Subsidiary ledger

Definition

A subsidiary ledger is a detailed ledger that supports a general ledger account. It contains individual accounts for each component, providing detailed information and tracking transactions for specific items.

5 Must Know Facts For Your Next Test

1. A subsidiary ledger breaks down general ledger accounts into more detailed parts.
2. It helps in managing large volumes of data by organizing it into smaller, more manageable sections.
3. Common types of subsidiary ledgers include accounts receivable and accounts payable ledgers.
4. Subsidiary ledgers are used to track transactions and balances for individual customers or suppliers.
5. The totals from the subsidiary ledgers are reflected in the corresponding control accounts in the general ledger.

Review Questions

• What is the primary purpose of a subsidiary ledger?
• Name two common types of subsidiary ledgers.
• How does a subsidiary ledger help in financial reporting?

Related terms

General Ledger:

The main accounting record where all company transactions are summarized.

Accounts Receivable Ledger:

A type of subsidiary ledger that tracks money owed to the business by customers.

Control Account:

An account in the general ledger that summarizes total amounts recorded in a subsidiary ledger.