Source Documents And The Ledger Of An Entity Are Linked Together Through Preparation Of Subsidiary Journals. Select One: True. False

The correct answer is “False”, as the Source Documents (e.g., Invoices, Receipts, Memos, etc.) are firstly connected with Subsidiary journals and then connected with Ledgers of an entity. The first Step of Accounting Cycle is the Source Documents where evidences about Business Transactions are collected and recorded and then these transactions are journalized in Subsidiary Journals and afterwards balance of accounts are (posted) transferred to concerned ledgers.

For example, if a sole proprietor (Mr. A) sold goods worth $200 to customer, Mr. B on account, then it is a sales transaction supported by source document i.e., sales receipts for evidence. This transaction is recorded in Subsidiary Sales Journal and then transferred to Sales Ledder and Accounts Receivable Ledger Accounts.

So, source documents are indirectly connected with ledger of an entity i.e., there is a bridge (Subsidiary Journal) between source document and ledger in order to be connected.aicle