Subsidiary ledgers and special journals

However, in some instances there is a need to track transactions within a single account in more detail.

Subsidiary ledgers and special journals

However, in some instances there is a need to track transactions within a single account in more detail. This is accomplished by using a subsidiary ledger. In accounting software, you only have to make the entry in the subaccount and the software automatically makes the corresponding entry in the controlling account.

It is important to understand that the subsidiary ledger is not a single ledger but a type of ledger. A company will only have one general ledger, but it can have multiple subsidiary ledgers.

Better Accounting Grades in Less Time

Below are some different types of subsidiary ledgers a company might have. In the Accounts Receivable Subsidiary Ledger, each credit customer has their own account, and their own balance. This is done as part of preparing the Trial Balance.

In the Accounts Payable Subsidiary Ledger, each supplier has their own account and their own balance. This is very useful for managing your payables and cash flow.

Other Examples of Subsidiary Ledgers While Accounts Receivable and Accounts Payable are commonly used with subsidiary ledgers, other accounts can benefit from this approach.

Here are three examples: Notes Receivable Subsidiary Ledger — A company such as an investment house that holds a large number of notes receivable can use a subsidiary ledger for Notes Receivable.

This can include information about the principal amount, due date, and payer. This subsidiary ledger is otherwise similar to the Accounts Receivable Subsidiary Ledger, except in this case the controlling account is Notes Receivable. This subledger can include information about the principal amount, due date, and payee.

This subsidiary ledger is otherwise similar to the Accounts Payable Subsidiary Ledger, except in this case the controlling account is Notes Payable. Equipment Subsidiary Ledger — Some companies carry a large amount of equipment, each of which must be depreciated over a number of years.

In this case, the depreciation is recorded for each item in the Equipment Subsidiary Ledger.

DEFINITION of 'Distributed Ledgers'

This subledger can include information about the aquisition and disposal of the item, the accumulated depreciation, and current book value. The controlling account for this subledger is Equipment.A subsidiary ledger contains the details to support a general ledger control account.

For instance, the subsidiary ledger for accounts receivable contains all of the information on each of the credit sales to customers, each customer's remittance, return of merchandise, discounts, and so on.

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Subsidiary ledgers and special journals

The general journal is used for adjusting entries, closing entries, correcting entries, and all transactions that do not belong in one of the special journals. If a general journal entry involves an account in a subsidiary ledger, the transaction must be posted to both the general ledger control account and the subsidiary ledger account.

four most common types of transactions: credit sales, cash receipts, purchases on account, and cash disbursements. To see how these specialized journals can save time. Explaining the purpose of the General Ledger is perhaps a difficult task for any teacher of Accounting.

One reason is because in this age of computers and information technology, the General Ledger does not any longer have an easily identifiable physical form.

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