One major advantage of a ledger is that it ____
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Correct Answer: Option D
Explanation:
A ledger is a central component of the accounting system used to record and classify all financial transactions. Its key advantage is versatility — it is suitable for all types of businesses, whether small or large, manufacturing or service-oriented.
Analysis of other options:
A. is a book of original entry – Incorrect. The journal is the book of original entry, not the ledger.
B. is only accessible to shareholders during distribution – Incorrect. Ledgers are for internal accounting, not limited to shareholders.
C. removes the need for preparing a balance sheet after each transaction – Incorrect. Ledgers support the preparation of financial statements but do not eliminate the need for them.
A ledger is a central component of the accounting system used to record and classify all financial transactions. Its key advantage is versatility — it is suitable for all types of businesses, whether small or large, manufacturing or service-oriented.
Analysis of other options:
A. is a book of original entry – Incorrect. The journal is the book of original entry, not the ledger.
B. is only accessible to shareholders during distribution – Incorrect. Ledgers are for internal accounting, not limited to shareholders.
C. removes the need for preparing a balance sheet after each transaction – Incorrect. Ledgers support the preparation of financial statements but do not eliminate the need for them.