Which of the Following Are Advantages of Maintaining a Subsidiary

question 49

Multiple Choice

Which of the following are advantages of maintaining a subsidiary ledger for depreciable assets?
I. It provides information for the preparation of income tax returns.
II. It provides information concerning servicing of the assets.
III. It provides information for internal control over assets.
IV. It provides information to support insurance claims in the event of loss from theft or accident.

• A) I, II and III only
• B) I, II and IV only
• C) II and IV only
• D) I, II, III and IV

---

Definitions:

Merchandise Inventory

Goods that a retailer, distributor, or manufacturer aims to sell to generate revenue, recorded as a current asset on the balance sheet.

Cash Paid

Cash Paid refers to the actual outflow of cash from a company to settle obligations, such as paying for expenses, acquisitions, or dividends.

Notes Payable

Written agreements where the borrower promises to pay back a specified sum of money plus interest to the lender at a future date.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity and overall financial health.