Accounts receivable subsidiary ledger

Definition

An accounts receivable subsidiary ledger is a detailed ledger that records all transactions related to individual customer accounts. It supplements the general ledger by providing granular information about amounts owed by each customer.

5 Must Know Facts For Your Next Test

1. The accounts receivable subsidiary ledger helps in tracking individual customer balances and transactions.
2. It ensures accuracy and completeness of the main accounts receivable account in the general ledger.
3. Special journals like sales journals are often used to record transactions before they are posted to the subsidiary ledger.
4. The subsidiary ledger is crucial for internal controls, as it allows for reconciliation with the general ledger.
5. Stakeholders such as auditors and managers use information from the subsidiary ledger for decision-making and financial analysis.

Review Questions

• What purpose does an accounts receivable subsidiary ledger serve?
• How does a sales journal relate to the accounts receivable subsidiary ledger?
• Why is the reconciliation between the subsidiary ledger and the general ledger important?

Related terms

General Ledger:

A complete record of all financial transactions over the life of a company.

Sales Journal:

A special journal used to record all credit sales transactions.

Internal Controls:

Processes designed to ensure reliable financial reporting, compliance with laws, and efficient operations.