The incorrect answer is Under the self-balancing ledger system, only two ledger accounts are prepared (Debtors Ledger and Nominal Ledger). Self-Balancing Ledger: All the ledger accounts are prepared from the balances extracted from the trial balance. Under a double-entry system of accounting, each ledger is self-balancing. Important PointsUnder self-balancing ledgers, as all the ledgers are prepared using the double-entry system, so a trial balance can be prepared with the Debtor's or Creditor's ledger balances. So, Option 2 is also contextually correct. Under self-balancing ledgers, Debtors Ledger is also known as Sold Ledger or Sales Ledger, which records all the transactions related to customers to whom goods have been sold on credit. Therefore, Option 3 is also contextually correct. Under the self-balancing ledger system, each ledger is prepared under the double-entry system. For each transaction, there shall be a debit entry and simultaneous credit entry. Therefore, Option 4 is also contextually correct. Under self-balancing ledger system, three ledger accounts are prepared namely Debtors Ledger, Creditor's Ledger and Nominal Ledger. So, option 1 contains an INCORRECT statement.