Why is "Putting an opening balance on the wrong side" a common mistake in Preparation of Ledger accounts?

Why it happens: Not classifying the account first. How to avoid it: Asset/expense accounts open with a DEBIT balance; liability/income/capital accounts open with a CREDIT balance. Source: 9706 Examiner Reports

Why is "Failing to insert balance c/d / b/d" a common mistake in Preparation of Ledger accounts?

Why it happens: Stopping after listing entries. How to avoid it: Always total the larger side, insert balance c/d on the smaller side, and bring balance b/d down below the totals. Source: 9706 Examiner Reports

Why is "Reconstructing the wrong account to find a missing figure" a common mistake in Preparation of Ledger accounts?

Why it happens: Not matching the unknown to the right account. How to avoid it: Missing credit sales → receivables account; missing credit purchases → payables account; missing drawings/cash → cash account. Source: 9706 Examiner Reports

Why is "Putting discount on the wrong side of a personal account" a common mistake in Preparation of Ledger accounts?

Why it happens: Confusing discount allowed and received. How to avoid it: Discount RECEIVED reduces a payable → debit the supplier. Discount ALLOWED reduces a receivable → credit the customer. Source: 9706 Examiner Reports

Why is "Omitting returns or irrecoverable debts when reconstructing" a common mistake in Preparation of Ledger accounts?

Why it happens: Focusing only on sales and cash. How to avoid it: Include ALL items that change the balance — returns, discounts, irrecoverable debts, contras — or the balancing figure will be wrong. Source: 9706 Examiner Reports

Why is "Showing a customer with a credit balance as normal" a common mistake in Preparation of Ledger accounts?

Why it happens: Mixing up customers and suppliers. How to avoid it: A credit customer normally has a DEBIT balance (they owe us). A credit balance on a customer account is unusual (e.g. an overpayment). Source: 9706 Examiner Reports

Cambridge International A Levels Accounting (9706)

Preparation of Ledger accounts

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Detailed Study Notes

Detailed notes on The Accounting system for Cambridge International A Levels Accounting, covering key concepts, explanations, examples, and exam-focused revision points.

Preparation of Ledger Accounts — Cambridge AS & A Level Accounting 9706 Study Notes (2026-2028)

Turn double entry into accurate, balanced ledger accounts. Learn the three ledgers, how to prepare and balance every common account, and the high-value exam skill of reconstructing an account to find a missing figure (such as credit sales or drawings) — the backbone of incomplete-records and control-account questions.

At a glance

Three ledgers: sales ledger (customers), purchases ledger (suppliers), nominal/general ledger (everything else).
Each account is balanced off to find its closing balance (balance c/d → b/d).
Debit balance = asset/expense; credit balance = liability/income/capital.
Personal accounts (customers/suppliers) come from the journals; nominal accounts hold totals.
Reconstructing an account lets you find a missing figure (e.g. credit sales, drawings, cash stolen).
Accuracy here feeds directly into the trial balance and the financial statements.

What you’ll learn

Mapped to the Cambridge International A Level 9706 syllabus (2026-2028).

1.2.1 — Prepare ledger accounts and balance them off.
1.2.1 — Understand the division of the ledger into sales, purchases and nominal ledgers.
Link 1.4.4 / 1.5.2 — reconstructing ledger accounts to find missing figures.

The three ledgers

Accounts are organised into the sales, purchases and nominal ledgers.

For control and convenience, the ledger is divided into three:

Ledger	Contains	Examples
Sales (receivables) ledger	Personal accounts of credit customers	Each customer's account
Purchases (payables) ledger	Personal accounts of credit suppliers	Each supplier's account
Nominal (general) ledger	All impersonal accounts	Sales, purchases, expenses, assets, capital, bank*

*The cash book is often treated as a separate book but functions as the bank/cash account.

This division allows division of labour, easier control (via control accounts, 1.4.4), and quicker location of an individual customer or supplier balance.

Sales ledger = customers; purchases ledger = suppliers; nominal ledger = everything else.
Personal accounts (customers/suppliers) vs impersonal (nominal) accounts.
Division supports control accounts and division of labour.

Preparing and balancing an account

Enter each transaction on the correct side, then balance off.

To prepare any ledger account:

Enter the opening balance (b/d) on the correct side (debit for an asset/expense, credit for a liability/income/capital).
Post each transaction to the correct side, with the contra (opposite-account) narrative.
Balance off: total the larger side, insert balance c/d on the smaller side, then bring balance b/d down.

Worked example — a customer (J Cole) account:

Dr	$	Cr	$
Balance b/d	500	Bank	1 800
Sales	1 400	Sales returns	100
Sales	600	Balance c/d	600
	2 500		2 500
Balance b/d	600

J Cole still owes $600 (a debit balance — a trade receivable).

Opening balance on the natural side (asset = debit).
Post transactions with the contra narrative.
Balance off: total, balance c/d, balance b/d.
A customer account normally has a debit (receivable) balance.

See the full worked example for preparation of ledger accounts →

Reconstructing an account to find a missing figure

Put in everything you know, then the balancing figure is the unknown.

One of the most valuable exam skills: if you know all the entries in an account except one, the balancing figure is the missing item. This solves incomplete-records and control-account questions.

The method:

Draw the account and enter the opening and closing balances.
Enter every known transaction.
The figure needed to balance is the unknown.

Example — find credit sales from the trade receivables account:

Dr	$	Cr	$
Balance b/d	8 000	Bank (from customers)	60 000
Credit sales (?)	? = 64 000	Discount allowed	1 000
		Balance c/d	11 000
	72 000		72 000

Total credits = 60,000 + 1,000 + 11,000 = 72,000. So credit sales = 72,000 − 8,000 = $64,000 (the balancing figure on the debit side).

Enter opening + closing balances and all known entries.
The balancing figure is the missing item.
Used to find credit sales/purchases, drawings, cash stolen, etc.
The cornerstone of incomplete-records questions.

See the full worked example for preparation of ledger accounts →

Control accounts (an introduction)

A summary account that checks a whole ledger — built from the same entries as the personal accounts.

A control account is a single account that summarises a whole ledger. The sales ledger control account mirrors all the customers' personal accounts; the purchases ledger control account mirrors all the suppliers' accounts. Its balance should equal the total of the individual balances in that ledger.

Sales ledger control account — what goes where:

Debit (increase receivables)	Credit (decrease receivables)
Opening balance b/d	Cash/bank received
Credit sales	Discount allowed
Dishonoured cheques	Sales returns
Interest charged to customers	Irrecoverable debts written off
	Contra with purchases ledger
	Closing balance c/d

The purchases ledger control account is the mirror image (opening balance and credit purchases on the credit side; payments, discount received, purchases returns and contras on the debit side).

Why they matter:

Check: if the control balance ≠ the sum of the personal accounts, there is an error in that ledger — the control account localises the search.
Speed: they give an instant total of receivables/payables for the financial statements.
Limitation: they do not catch every error (e.g. posting to the wrong customer leaves the total unchanged), and they rely on accurate totals from the books of prime entry.

Control account = a summary of a whole ledger; its balance = total of the personal accounts.
Sales ledger control: Dr opening balance, credit sales, dishonoured cheques; Cr receipts, discount allowed, returns, irrecoverable debts, contra.
Purchases ledger control is the mirror image.
They localise errors and total receivables/payables quickly, but miss some errors.

See the full worked example for preparation of ledger accounts →

Accruals and prepayments in ledger accounts

Expense and income accounts carry opening/closing balances that adjust the charge or income.

Applying the matching concept through the ledger is a core A-Level skill. An expense account can carry:

an opening prepayment (a debit balance b/d — paid in advance last year);
an opening accrual (a credit balance b/d — owed at the start);
a closing prepayment (credit balance c/d → debit b/d next year);
a closing accrual (debit balance c/d → credit b/d next year).

The charge to the statement of profit or loss is the balancing figure once payments and these balances are entered.

Rule of thumb for an expense:

$\text{Charge} = \text{Paid} + \text{Opening prepaid} - \text{Opening accrued} - \text{Closing prepaid} + \text{Closing accrued}$

Income accounts (e.g. rent receivable) work in mirror image:

opening received in advance = credit b/d; closing accrued income (owed to us) = debit b/d;
the income credited to the SOPL is the balancing figure.

$\text{Income} = \text{Received} + \text{Opening received in advance} - \text{Opening accrued income} - \text{Closing received in advance} + \text{Closing accrued income}$

Expense account: opening prepaid (Dr), opening accrual (Cr); closing prepaid (Cr c/d), closing accrual (Dr c/d).
SOPL charge = the balancing figure (= paid + opening prepaid − closing prepaid + closing accrual − opening accrual).
Income accounts are the mirror image (received in advance vs accrued income).
A prepayment is a current asset; an accrual is a current liability.

See the full worked example for preparation of ledger accounts →

Quick recap

Three ledgers: sales (customers), purchases (suppliers), nominal (impersonal).
Prepare an account: opening balance → transactions → balance off (c/d, b/d).
Debit balance = asset/expense; credit balance = liability/income/capital.
Reconstruct an account by entering all known items; the balancing figure is the unknown.
Match the account to the missing figure (receivables → credit sales, etc.).

Memorise this

Verbatim phrases and definitions Cambridge mark schemes credit.

Sales ledger = customers; purchases ledger = suppliers; nominal ledger = everything else.
Balance off: total the larger side, insert balance c/d, bring down balance b/d.
The balancing figure in a reconstructed account = the missing item.

How it’s examined

Tested on Paper 2/Paper 3 through Prepare the [named] account tasks (commonly 4-6 marks, marked per correct entry and balance) and as the engine of incomplete-records and control-account questions where a missing figure must be found. Examiner reports note errors in opening-balance sides and omitted balance c/d.

Sources: Cambridge International AS & A Level Accounting 9706 syllabus (2026-2028); 9706/22 Paper 2 question paper & mark scheme, Feb/Mar 2024; 9706 Examiner Reports (Paper 1 & Paper 2), 2022-2024. Last reviewed 2026-06-17.

Take this whole topic with you

Step-by-step worked examples — Preparation of Ledger accounts

Step-by-step solutions to past-paper-style questions on preparation of ledger accounts, written exactly the way a tutor would explain them at the board.

Question type:

1Identify the correct ledger (3 marks)
Getting startedIdentify & classify• 9706 Paper 1/2 style• ledgers, AO1
Question
State which ledger holds each account: (i) a credit customer; (ii) the rent expense account; (iii) a credit supplier. (3 marks)
Step-by-step solution
1. Step 1
  (i) Credit customer → sales (receivables) ledger.
2. Step 2
  (ii) Rent expense → nominal (general) ledger.
3. Step 3
  (iii) Credit supplier → purchases (payables) ledger.
Answer
(i) Sales ledger; (ii) Nominal ledger; (iii) Purchases ledger.
Examiner tip
Personal accounts → sales/purchases ledgers; impersonal → nominal ledger.
2Prepare and balance a customer account (5 marks)
Building confidenceMulti-step problem• 9706 Paper 2 style• ledger, balancing, AO1, AO2
Question
Prepare the account of credit customer R Diaz and balance it off: 1 Aug balance owing $400; 5 Aug sold goods on credit$ 2,000; 9 Aug R Diaz returned goods $150; 22 Aug received cheque$ 1,800. (5 marks)
Step-by-step solution
1. Step 1
  Debit: balance b/d 400; sales 2,000.
2. Step 2
  Credit: sales returns 150; bank 1,800.
3. Step 3
  Debit total 2,400; credit so far 1,950 → balance c/d 450 (credit side).
4. Step 4
  Both sides total 2,400; balance b/d 450 (debit side).
Answer
Closing balance $450 debit (R Diaz still owes$ 450).
Examiner tip
Opening balance on the debit side (asset). Returns and the cheque are credits. Balance is a debit (receivable).
3Prepare and balance a supplier account (5 marks)
Building confidenceMulti-step problem• ledger, payables, AO2
Question
Prepare the account of supplier T Wong: 1 Sep balance owed $1,200; 4 Sep bought goods on credit$ 3,000; 10 Sep returned goods $400; 25 Sep paid$ 2,500 by cheque, taking $100 discount. (5 marks)
Step-by-step solution
1. Step 1
  Credit: balance b/d 1,200; purchases 3,000.
2. Step 2
  Debit: purchases returns 400; bank 2,500; discount received 100.
3. Step 3
  Credit total 4,200; debit so far 3,000 → balance c/d 1,200 (debit side).
4. Step 4
  Both sides total 4,200; balance b/d 1,200 (credit side).
Answer
Closing balance $1,200 credit (still owed to T Wong).
Examiner tip
A supplier is a credit balance. Discount received is debited in the supplier's account (it reduces what is owed).
4Reconstruct receivables to find credit sales (6 marks)
StretchMulti-step problem• 9706 Paper 2 incomplete-records style• reconstruction, incomplete records, AO2
Question
Trade receivables were $9,000 at the start and$ 11,500 at the end of the year. During the year: receipts from customers $72,000; discount allowed$ 1,500; irrecoverable debts written off $800. Calculate the credit sales for the year. (6 marks)
Step-by-step solution
1. Step 1
  Draw the total trade receivables account.
2. Step 2
  Debit: balance b/d 9,000; credit sales (?).
3. Step 3
  Credit: bank 72,000; discount allowed 1,500; irrecoverable debts 800; balance c/d 11,500.
4. Step 4
  Total credits = 72,000 + 1,500 + 800 + 11,500 = 85,800.
5. Step 5
  Credit sales = 85,800 − 9,000 = $76,800 (balancing figure).
Answer
Credit sales = $76,800.
Examiner tip
Credit sales is the balancing figure on the debit side. Discount allowed and irrecoverable debts reduce receivables (credits).
5Reconstruct cash to find drawings (6 marks)
StretchMulti-step problem• reconstruction, drawings, AO2
Question
Cash in hand was $500 at the start and$ 300 at the end. During the year: cash sales received $40,000; cash paid to suppliers$ 25,000; cash expenses $6,000. The remaining cash was taken as drawings. Calculate the drawings. (6 marks)
Step-by-step solution
1. Step 1
  Draw the cash account.
2. Step 2
  Debit: balance b/d 500; cash sales 40,000 → total 40,500.
3. Step 3
  Credit: suppliers 25,000; expenses 6,000; balance c/d 300; drawings (?).
4. Step 4
  Known credits = 25,000 + 6,000 + 300 = 31,300.
5. Step 5
  Drawings = 40,500 − 31,300 = $9,200 (balancing figure).
Answer
Drawings = $9,200.
Examiner tip
Drawings is the cash unaccounted for — the balancing figure on the credit side of the cash account.
6Explain the benefit of dividing the ledger (4 marks)
StretchWord problem• ledgers, AO2
Question
Explain two benefits to a business of dividing its ledger into separate sales, purchases and nominal ledgers. (4 marks)
Step-by-step solution
1. Step 1
  Division of labour / efficiency. Different staff can maintain different ledgers, speeding up bookkeeping.
2. Step 2
  Control and easier checking. Each ledger can be checked against a control account, and individual customer/supplier balances are quicker to find.
Answer
Division of labour (different staff per ledger) and better control (control accounts + quick access to individual balances).
Examiner tip
Link the division to control accounts (1.4.4) for a developed point.
7Prepare a full sales ledger control account (8 marks)
StretchMulti-step problem• 9706 Paper 2/3 style• control account, comprehensive, AO2
Question
Prepare the sales ledger control account and find the closing balance. Opening trade receivables $15,000. During the year: credit sales$ 90,000; receipts from customers $82,000; discount allowed$ 1,800; sales returns $2,200; irrecoverable debts written off$ 700; contra with the purchases ledger $1,300; a customer's dishonoured cheque$ 500. (8 marks)
Step-by-step solution
1. Step 1
  Debit side (increases receivables): balance b/d 15,000; credit sales 90,000; dishonoured cheque 500 → total 105,500.
2. Step 2
  Credit side (decreases receivables): bank 82,000; discount allowed 1,800; sales returns 2,200; irrecoverable debts 700; contra 1,300.
3. Step 3
  Known credits = 82,000 + 1,800 + 2,200 + 700 + 1,300 = 88,000.
4. Step 4
  Balance c/d = 105,500 − 88,000 = $17,500 (closing trade receivables).
Answer
Closing trade receivables = $17,500.
Examiner tip
A dishonoured cheque is a DEBIT (it reinstates the debt); discounts allowed, returns, irrecoverable debts and contras are all credits.
8Expense account with prepayment and accrual (6 marks)
StretchMulti-step problem• 9706 Paper 2/3 style• accruals, prepayments, AO2
Question
Prepare the insurance account and find the charge to the statement of profit or loss: 1 Jan insurance prepaid $300; paid during the year$ 4,200 by cheque; 31 Dec insurance accrued (owing) $250. (6 marks)
Step-by-step solution
1. Step 1
  Debit: balance b/d (prepaid) 300; bank 4,200; balance c/d (accrual owing) 250.
2. Step 2
  Debit total = 300 + 4,200 + 250 = $4,750.
3. Step 3
  Credit: the balancing figure is the charge to the statement of profit or loss = $4,750.
4. Step 4
  The $250 accrual is then brought down as a credit balance (a current liability).
Answer
Charge to SOPL = $4,750 (= 4,200 paid + 300 opening prepaid + 250 closing accrual);$ 250 accrual carried forward.
Examiner tip
Opening prepayment (Dr) and closing accrual (added) both increase the charge. The accrual is a credit balance b/d (liability).
9Reconstruct the capital account to find drawings (5 marks)
Building confidenceMulti-step problem• capital account, reconstruction, AO2
Question
Opening capital $40,000; profit for the year$ 18,000; capital introduced $5,000; closing capital$ 52,000. Reconstruct the capital account to find the drawings. (5 marks)
Step-by-step solution
1. Step 1
  Credit side: balance b/d 40,000; profit 18,000; capital introduced 5,000 = 63,000.
2. Step 2
  Debit side: drawings (?); balance c/d 52,000.
3. Step 3
  Drawings = 63,000 − 52,000 = $11,000 (the balancing figure).
Answer
Drawings = $11,000.
Examiner tip
Profit and capital introduced are credits; drawings and the closing balance are debits. Drawings is the balancing figure.
10Rent receivable (income) account (6 marks)
StretchMulti-step problem• income account, accrued income, AO2
Question
A business sublets part of its premises. Prepare the rent receivable account and find the amount credited to the statement of profit or loss: 1 Jan rent received in advance $400; received during the year$ 9,600; 31 Dec rent owing to the business (accrued income) $700. (6 marks)
Step-by-step solution
1. Step 1
  Rent receivable is an income account. Credit side: balance b/d (received in advance) 400; bank 9,600; balance c/d (accrued income) 700 = 10,700.
2. Step 2
  Debit side: the balancing figure is the income to the statement of profit or loss = $10,700.
3. Step 3
  The $700 accrued income is brought down as a debit balance (a current asset — owed to the business).
Answer
Income credited to SOPL = $10,700 (= 9,600 received + 400 opening advance + 700 closing accrued).
Examiner tip
For income, opening 'received in advance' is a credit b/d and closing 'accrued income' is added; accrued income is a debit balance (asset).

Model Answers — Preparation of Ledger accounts

High-scoring sample answers for preparation of ledger accounts on the Cambridge IGCSE paper, with examiner-style notes mapping each response to the mark scheme and assessment objectives.

Question 1
9706 Paper 2 style3 marks
Q (3 marks). State the ledger in which each account is kept: (a) a credit supplier; (b) the sales account; (c) a credit customer.
Model answer
(a) Credit supplier → purchases (payables) ledger. (b) Sales account → nominal (general) ledger. (c) Credit customer → sales (receivables) ledger.
Why this scores
Marking (point-based, 3). 1 mark each. Personal accounts in the sales/purchases ledgers; impersonal in the nominal ledger.
Question 2
9706 Paper 2 style4 marks
Q (4 marks). Prepare and balance the rent payable account: 1 Jan balance owing (accrual) $200; paid by cheque during the year$ 4,800; 31 Dec rent owing $300.
Model answer
Rent payable account

Dr $ Cr $
Bank 4 800 Balance b/d 200
Balance c/d 300 Statement of profit or loss 4 900
5 100 5 100
Balance b/d 300

The charge to the statement of profit or loss is $4,900 (the balancing figure), and $300 is owing at the year end.
Why this scores
Marking (point-based, 4). Opening accrual on the credit side (1); bank payment on the debit (1); closing accrual balance c/d $300 (1); SOPL charge$ 4,900 (1, OF).
Question 3
9706 Paper 2 style5 marks
Q (5 marks). Prepare the account of credit customer L Ahmed and balance it off: 1 Mar balance owing $650; 8 Mar credit sales$ 1,900; 15 Mar L Ahmed returned goods $250; 28 Mar received$ 1,600 by bank transfer and allowed $50 discount.
Model answer
L Ahmed account

Dr $ Cr $
Balance b/d 650 Sales returns 250
Sales 1 900 Bank 1 600
Discount allowed 50
Balance c/d 650
2 550 2 550
Balance b/d 650

L Ahmed still owes $650.
Why this scores
Marking (point-based, 5). Opening balance debit (1); sales debit (1); returns credit (1); bank + discount allowed credits (1); balance c/d/b/d $650 (1). Discount allowed is credited in the customer's account.
Question 4
9706 Paper 2 incomplete-records style6 marks
Q (6 marks). Trade payables were $7,200 at the start and$ 8,000 at the end of the year. During the year the business paid suppliers $54,000 by cheque, received$ 1,200 discount and returned goods worth $900. Calculate the credit purchases for the year.
Model answer
Reconstruct the total trade payables account:

Dr $ Cr $
Bank 54 000 Balance b/d 7 200
Discount received 1 200 Credit purchases (?) ? = 56 900
Purchases returns 900
Balance c/d 8 000
64 100 64 100

Debit total = 54,000 + 1,200 + 900 + 8,000 = 64,100. Credit purchases = 64,100 − 7,200 = $56,900.
Why this scores
Marking (point-based, 6). Correct account chosen (1); opening/closing balances (1); bank, discount received, returns entered correctly (2); arithmetic (1); credit purchases $56,900 (1, OF).
Question 5
9706 Paper 2 incomplete-records style7 marks
Q (7 marks). A shop's cash records are incomplete. Cash float was $400 at the start and$ 400 at the end. During the year: cash sales $95,000; cash banked$ 80,000; cash expenses paid $7,000; owner's cash drawings$ 6,000. The owner suspects cash has been stolen. (a) Calculate the amount of cash missing (presumed stolen). (b) State one internal control that would reduce this risk.
Model answer
(a) Cash account

Dr $ Cr $
Balance b/d 400 Cash banked 80 000
Cash sales 95 000 Expenses 7 000
Drawings 6 000
Cash stolen (?) ? = 2 000
Balance c/d 400
95 400 95 400

Known credits = 80,000 + 7,000 + 6,000 + 400 = 93,400. Cash stolen = 95,400 − 93,400 = $2,000 (the balancing figure).

(b) Control. Bank all cash takings promptly and intact daily, and separate the duties of receiving cash and recording it (segregation of duties), so takings can be reconciled and theft detected.
Why this scores
Marking (point-based, 7). Cash account with opening/closing balances (1); cash sales debit (1); banked, expenses, drawings credits (3); cash stolen $2,000 as balancing figure (1); valid control (1).
Question 6
9706 Paper 2 style6 marks
Q (6 marks). Explain how a business that has not kept full double entry records can still calculate its credit sales for the year, and state two pieces of information it would need.
Model answer
The business can reconstruct the total trade receivables account. By entering everything it does know, the missing credit sales appears as the balancing figure.

The information needed includes:

The opening and closing balances of trade receivables.

The money received from credit customers during the year. And, to be accurate, any discount allowed, irrecoverable debts written off, sales returns and contra entries.

Method: enter the opening balance and credit sales (unknown) on the debit side, and the receipts, discounts, irrecoverable debts, returns and closing balance on the credit side; the figure required to balance the account is the credit sales for the year.
Why this scores
Marking (point-based, 6). Explanation of reconstructing the receivables account / balancing figure (~3); two valid pieces of information (2); recognising other adjusting items (~1).
Question 7
9706 Paper 2 style5 marks
Q (5 marks). A business sublets part of its premises. Prepare the rent receivable account and find the amount credited to the statement of profit or loss: 1 January rent received in advance $500; received during the year$ 7,200; 31 December rent owing to the business (accrued income) $600.
Model answer
Rent receivable account

Dr $ Cr $
Statement of profit or loss 8 300 Balance b/d (received in advance) 500
Bank 7 200
Balance c/d (accrued income) 600
8 300 8 300
Balance b/d (accrued income) 600

Income credited to the statement of profit or loss = $8,300 (= 7,200 received + 500 opening advance + 600 closing accrued).
Why this scores
Marking (point-based, 5). Opening 'received in advance' as a credit b/d (1); bank received (1); closing accrued income as balance c/d (1); SOPL income $8,300 (1); accrued income b/d as a debit/asset (1).

Dr	$	Cr	$
Bank	4 800	Balance b/d	200
Balance c/d	300	Statement of profit or loss	4 900
	5 100		5 100
		Balance b/d	300

Dr	$	Cr	$
Balance b/d	650	Sales returns	250
Sales	1 900	Bank	1 600
		Discount allowed	50
		Balance c/d	650
	2 550		2 550
Balance b/d	650

Dr	$	Cr	$
Bank	54 000	Balance b/d	7 200
Discount received	1 200	Credit purchases (?)	? = 56 900
Purchases returns	900
Balance c/d	8 000
	64 100		64 100

Dr	$	Cr	$
Balance b/d	400	Cash banked	80 000
Cash sales	95 000	Expenses	7 000
		Drawings	6 000
		Cash stolen (?)	? = 2 000
		Balance c/d	400
	95 400		95 400

Dr	$	Cr	$
Statement of profit or loss	8 300	Balance b/d (received in advance)	500
		Bank	7 200
		Balance c/d (accrued income)	600
	8 300		8 300
Balance b/d (accrued income)	600

Question 8

9706 Paper 2/3 style9 marks

Q (9 marks). Prepare the sales ledger control account for the month and find the closing balance. Opening trade receivables $24,000. During the month: credit sales$ 118,000; cash/bank received from customers $104,000; discount allowed$ 2,600; sales returns $3,100; irrecoverable debts written off$ 900; a customer's dishonoured cheque $1,200; a contra (set-off) with the purchases ledger$ 1,500.

Model answer

Sales ledger control account

Dr	$	Cr	$
Balance b/d	24 000	Bank	104 000
Credit sales	118 000	Discount allowed	2 600
Dishonoured cheque	1 200	Sales returns	3 100
		Irrecoverable debts	900
		Contra (purchases ledger)	1 500
		Balance c/d	31 100
	143 200		143 200
Balance b/d	31 100

Closing trade receivables = $31,100.

Why this scores

Marking (point-based, 9). Debits: opening balance, credit sales, dishonoured cheque (3). Credits: bank, discount allowed, sales returns, irrecoverable debts, contra (5). Balance c/d $31,100 (1, OF). The dishonoured cheque is a debit; the contra is a credit.

Question 9
9706 Paper 2/3 style6 marks
Q (6 marks). (a) State two benefits of preparing control accounts. (b) State two limitations of control accounts. (c) Explain how a control account helps a business locate errors.
Model answer
(a) Benefits:

They provide a check on the accuracy of the sales/purchases ledger (the control total should equal the sum of the individual balances).

They give a quick total of receivables or payables without adding up every personal account.

(b) Limitations:

They do not reveal every error — for example, an error of commission (posting to the wrong customer) leaves the control total unchanged.

They are only as reliable as the figures entered; an error in the totals from the books of prime entry will be carried into the control account.

(c) Locating errors: if the control account balance does not agree with the total of the individual balances in the ledger, it signals that an error exists in that ledger and directs the search to it, rather than the whole set of books.
Why this scores
Marking (point-based, 6). 1 mark per valid benefit (2), per valid limitation (2), and ~2 for explaining how disagreement directs the search for errors.
Question 10
9706 Paper 2 style6 marks
Q (6 marks). Prepare the insurance account and state the charge to the statement of profit or loss: 1 January insurance prepaid $250; paid during the year$ 3,900 by cheque; 31 December insurance accrued (owing) $180.
Model answer
Insurance account

Dr $ Cr $
Balance b/d (prepaid) 250 Statement of profit or loss 4 330
Bank 3 900
Balance c/d (accrual) 180
4 330 4 330
Balance b/d (accrual) 180

Charge to the statement of profit or loss = $4,330 (= 3,900 paid + 250 opening prepaid + 180 closing accrual).
Why this scores
Marking (point-based, 6). Opening prepaid as debit b/d (1); bank paid (1); closing accrual as balance c/d on the debit side (1); SOPL charge $4,330 (2); accrual b/d as a credit balance/liability (1).

Dr	$	Cr	$
Balance b/d (prepaid)	250	Statement of profit or loss	4 330
Bank	3 900
Balance c/d (accrual)	180
	4 330		4 330
		Balance b/d (accrual)	180

Key Definitions and Keywords — Preparation of Ledger accounts

Definitions to memorise and the exact keywords mark schemes credit for preparation of ledger accounts answers — sharpened from recent examiner reports for the 2026 Cambridge IGCSE sitting.

Ledger
Examiner keyword
The collection of all the accounts of a business; divided into the sales, purchases and nominal ledgers.
Sales (receivables) ledger
Examiner keyword
The ledger containing the personal accounts of credit customers.
Purchases (payables) ledger
Examiner keyword
The ledger containing the personal accounts of credit suppliers.
Nominal (general) ledger
Examiner keyword
The ledger containing all impersonal accounts — sales, purchases, expenses, income, assets and capital.
Personal account
An account for a person or business (a customer or supplier).
Impersonal account
An account that is not for a person — e.g. sales, rent, machinery (nominal/real accounts).
Balancing figure
Examiner keyword
The figure needed to make the two sides of an account agree; used to find a missing amount in a reconstructed account.
Reconstructing an account
Examiner keyword
Drawing up an account from known information so that an unknown item appears as the balancing figure (used in incomplete records).
Discount received
A reduction given by a supplier for prompt payment; in the supplier's account it is debited (it reduces the amount owed).

Common Mistakes and Misconceptions — Preparation of Ledger accounts

The traps other students keep falling into on preparation of ledger accounts questions — taken from recent Cambridge IGCSE examiner reports and mark schemes — and how to avoid them.

✕Putting an opening balance on the wrong side
9706 Examiner Reports
Why it happens
Not classifying the account first.
How to avoid it
Asset/expense accounts open with a DEBIT balance; liability/income/capital accounts open with a CREDIT balance.
✕Failing to insert balance c/d / b/d
9706 Examiner Reports
Why it happens
Stopping after listing entries.
How to avoid it
Always total the larger side, insert balance c/d on the smaller side, and bring balance b/d down below the totals.
✕Reconstructing the wrong account to find a missing figure
9706 Examiner Reports
Why it happens
Not matching the unknown to the right account.
How to avoid it
Missing credit sales → receivables account; missing credit purchases → payables account; missing drawings/cash → cash account.
✕Putting discount on the wrong side of a personal account
9706 Examiner Reports
Why it happens
Confusing discount allowed and received.
How to avoid it
Discount RECEIVED reduces a payable → debit the supplier. Discount ALLOWED reduces a receivable → credit the customer.
✕Omitting returns or irrecoverable debts when reconstructing
9706 Examiner Reports
Why it happens
Focusing only on sales and cash.
How to avoid it
Include ALL items that change the balance — returns, discounts, irrecoverable debts, contras — or the balancing figure will be wrong.
✕Showing a customer with a credit balance as normal
9706 Examiner Reports
Why it happens
Mixing up customers and suppliers.
How to avoid it
A credit customer normally has a DEBIT balance (they owe us). A credit balance on a customer account is unusual (e.g. an overpayment).

Preparation of Ledger accounts

Detailed Study Notes

At a glance

What you’ll learn

Quick recap

Memorise this

How it’s examined

Take this whole topic with you

1Identify the correct ledger (3 marks)

2Prepare and balance a customer account (5 marks)

3Prepare and balance a supplier account (5 marks)

4Reconstruct receivables to find credit sales (6 marks)

5Reconstruct cash to find drawings (6 marks)

6Explain the benefit of dividing the ledger (4 marks)

7Prepare a full sales ledger control account (8 marks)

8Expense account with prepayment and accrual (6 marks)

9Reconstruct the capital account to find drawings (5 marks)

10Rent receivable (income) account (6 marks)

Ledger

Sales (receivables) ledger

Purchases (payables) ledger

Nominal (general) ledger

Personal account

Impersonal account

Balancing figure

Reconstructing an account

Discount received

✕Putting an opening balance on the wrong side

✕Failing to insert balance c/d / b/d

✕Reconstructing the wrong account to find a missing figure

✕Putting discount on the wrong side of a personal account

✕Omitting returns or irrecoverable debts when reconstructing

✕Showing a customer with a credit balance as normal