Future Business Leaders of America (FBLA) Accounting Practice Test

What must the balance of a controlling account equal?

1. The total of all account balances in the general ledger

2. The total of all the account balances in the subsidiary ledger

3. The total assets of the company

4. The total of all revenue accounts

The correct answer is: The total of all the account balances in the subsidiary ledger

A controlling account is a summary account in the general ledger that consolidates all the transactions from a subsidiary ledger, which contains the detailed individual accounts. For example, in accounts receivable, the controlling account would represent the total amount owed by customers, while the subsidiary ledger would include the individual balances of each customer account. Therefore, the balance of the controlling account must equal the total of all the account balances within the subsidiary ledger. This ensures accuracy and provides a clear picture of the overall financial position in that area. It allows for an organized structure where detailed transactions can be traced back to the summary figures within the general ledger. The other options do not accurately reflect the relationship between controlling accounts and subsidiary ledgers. The total of all account balances in the general ledger encompasses all areas of the business, which is broader than what a controlling account represents. Total assets of the company involve liabilities and equity, and total revenue accounts pertain specifically to income, rather than the balancing of accounts in a specific area. Thus, the correct answer highlights the specific function of controlling accounts in relation to subsidiary accounts.