A subsidiary ledger that collects transaction data of individual creditors. Companies use subsidiary ledgers to keep track of individual balances. A subsidiary ledger is a group of accounts with common characteristics (for example, all accounts receivable). It is an addition to, and expansion of, the general ledger. The subsidiary ledger frees the general ledger from the details of individual balances.
Two common subsidiary ledgers are;
- The accounts receivable (or customers) subsidiary ledger, which collects transaction data of individual customers).
- The accounts payable (or subsidiary ledger, which collects transaction data of individual creditors).