Subsidiary ledgers have several advantages:
- They show in a single account transactions affecting one customer or one creditor, thus providing up-to-date information on specific account balances.
- They free the general ledger of excessive details. As a result, a trial balance of the general ledger does not contain vast numbers of individual account balances.
- They help locate errors in individual accounts by reducing the number of accounts in one ledger and by using control accounts.
- They make possible a division of labor in posting. One employee can post to the general ledger while someone else posts to the subsidiary ledgers.
Category: Accounting & Auditing
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