Subsidiary Ledgers in a Manual Accounting System Have Three Main

question 8

Multiple Choice

Subsidiary ledgers in a manual accounting system have three main advantages. Which of the following is not one of those advantages?

• A) They dramatically reduce the occurrence of bad debts.
• B) They remove a mass of detail from the general ledger.
• C) They allow a division of labour in maintaining the general and subsidiary ledgers.
• D) They improve internal control through the reconciliation of the control account with the subsidiary ledger.

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Definitions:

Return on Assets

This measures how effectively a company uses its assets to generate profit, calculated by dividing net income by total assets.

Disposal

The act of getting rid of an asset through sale, exchange, retirement, or destruction.

Continuing Operations

The segments or activities of a business expected to continue for the foreseeable future, excluding any discontinued operations from financial analysis.

Discontinued Operations

Components of a business that have been sold or terminated, which are reported separately in the financial statements.