Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which of the following best describes a subsidiary ledger in the context of receivables?

It is a collection of all accounts with their activity and balances that exist in a business.

It is a summary account that appears in the general ledger and represents the total of all individual accounts.

It is a report showing only overdue accounts receivable.

It is a document used to authorize the extension of credit to customers.

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Verified step by step guidance

Understand the concept of a subsidiary ledger: A subsidiary ledger is a detailed ledger that contains individual accounts for a specific category, such as accounts receivable, accounts payable, or inventory. It provides detailed information about each account within the category.

Recognize the relationship between the subsidiary ledger and the general ledger: The subsidiary ledger supports the general ledger by providing detailed information for a summary account. For example, the accounts receivable subsidiary ledger contains individual customer accounts, while the general ledger has a summary account showing the total receivables.

Eliminate incorrect options: A subsidiary ledger is not a report showing only overdue accounts receivable, nor is it a document used to authorize credit. These descriptions do not align with the purpose of a subsidiary ledger.

Focus on the correct description: A subsidiary ledger is a collection of all accounts with their activity and balances that exist in a business. It provides detailed information for each account, which is summarized in the general ledger.

Connect the concept to the problem: Based on the explanation, the correct answer is the option that describes the subsidiary ledger as a collection of all accounts with their activity and balances that exist in a business.