Control Accounts as Fraud Deterrents

Steps:

• Identify the sales ledger control account as a summary of individual customer balances in the sales ledger.
• Recognize its monthly preparation reconciles the control account total with the sum of individual ledger accounts.
• Understand this reconciliation detects discrepancies, errors, or manipulations early.
• Conclude that regular checks minimize fraud risks by ensuring ledger accuracy.

Why B is correct:

• Control accounts provide an independent verification mechanism, reducing fraud opportunities as per double-entry bookkeeping principles, where mismatches signal potential irregularities.

Why the others are wrong:

• A: Income statements use sales day books or journals, not requiring control accounts directly.
• C: Sales ledger control checks receivables, not payables, which use a separate purchases ledger.
• D: Sales totals come from sales journals, not control accounts focused on balances owed.

Final answer: B