Which ledger shows the balances for individual suppliers?

• A. The purchases ledger shows the balances for each supplier.
• B. The purchases ledger records cash receipts from customers.
• C. The purchases ledger records only the day book entries.
• D. The purchases ledger tracks inventory levels.

Answer: (D)

The main idea is that the purchases ledger (also called the supplier ledger) is the sub-ledger that holds each supplier’s individual account and running balance. It shows how much you owe to each supplier, with an outstanding balance for every supplier. When you record purchases or invoices, the balance for that supplier increases; when you pay, it decreases. That running total for every supplier is exactly what the purchases ledger is designed to show.

To place this in context, the day book records the initial purchase transactions, but the purchases ledger tracks the ongoing balances by supplier, feeding into the overall accounts payable control account in the general ledger. The other descriptions belong to different records: cash receipts from customers go through the cash book (and relate to the sales ledger or debtors), and inventory levels are tracked in the stock or inventory records, not the purchases ledger.

So the ledger that shows balances for individual suppliers is the purchases ledger.