What is an Accounts Receivable Subsidiary Ledger?
An accounts receivable subsidiary ledger is an account book that shows a list of customers or clients who owe a company. Customers that are in debt to a company are listed in the ledger in order to ensure easy tracking of accounts receivable in a company. This subsidiary ledger also reflect the transaction history of a company, it opens a separate account for each customer owing the company. The amounts of debts owed by customers recorded in this subsidiary ledger is compared with the accounts receivable balance in the general ledger. An accounts receivable subsidiary ledger is the opposite of accounts payable subsidiary ledger.
How Is an Accounts Receivable Subsidiary Ledger Used?
Having a record of accounts receivable is important for any business that doesn’t want to go bankrupt. Keeping records in an accounts receivable subsidiary ledger aids the tracking of customers who owe a company or are in debt to the company. Also, for financial reporting purposes, it is important to keep an accounts receivable subsidiary ledger which is them reconciled with the accounts receivable of the company in the general ledger. This subsidiary ledger is also called a subledger or subaccount, it gives the details of customers owing a company and the specific amount owed by each customer. Tracking customers payments and transaction history will be difficult without the subsidiary ledger, especially for companies with large number of customers.
Related Topics
- Accounting for Accounts Receivable? – Financial Accounting
- Accounts Receivable Subsidiary Ledger
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