Make audits easier: Subledgers categorize financial information, so when an accountant performs an audit, each revenue stream and form of debt is transparent and easy to find. Here are some other ways subledgers benefit a company: Subledgers can help organize a company's financial accounting information, so people in accounting roles can easily track and report monetary amounts used to run a business. Related: Guide to Double-Entry Accounting (With Examples) Benefits of a subledger Here are a few examples of the information an accountant may include in a subledger: Within each ledger, the accountant records additional details of transactions they didn't specify in the general ledger. Related: How To Create a General Ledger Template (With Steps and Example) What does a subledger include?Īn accountant may create a subaccount from various accounts with similar characteristics and separate them into categories within the general ledger. The total amount shows the net amount of cash when you combine a company's cash accounts. This ledger usually outlines the materials it obtained, suppliers it used and other details about the purchase.Ĭash ledger: People who work in finance often use this ledger to record all types of cash transactions, including purchases, cash purchases, sales or costs. Purchase ledger: An accountant may use this ledger to show the accounting transactions related to the company's purchase of services or goods within a period. Sales ledger: The sales ledger is an account for every client of a company and records the money it receives for services or products, along with what the client still owes. These categories include plant, property and equipment assets, which include items like technology, equipment, furniture and building improvements. It also includes investor and sales data an accountant may use to analyze the costs and sales of a business venture.įixed asset ledger: A fixed assets ledger's accounts may be extensive, so an accountant may classify these expenditures into further categories to detail them individually. Inventory ledger: This type of subledger includes all inventory transactions, such as finished goods, work in process and raw materials. To ensure accuracy, a company's accountant also regularly reconciles the balance in each client account with the accounts receivable balance in the general ledger. Accountants often reconcile this balance with the general ledger.Īccounts receivable ledger: This subledger records the payment history and credit sales transactions of each client. Here are the various subledger categories accountants typically use:Īccounts payable ledger: This type of ledger records payments to creditors and credit purchases. Related: What Is a General Ledger? Definition, Functions and Key Elements Types of subsidiary ledgers Companies also refer to separate business subledgers as controlling accounts. Accountants often create subledgers for each customer of a company, and these separate databases can trace the transactions of a specific company and the amount of payment it expects from each client. One of the main uses of a subledger is to record the accounts receivable transactions of specific clients. Companies reflect the sum of their subledger in their general ledger. It helps organize the general ledger for a large corporation that maintains multiple streams of revenue and debts. A subledger contains details that contribute to the total financial transactions within a company. Short for a subsidiary ledger, a subledger is a subset of the general ledger that contains all financial accounting information for a company. In this article, we discuss what a subledger is, list its types and what it includes, explore its benefits and provide examples. If you're responsible for viewing, recording or reporting a company's financial information, it's important to understand how to use a subledger to organize the primary accounts of a business. When an accountant processes a significant number of transactions for a client or business function, they often create subledgers to manage the data. Managing and recording a large company's financial information may require more than a general ledger.
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