CAF-5 · Chapter 5 · Question 10 of 10
In an interlocking accounting system, the cost ledger does not maintain cash or bank accounts. Therefore, whenever a financial transaction occurs (like purchasing raw materials on credit), which account is used in the cost ledger to complete the double entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) General Ledger Adjustment Account (or Cost Ledger Control Account)
Explanation
In an interlocking system, the cost ledger only tracks cost flows (materials, labour, overheads). It does not have personal accounts (debtors/creditors) or real accounts (cash/bank). To make the cost ledger self-balancing when an external financial transaction occurs, a "General Ledger Adjustment Account" is used to complete the double entry.
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