The-definition.com

Definition

Advantages of Subsidiary Ledgers

“A subsidiary ledger is a group of accounts with a common characteristic. The accounts are assembled together to facilitate the accounting process by freeing the general ledger from details concerning individual balances.”

Using subsidiary ledgers serves with several advantages. The advantages of subsidiary ledgers are as follows:

  1. They show in a single account transaction affecting one customer or one creditor, thus providing up-to-date information on specific account balances.
  2. 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.
  3. They help locate errors in individual accounts by reducing the number of accounts in one ledger and by using control accounts.
  4. 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.

Use of the term in Sentences:

  • The professor is discussing the advantages of subsidiary ledgers in the accounting class.
  • Considering the advantages of subsidiary ledgers, many businesses use it.
  • Jim is preparing an assignment on the advantages of subsidiary ledgers.
Share it:  Cite

More from this Section

  • Monetary unit assumption
    The monetary unit assumption requires that companies include in the accounting records ...
  • Categories of securities
    For purposes of valuation and reporting at a financial statement date, companies classify ...
  • Learning and growth perspective
    Learning and growth perspective is a viewpoint employed in the balanced scorecard to evaluate ...
  • Production budget
    Production budget is a projection of the units that must be produced to meet anticipated ...
  • Debit card
    Debit card is a plastic card, similar to a credit card, that transfers funds directly ...