What is subsidiary ledger?

A subsidiary ledger is a group of accounts with a common characteristic.

Subsidiary ledgers are of various types, such as:

  1. Accounts receivable subsidiary ledger,
  2. Accounts payable subsidiary ledger,
  3. Investors subsidiary ledger,
  4. Employees subsidiary ledger,
  5. 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.