As we all know about the ledger it is an accounting book in the double entry system that is used to record and maintain transactions for a business. There are different types of ledgers one of them is subsidiary ledger that is used to store different types of transactions.
All the information stored and processed in subsidiary ledger is posted to a specific account of the general ledger. The general ledger with all this information is used to prepare the financial statements of the business. The account that holds the information from the subsidiary ledger is called the control account. A general ledger has a large number of accounts and most of them are not control accounts as information is stored directly in to them.
A subsidiary ledger can be created for every account of the general ledger however commonly this ledger is prepared for the accounts that are overcrowded or over whelming with the transactions and recordings. Accounts for which we can prepare subsidiary ledgers are the accounts payable, accounts receivable, sales accounts, fixed asset ledger, inventory ledger and purchase ledger.
Subsidiary ledgers are used to avoid large amount of information cluttering and accumulation in general ledger. This happens within the businesses having a large number of sales volumes. Generally small companies do not need sales ledgers. Subsidiary ledger can also be used for the research purposes and the date is drilled down from the general ledger to the subsidiary ledger in order to find out correct information.
Sana Ahmed