Premiums and commissions coded as premiums receivable, premiums written, and commission expense can be accumulated to provide summary control data for entry into the:

Question

Options

• Ajournal
• Bgeneral ledger
• CFinancial statement
• Dbalance sheet

• A
  9% (6)
• B
  85% (55)
• C
  2% (1)
• D
  5% (3)

Explanation

Option B is correct because the general ledger is the central repository where summary control data from subsidiary records (like premiums receivable, premiums written, and commission expense) is posted as aggregated journal entries - it serves as the master record of all account balances used to produce financial reports.

Why the distractors are wrong:

• A (Journal): The journal is where individual transactions are first recorded chronologically before posting; accumulated control totals flow from the journal to the ledger, not the other way around.
• C (Financial statement): Financial statements (income statement, etc.) are outputs derived from the general ledger, not a destination for control data entry.
• D (Balance sheet): The balance sheet is a specific financial statement showing assets/liabilities at a point in time - also an output, not a data entry target.

Memory tip: Think of the flow as a pipeline - Source records → Journal → General Ledger → Financial Statements. Control totals accumulate to feed the middle step (General Ledger), which then feeds the end-product statements.

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