Which of the following is an example of a sub-account of the liabilities general ledger (GL) account?

• A. Accounts Payable
• B. Retained Earnings
• C. Sales Revenue
• D. Prepaid Expenses

Answer: (A)

Verified step by step guidance

1. Understand the concept of a general ledger (GL) account: A general ledger is a complete record of all financial transactions of a company, categorized into accounts such as assets, liabilities, equity, revenue, and expenses.
2. Focus on the liabilities category: Liabilities represent obligations or debts that a company owes to external parties, such as suppliers, lenders, or creditors.
3. Define sub-accounts: Sub-accounts are specific accounts under a broader category in the general ledger. For example, under liabilities, sub-accounts could include Accounts Payable, Notes Payable, or Accrued Expenses.
4. Analyze the options provided: Accounts Payable is a sub-account under liabilities because it represents amounts owed to suppliers for goods or services received. Retained Earnings, Sales Revenue, and Prepaid Expenses belong to other categories (equity, revenue, and assets, respectively).
5. Conclude that Accounts Payable is the correct example of a sub-account under the liabilities general ledger account.