Preston Ltd Uses a Subsidiary Ledger and Control Account System

question 40

Multiple Choice

Preston Ltd uses a subsidiary ledger and control account system for its accounts receivable. At the end of the accounting period a listing of customers' accounts is prepared from the subsidiary ledger. The purpose of this listing is to:

• A) furnish the amount that should be posted to the accounts receivable control account.
• B) determine whether the debits equal the credits in the subsidiary ledger.
• C) prove that the subsidiary ledger agrees with the control account.
• D) provide information necessary for trial balance preparation.

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Definitions:

Capital Gains

The profit realized from the sale of assets such as stocks, bonds, or real estate, when the selling price exceeds the purchase price.

Marginal Tax Rates

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Total Tax

Total tax refers to the combined amount of all taxes owed by an individual or business entity in a given tax period, including federal, state, and local taxes.

Provincial Tax Brackets

Various income ranges within a province that are taxed at different rates, used to determine the amount of provincial income tax individuals owe.