A subsidiary ledger is a group of accounts with a common characteristic.
Subsidiary ledgers are of various types, such as:
- Accounts receivable subsidiary ledger,
- Accounts payable subsidiary ledger,
- Investors subsidiary ledger,
- Employees subsidiary ledger,
- Tenants subsidiary ledger.
Advantages of Subsidiary Ledger
Subsidiary ledgers have several advantages. Such of them are as follows:
- It provides the up-to-date information on specific account balances.
- It shows transactions affecting one customer or one creditor in a single
- It makes easy to free the general ledger of excessive details.
- It minimizes the number of accounts for making an easy trial balance.
- It helps to locate errors in individual accounts using control accounts.
- It makes possible a division of labour in posting.
In short, subsidiary ledger ensures that account information is current.