Question

)c B(a) What are the advantages of using an accounts receiv- able subsidiary ledger? (b) Describe the relationship be- tween the general ledger control account and the subsid ary ledger. What is the purpose of the account Allowance for (SO 2) C Doubtful Accounts? Although the normal balance of this account is a credit balance, it sometimes has a debit balance. Explain how this can happen 81800 Eng cannot understand why net realizable value does under the allowvance method. Clarify this for Soo Eng ypically not the same amount as the allowance for (SO 2) C not decrease when an uncollectible account is written off qui stan 2. Why is the bad debts expense in the income statement doubtful accounts amount in the balance sheet? mig cre 19. The president proudly announces that her company's liquidity has improved. Its current ratio increased sub- stantially this year. Does an increase in the current ratio always indicate improved liquidity? What other ratio(s) might you review to determine whether or not the in- crease in the current ratio is an improvement in the company's financial health?

Answer 1

ANSWER-3)

An accounts receivable subsidiary ledger refers to an accounting ledger that displays the transaction and payment history of each client to whom the business extends credit. The main advantages are as follows:

--It can show, at a glance, the account amounts and status owed by a specific customer

-- It keeps the customer payments tracks and prevents instances of overpayments and other errors in bookkeeping.

-- The aging report indicates how long clients have owed the money, how much and who is past due; thus assists the businesses to gauge client reliability and track the defaulted accounts.

-- Subsidiary accounts receivable ledgers are also a significant tool in detecting internal fraud as well as embezzlement

-- It helps to determine which geographic region is paying more current, which age group is most reliable in remittance, or which industry that the deal with generates majority of the cash flow.