What is a subsidiary ledger?
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of each customer to whom the business extends credit. The balance in each customer account is periodically reconciled with the accounts receivable balance in the general ledger to ensure accuracy.
What is the difference between a general ledger and a subsidiary ledger?
A sub-ledger has no chart of accounts. A general ledger has a few accounts in the following categories; assets, liabilities, income, expenses, and equity. They also have a few sub-accounts, such as accounts payable and accounts receivable. Accounts are often created as needed.
What are the three types of subsidiary ledgers?
Subledger eliminates the chances of fraud and errors, and it can be segregated into three types- fixed asset sub-ledger, accounts receivable sub-ledger, and accounts payable sub-ledger.
Which items are included in the subsidiary ledger?
A subsidiary ledger contains the details to support a general ledger control account. For instance, the subsidiary ledger for accounts receivable contains the information for each of the company’s credit sales to customers, each customer’s remittance, return of merchandise, discounts, and so on.
Why would a subsidiary ledger be established?
Companies create subsidiary ledgers whenever they need to monitor the individual components of a controlling general ledger account.
What are the advantage of using subsidiary ledger?
The advantages of using subsidiary ledgers are that they: Permit transactions affecting a single customer or single creditor to be shown in a single account, thus providing necessary up-to-date information on specific account balances.
What is a ledger and subledger?
A subledger is a ledger containing all of a detailed sub-set of transactions. The total of the transactions in the subledger roll up into the general ledger. For example, a subledger may contain all accounts receivable, or accounts payable, or fixed asset transactions.
Which of the following best describes a subsidiary ledger?
A subsidiary ledger can be described as: A supporting record which contains detailed info on specific accounts in the general ledger.
What is subsidiary ledger and its advantages?
“A subsidiary ledger is a group of accounts with a common characteristic. The accounts are assembled together to facilitate the accounting process by freeing the general ledger from details concerning individual balances.”
What are the reasons for using subsidiary ledgers and special journals in accounting?
Special journals are suitable for recording transactions that occur frequently. The computed balances from the special journals are transferred to the subsidiary ledgers and lastly to the general ledger. Recording these transactions directly into the general ledger is cumbersome and unnecessary.
The subsidiary ledger is a chart of specific accounts that are not included in the general ledger. The accounts in the subsidiary ledgers hold more specific information about the accounts that make up the general ledger. However, do not include the specific accounts in this ledger because it would result in tedious work.
What does the accounts receivable subsidiary ledger show?
The accounts receivable subsidiary ledger shows the transactions and payment history of each customer that has been extended credit. The balance in the accounts receivable subsidiary ledger is reconciled with accounts receivables in the general ledger.
What is the sum of all invoices in the subsidiary ledger?
The sum of all invoices in the accounts receivable subsidiary ledger should equal that of the accounts receivables on the general ledger, also known as the control account. The usefulness of the accounts receivable subsidiary ledger lies in the fact that it can show, at a glance, the account status and amounts owed by a specific customer.
What is a subledger in accounting?
The subsidiary ledger is also commonly referred to as the subledger or subaccount. The accounts receivable subsidiary ledger shows the transactions and payment history of each customer that has been extended credit.