The general ledger account representing the subsidiary ledger is known as a control account because:
A) inclusion of both control accounts and subsidiary ledger accounts in the general ledger improves control.
B) the accuracy of the detailed accounts in the subsidiary ledger can be checked against the aggregate data and the balance contained in it.
C) subsidiary ledgers eliminate the need to record totals in the general ledger.
D) it includes all transactions in the subsidiary ledger.

Question

Quizplus · Accepted Answer

A control account is a general ledger account that summarizes the balances of a subsidiary ledger. The inclusion of both control accounts and subsidiary ledger accounts in the general ledger does improve control, but that is not the primary reason for a control account. The purpose of a control account is to verify the accuracy of the detailed accounts in the subsidiary ledger by comparing their total with the balance contained in the control account. Subsidiary ledgers do not eliminate the need to record totals in the general ledger, as control accounts are still needed to summarize the transactions in the subsidiary ledger. Therefore, option B is the best choice as it correctly explains the primary purpose of a control account.

The General Ledger Account Representing the Subsidiary Ledger Is Known