A detailed ledger that breaks down a general ledger control account into individual sub-accounts, such as separate records for each customer or supplier.
A Subsidiary Ledger (or Sub-Ledger) provides granular details behind a summary control account in the general ledger. The two most common are: Accounts Receivable Subsidiary Ledger (individual customer accounts showing invoices, payments, credit notes, and balances) and Accounts Payable Subsidiary Ledger (individual vendor accounts with bills, payments, debit notes, and balances). Other subsidiary ledgers include: fixed asset register, inventory ledger, and employee loan ledger. The total of all subsidiary ledger balances must equal the control account balance in the general ledger — this is verified through regular reconciliation. ERP systems automatically maintain subsidiary ledgers and their links to the GL, but manual reconciliation is still necessary during month-end close to catch posting errors.
GL shows Accounts Receivable: ₹15,00,000. Subsidiary ledger: Customer A: ₹5,00,000, Customer B: ₹3,50,000, Customer C: ₹2,80,000, Customer D: ₹2,20,000, Customer E: ₹1,50,000. Total: ₹15,00,000 ✓ (matches GL). If it doesn't match, there's a posting error to investigate.
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ERP automates the posting, but human review is still needed: to verify completeness (all invoices posted?), accuracy (correct customer/vendor?), aging analysis (who owes what for how long?), and to catch duplicate entries, missing payments, or incorrect allocations. The GL only shows one total number — the subsidiary tells the full story.
Common causes: direct GL journal entries bypassing the sub-ledger, timing differences (payment posted to GL but not sub-ledger), duplicate entries, incorrect customer/vendor assignment, or foreign exchange differences. To fix: run a reconciliation report, identify the variance, trace individual entries, and post correcting journals.
The master accounting record that contains all financial transactions of a business, organized by account.
The principal book of accounts where all financial transactions are classified and recorded under specific account heads, forming the basis for financial statements.
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Money a business owes to its suppliers or vendors for goods and services received but not yet paid for.
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