Press "Enter" to skip to content

What are subsidiary ledgers used for?

A subsidiary ledger stores the details for a general ledger control account. Once information has been recorded in a subsidiary ledger, it is periodically summarized and posted to a control account in the general ledger, which in turn is used to construct the financial statements of a company.

Which of the following accounts would most likely use a subsidiary ledger?

Which of the following accounts would most likely use a subsidiary ledger? cash receipts and cash disbursements.

What is subsidiary ledger example?

A subsidiary ledger is a group of similar accounts whose combined balances equal the balance in a specific general ledger account. For example, an accounts receivable subsidiary ledger (customers’ subsidiary ledger) includes a separate account for each customer who makes credit purchases.

Why do a business owner needs to maintain a subsidiary ledger for some accounts?

Large business organizations often use subsidiary ledgers because they have large numbers of financial transactions. However, companies prefer to use subsidiary ledgers when recording financial transactions to limit the amount of detailed information in the general ledger.

What are the advantages of subsidiary ledgers?

The advantages of using subsidiary ledgers are that they: Permit transactions affecting a single customer or single creditor to be shown in a single account, thus providing necessary up-to-date information on specific account balances.

What is the relationship between a controlling account and subsidiary ledger?

What is the relationship between a controlling account and a subsidiary ledger? A controlling account summarizes all accounts in a subsidiary ledger. The balance of a controlling account equals the total of all account balances in its related subsidiary ledger.

Why is subledger important?

A subledger or subsidiary ledger provides the details that make up the balance of specific general ledger accounts. Because general ledger accounts only provide an ending balance for each particular account, a subsidiary ledger is used to provide the details that result in that general ledger balance.

What is meant by subledger?

The subledger, or subsidiary ledger, provides details behind entries in the general ledger used in accounting. The subledger shows detail for part of the accounting records such as property and equipment, prepaid expenses, etc. The total of the subledger would match the line item amount on the general ledger.

What does ledger balance mean on a debit card?

What Is a Ledger Balance? A ledger balance is computed by a bank at the end of each business day and includes all withdrawals and deposits to calculate the total amount of money in a bank account. The ledger balance is the opening balance in the bank account the next morning and remains the same all day.

What does it mean if my ledger balance is negative?

A negative cash balance results when the cash account in a company’s general ledger has a credit balance. The credit or negative balance in the checking account is usually caused by a company writing checks for more than it has in its checking account.

What should be done if closing cash balance is negative?

Tips to Recover from Negative Cash Flow

  1. Look at your financial statements. If you want to fix a problem, you need to get to the root of the issue.
  2. Modify payment terms. Negative cash flow can be due to customers not paying you.
  3. Cut expenses.
  4. Increase sales.
  5. Work with vendors, lenders, and investors.