Future Business Leaders of America (FBLA) Accounting Practice Test

What is the term for a ledger that is summarized in a controlling account in the general ledger?

1. Sub-ledger

2. Controlling account

3. Permanent account

4. Trial balance

The correct answer is: Controlling account

A ledger that is summarized in a controlling account in the general ledger is referred to as a sub-ledger. This is because the sub-ledger contains detailed records that support the balance of the controlling account, which reflects an aggregate of all the individual accounts within that sub-ledger. Each sub-ledger breaks down transactions into more specific categories, such as accounts receivable or accounts payable, allowing for detailed tracking while maintaining an overall summary in the controlling account. The controlling account serves as a means of consolidating information from multiple sub-ledgers, facilitating easier management and oversight of accounting entries. This structure is essential for ensuring accuracy in financial reporting and enhances the ability to track specific transactions within larger financial categories.