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Questions and Answers
Which accounting departments typically keep subsidiary ledgers?
Which accounting departments typically keep subsidiary ledgers?
- Customer Service, Production, Research and Development
- Finance, Legal, Information Technology
- Human Resources, Marketing, Sales
- Inventory, Accounts Payable, Payroll, Accounts Receivable (correct)
What is the purpose of separating subsidiary ledgers in different accounting departments?
What is the purpose of separating subsidiary ledgers in different accounting departments?
- To assess the completeness and accuracy of transaction processing
- To detect out-of-balance conditions
- To verify the overall accuracy of accounting data (correct)
- To provide financial statement information
What should the total of account balances in a subsidiary ledger equal to?
What should the total of account balances in a subsidiary ledger equal to?
- The total of account balances in the other subsidiary ledgers
- The total of account balances in the corresponding general ledger control account (correct)
- The total of account balances in the financial statements
- The total of account balances in the journal
What is the purpose of periodically reconciling summary balances from subsidiary accounts, journals, and control accounts?
What is the purpose of periodically reconciling summary balances from subsidiary accounts, journals, and control accounts?
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What will cause an out-of-balance condition that should be detected during the general ledger update?
What will cause an out-of-balance condition that should be detected during the general ledger update?
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Study Notes
Accounting Departments and Subsidiary Ledgers
- Accounts receivable, accounts payable, and payroll departments typically keep subsidiary ledgers.
- The purpose of separating subsidiary ledgers in different accounting departments is to facilitate detailed tracking and recording of specific transactions and accounts.
Subsidiary Ledger Balances
- The total of account balances in a subsidiary ledger should equal the corresponding control account balance in the general ledger.
Reconciling Summary Balances
- The purpose of periodically reconciling summary balances from subsidiary accounts, journals, and control accounts is to ensure accuracy and detect errors.
Out-of-Balance Condition
- An out-of-balance condition that should be detected during the general ledger update is typically caused by a mismatch between the total of subsidiary ledger account balances and the corresponding control account balance.
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