Reconciling purchases ledger with supplier statements detects unrecorded credit notes

Steps:

• Credit notes from suppliers reduce amounts owed in the purchases ledger.
• Unrecorded credit notes cause ledger balances to exceed supplier statement balances.
• Compare individual purchases ledger balances to supplier statements to identify discrepancies.
• Discrepancies indicate missing credits, confirming the issue.

Why B is correct:

• Supplier statements provide external evidence of credits issued, so reconciling ledger balances (option 1) directly reveals unrecorded items per reconciliation procedures in accounting.

Why the others are wrong:

• A includes option 2, which lists internal balances without external comparison, missing detection of errors.
• C includes options 2 and 3, both internal summaries that cannot verify against external statements.
• D uses only option 3, an aggregated internal control account that ignores individual supplier discrepancies.

Final answer: B