The General Ledger Account Representing the Subsidiary Ledger Is Known

question 18

Multiple Choice

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.

---

Definitions:

Fixed Overheads

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance costs.

Estimated Total Cost

An approximation of the total cost associated with a project or production, including all relevant expenses.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, making it more useful for controlling costs and planning.

Static Budget

A fixed budget that does not change or adjust to variations in sales volumes or business activity levels throughout the period.