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October 22, 2008

What is the purpose of subsidiary ledgers?

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. With these details in the subsidiary ledger, the Accounts Receivable account in the general ledger can be a control account. As a control account, it will simply report the aggregate amounts of the accounts receivable activity.

By having the details of the accounts receivable activity in a subsidiary ledger, a company can better control its financial information. For example, the credit manager and others in the credit department of a company will have access to any and all of the credit sales information through the subsidiary ledger without having access to any other account in the company’s general ledger.

In job order costing systems, the job cost sheets or records serve as the subsidiary ledger containing the detail for the general ledger account Work in Process. The Work in Process account is now a control account containing aggregate amounts for direct materials, direct labor, factory overhead applied, transfers to finished goods, etc. Manufacturing personnel will have full access to the job cost sheets without gaining access to other accounts in the general ledger.

Since companies are integrating accounting records with their other information into one database, I assume there will be less use of the term subsidiary ledgers in the future. There will likely be a report generated to provide the information formerly contained in the subsidiary ledger.

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Comments

13 Responses to “What is the purpose of subsidiary ledgers?”

  1. Ann on October 30th, 2008 10:49 am

    Hi accountingcoach,
    U are well done for the knowledge gotten from your website.
    I will desire you explain to me what you is meant by “Account payable & Account Receiveable, I needed a detail about it.
    I shall appreciate it if you can kindly make a reply into my email box.
    I say more Grace to your elbow.
    Kind Regards
    Ann

  2. Johar on November 1st, 2008 11:43 am

    Hi accountingcoach
    It was appreciateable, you have provided about this topic. I understood easily what purpose of subsidiary ledger is all about. Thanks dear and keep it up.
    kind regards,
    Johar

  3. Manogyan on November 5th, 2008 8:28 am

    Hi Accounting Coach,

    Could you please tell me something about intercompany accounting

    Best regards
    Manogyan

  4. krishna reddy on November 18th, 2008 6:31 am

    good morning sir,

    i received u message very happy feel to me
    ple send closing entry depreaction
    ple send to me
    your faith fully
    krishna reddy

  5. somie on November 25th, 2008 5:09 am

    can you tell me what is the purpose of columnar?and how to analyze a problem?can you give some example and i will answer it…..! chuuuvanizm!….

  6. Gopal on January 30th, 2009 7:28 am

    What is the meaning of GSM and moisture in terms of A/c Payable section or at the time of payment. Is ther any kind of deduction of GSM & moisture at the time of payment.

    Please reply ASAP as this question is supposed to ask me in my interview.

    Regards,
    Gopal Sharma.

  7. Abas Ali on March 17th, 2009 6:04 am

    it is a total of all the individual creditors and debtors accounts and a double checking record against control account.

  8. edward on April 10th, 2009 2:52 pm

    Dear sir,
    Please explain me in normaly General ledger Control account and Customer ageing (subledger)matching in every month last month end it was showing differance in GL And aging balance ?

  9. rizwan on April 13th, 2009 1:09 pm

    respected sir
    can u tell me about that which system of costing in mass production(process costing or job order costing ) and what are there examples and which type of company they are used plz in detail

  10. Hassan on July 3rd, 2009 2:05 pm

    Dear Sir,
    Could you please explain what is a consolidated Balance Sheet.

  11. lax on September 29th, 2009 7:46 am

    What sort of costing method to be applied for Oil Recycling Industry?.

  12. sohail on November 2nd, 2009 12:41 pm

    Dear sir
    The great greating of Islam Aslam-o-Alikum
    sir i got sufficent knowledge of this website thanks for this kindness
    i am teacher of account
    so i know about real account and nominal account or types of account
    and more about the control account and subsidairy account and please tell me how they prepare

    Thanks for Reply if soon

  13. muhmamed hussain on November 6th, 2009 8:46 am

    Dear sir,

    Very good morning, Good day to you.

    I would like this site because i have learnt about All accounting concepts and very useful to me.

    I am well appreciate for this site,

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    Regards,
    muhamed.

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