What is a Payables ledger?

• A. A ledger that keeps individual balances of each supplier
• B. A ledger that tracks customers
• C. A ledger of cash payments
• D. A ledger for internal expenses

Answer: (A)

The payables ledger is a subsidiary ledger that keeps the individual balances owed to each supplier. It sits under the Purchases/Accounts Payable section of the ledgers, and the total of all supplier balances in this ledger should match the general ledger’s Accounts Payable control account. When you buy on credit, you record the amount as a liability to that supplier in their own account within the payables ledger, while the purchases (or expense) are recorded in the appropriate expense account. If you pay a supplier, that supplier’s balance is reduced in the payables ledger and the cash/bank balance is reduced in the cash book, with both updates feeding the control account. For example, owing 400 to Supplier A and 600 to Supplier B means the payables ledger shows those two balances, totaling 1000, which aligns with the Accounts Payable control account. The other options describe different ledgers: tracking customers is the debtors (receivables) ledger; a ledger of cash payments would be the cash book; an internal expenses ledger would be part of the nominal/expense accounts, not the payables ledger.