For small businesses, all accounts are recorded in the general ledger only. The double-entry system can be done in the general ledger and the Balance Sheet can be set up at any time to test the accuracy of the double entry. Thus, Account control is not needed.
For a large business, accounts are recorded in a number of ledgers because clerical work is divided into several sections to facilitate administration. Debtors and creditors’ accounts are usually issued from the general ledger and are recorded in separate ledgers.
All Accounts Receivable is recorded under the Debtor’s Ledger or Sales Ledger. All Accounts Payable are recorded in the Creditor’s Ledger or Purchase Ledger. Other accounts such as Asset Account, Liability Account, Nominal Account, Takeout Account, and Capital Account are still recorded in General Ledger.
Since all Accounts Receivable and Accounts Payable have been issued from General Ledger, the Balance Sheet provided under the accounts of General Ledger will not be balanced. Then the Debtors Control Account and Creditors Control Account are provided in General Ledger to take the accounts of the debtor and creditors who have been transferred to a special ledger.
With this way, the complete notes in General Ledger and Balance Sheet can be prepared to test the accuracy of the accounting records.