Importance Of Subsidiary Ledger

To go back in time, Accounting arises from a gentleman by the name of Luca Pacioli. Pacioli took several time out of his day to prepare what they call today ledgers and journals. These where made in those days to make business lives easier. He created a journal entry that includes Debit and credit purchases which we are still familiar with today. At that time he also created a trial balance. Subsidiary ledgers are very important in the accounting world and in the overall language. Subsidiary ledgers provides detail information on financials things such as purchases or sales. It records specific transactions that go down in a business. All of this information then goes on to a bigger ledger which is called the general ledger.
The difference between The General ledger and the subsidiary ledger is that the General ledger contains all of the high accounts in a company and only records major accounts. The subsidiary ledger is a little bit less …show more content…
Some are Accounts payable ledger, accounts receivable ledger, inventory ledge, fixed assets ledger. And purchases ledger. The accounts payable ledger deals with the amounts owed to the company and the credit balances that they receive through purchase. Accounts payable ledgers goes into depth of how much is owed and where exactly the transaction is coming from. Compared to a General ledger it would just state the amount owed but won’t go into detail. Accounts receivable is the other side of Accounts payable, meaning the part where the balance that was owed is finally received. In that specific ledger it would go into detail and tell you which debt is paid off with the date it was received where general ledger will have just the amount claimed. Companies would use the Subsidiary ledger in accounts receivable to be able to point fingers at who made a payment and who didn’t. It makes it very clear and understandable that way there is no confusion in