Subsidiary ledgers are the detailed register or records which provide details about the main general ledger. They are also called sub-ledgers. These subsidiary ledgers are very useful where the customers and suppliers are in big quantity. So, it becomes very tedious to account for each and every customer and supplier into account receivable and accounts payable general ledger. So, within each account receivable and accounts payable general ledger, we create sub-ledgers for each and every customer and supplier.
Types of Subsidiary Ledgers
- Accounts payable subsidiary ledgers
- Accounts receivable subsidiary ledgers
- Fixed assets subsidiary ledgers
Accounts receivable general ledger account is also known as control account as it only shows the summary of the subsidiary transactions in sub-ledgers. As the customers exist in big quantities, accountants cannot come to know the outstanding amount from each customer. That is why; posting is not made directly into the general ledger. Instead, separate sub-ledgers are maintained to know exactly how much we have transacted with a customer and how much is outstanding from him. That is the whole idea and purpose of sub-ledgers in accounting.