in the Chart of Accounts and link it to supplier subsidiary accounts.

Scenario:

Your organization wants to centralize supplier balances in a single Control Account for Accounts Payable while maintaining detailed records for individual suppliers. This setup allows for clear visibility into overall liabilities and detailed transaction tracking.

Procedure:

Step 1: Create the Accounts Payable Control Account

• Navigate to General Ledger > Chart of Accounts. 

• Click on New. 
• Choose Current Liabilities account type as the Parent.
• Enter the following details:
  • Account Code: Assign a unique number (e.g., 301-0000)
  • Account Name: Accounts Payable (or a custom name if preferred)

• Select Creditors Control Account as the Special Account Type.
• Save the new account.

Step 2: Link Supplier Accounts to the Control Account

• Navigate to Account Payable > Suppliers. 

• Review existing supplier records to ensure each supplier account is classified under the appropriate accounts payable Control Acc., based on your company’s accounting structure.  

• If adding new supplier account, assign them to the appropriate accounts payable Control Acc. during the setup. 

Application:

• When bills and purchase invoices are created for linked suppliers, the system will automatically post amounts to the Accounts Payable control account.
  
  
• Payments made to suppliers will reduce the balance in the control account.
  
  
• The Accounts Payable control account will appear on the balance sheet, reflecting total supplier balances. 

• Subsidiary accounts provide detailed records of supplier interactions and outstanding bills and purchase invoices. 

• Periodically reconcile the total in the control account with the sum of individual supplier balances to ensure accuracy.