The term "set off" in control account is also called
Answer Details
In bookkeeping and accounting, the term "set off" in control accounts is most commonly referred to as a contra entry.
To explain this in simple terms:
A contra entry occurs when an amount is recorded in both the debit and credit sides of the same account or two related accounts. Essentially, it's an internal transaction.
The main purpose of a contra entry is to offset two entries against each other. This is often used to reflect that part of a transaction has cleared or been offset by another transaction.
For example, if a business has an account that records both money received and money spent, a contra entry would allow the business to show that a certain amount received has effectively been set off by a corresponding expenditure.
It’s important because it provides a method to track the exact operations within a business’s accounts, ensuring transparency and accuracy in financial statements.