Final answer:
The balance in the accounts receivable control account must always equal the total of all accounts in the accounts receivable subsidiary ledger. This is true because the control account reflects the total outstanding receivables, and the subsidiary ledger details individual customer balances. Both records must be reconciled to ensure accuracy and are critical for financial reporting.
Step-by-step explanation:
The question concerns the relationship between the balance in the accounts receivable control account and the total of all individual customers' balances in the accounts receivable subsidiary ledger. The statement that these two must always be equal is true. This is because the control account is a summary account that reflects the total outstanding receivables for the company, while the subsidiary ledger provides detail on the individual balances owed by each customer.
In accounting, the control account and the subsidiary ledger must be reconciled, meaning their balances should match. If they do not, it indicates that there may be errors or omissions in one or both of the records. Proper accounting practices require that accountants maintain the accuracy of these records and regularly perform reconciliations to ensure their consistency. The control account balance is reported on the balance sheet, while the subsidiary ledger provides the detailed information necessary for managing individual customer accounts. As such, to maintain an accurate representation of the company’s financial situation, it is crucial for the control account in the general ledger to match the sum of all the individual customer accounts recorded in the accounts receivable subsidiary ledger.