Which of the following statements is correct?
A) A subsidiary ledger requires double entry accounting.
B) A business with three debit customers would need to set up an accounts payable subsidiary ledger.
C) A manual accounting system that has both a control account and a subsidiary ledger for creditors requires transactions for creditors to be recorded twice.
D) Every business must have special journals to record transactions for returns of goods.

Question

Quizplus · Accepted Answer

In a manual accounting system that has both a control account and a subsidiary ledger for creditors, transactions for creditors would need to be recorded twice. This is because the control account records summarized information, while the subsidiary ledger records detailed information about each creditor's account. Therefore, when a transaction is recorded in the subsidiary ledger, it must also be recorded in the control account to ensure the accuracy of the overall accounts payable balance. Option A is incorrect because a subsidiary ledger may be used with single-entry accounting. Option B is incorrect because accounts payable subsidiary ledgers typically record credit purchases, not debit customers. Option D is incorrect because not every business requires special journals for returns of goods.

Which of the Following Statements Is Correct