Q4RQ - Horngren'S Financial And Managerial Accounting

Question

When dealing with receivables, give an example of a subsidiary account

Step-by-Step Solution

Answer

All sales and collections from that customer are tracked in that account, along with the balance.

Step 1: Meaning of Subsidiary Account

A subsidiary account brings together linked accounts into a single ledger so they may be quickly added up and studied. Data that has been sorted and put together makes it much simpler to review. Consider the ledger for payments due.

Step 2: Example of subsidiary account while dealing with receivables

For each customer, a business must have a separate accounts receivable account to track payments received from that customer and balances still owing. This account keeps track of all transactions with that customer, including sales and payments, as well as the balance.