Final answer:
A control account is a summary account in the ledger that is used to record and monitor the balances of a specific group of subsidiary accounts. Introducing control accounts can benefit Nana by improving accuracy, enhancing efficiency, enabling better financial analysis, and establishing effective internal control.
Step-by-step explanation:
i) Definition of control accounts:
A control account is a summary account in the ledger that is used to record and monitor the balances of a specific group of subsidiary accounts, such as debtors or creditors. It acts as a control mechanism to ensure that the total of the subsidiary accounts matches the balance in the control account.
ii) Benefits of introducing control accounts for Nana:
- Improved accuracy: By keeping control accounts, Nana can easily identify any discrepancies between the total of the subsidiary accounts and the balance in the control account, allowing for prompt correction of errors.
- Enhanced efficiency: Control accounts provide a organized and systematic way of managing and monitoring the balances of debtors and creditors. This allows Nana to quickly access and retrieve relevant information, making the accounting process more efficient.
- Better financial analysis: Control accounts provide a clear overview of the balances owed by debtors and to creditors, helping Nana analyze the financial position of the business. This information can be used to make informed business decisions.
- Effective internal control: Control accounts help in establishing a system of internal control within the business. By regularly reconciling the subsidiary accounts with the control account, Nana can identify any irregularities or fraudulent activities, preventing potential financial losses.