The Thomas Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit.Which of the following statements about the general ledger account is not true?
A)The general ledger account is also called a contra account.
B)The balance of the general ledger account should agree with the total of all of the accounts in the subsidiary ledger.
C)The general ledger account is called a real or permanent account.
D)The general ledger account is properly referred to as a control account.

Question

Quizplus · Accepted Answer

The general ledger account is not called a contra account. A contra account is a separate account that is used to offset another account. Examples of contra accounts include accumulated depreciation, allowance for doubtful accounts, and discount on bonds payable. The general ledger account for accounts receivable is not a contra account because it represents the total amount of accounts receivable for the business, rather than an offset to a separate account.

The Thomas Company Has an Accounts Receivable Account in Its