What are the subsidiary ledgers?
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.
What are the most common subsidiary ledgers?
Common examples of subsidiary ledgers that businesses typically maintain are the following:
- Account Receivable Ledger.
- Accounts Payable Ledger.
- Purchases Ledger.
- Inventory Ledger.
- Fixed Assets Ledger.
How do you reconcile subsidiary ledgers?
The reconciliation process involves the following steps:
- Compare the entries in the general ledger to those in the subledger.
- Identify the differences between the subledger and general ledger, decide if a correction is necessary, and in which of the two the correction should be recorded.
How many subsidiary ledgers are there?
Subledger eliminates the chances of fraud and errors, and it can be segregated into three types- fixed asset sub-ledger, accounts receivable sub-ledger, and accounts payable sub-ledger.
What is subsidiary ledger in Financial Accounting?
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of each customer to whom the business extends credit. The balance in each customer account is periodically reconciled with the accounts receivable balance in the general ledger to ensure accuracy.
What is the first step in accounting cycle?
First Four Steps in the Accounting Cycle. The first four steps in the accounting cycle are (1) identify and analyze transactions, (2) record transactions to a journal, (3) post journal information to a ledger, and (4) prepare an unadjusted trial balance.
How many subsidiary accounts are there?
There are basically 8 types of subsidiary books that are used for recording different types of transactions.
What are the steps in account reconciliation?
The Reconciliation Process
- Compare internal cash register to the bank statement.
- Identify payments recorded in the internal cash register and not in the bank statement (and vice-versa)
- Confirm that cash receipts and deposits are recorded in the cash register and bank statement.
- Watch out for bank errors.
What are two common subsidiary ledgers?
Two common subsidiary ledgers: Accounts receivable subsidiary ledger where data relating to individual buyers are kept. Accounts payable subsidiary ledger is due where data relating to individual creditors are kept.
Why subsidiary ledger is 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 the difference between general ledger and subsidiary ledger?
A sub-ledger has no chart of accounts. A general ledger has a few accounts in the following categories; assets, liabilities, income, expenses, and equity. They also have a few sub-accounts, such as accounts payable and accounts receivable. Accounts are often created as needed.
What are the 5 steps in the accounting process?
The eight steps of the accounting cycle include the following:
- Step 1: Identify Transactions.
- Step 2: Record Transactions in a Journal.
- Step 3: Posting.
- Step 4: Unadjusted Trial Balance.
- Step 5: Worksheet.
- Step 6: Adjusting Journal Entries.
- Step 7: Financial Statements.
- Step 8: Closing the Books.
What are the types of subsidiary books?
Different Types of Subsidiary Books
- Cash book.
- Purchases book.
- Sales book.
- Purchases return or return outwards book.
- Sales return or return inwards book.
- Bills receivable book.
- Bills payable book.
- Journal proper.
What is the first step in the reconciliation process?
The first step is to compare transactions in the internal register and the bank account to see if the payment and deposit transactions match in both records. Identify any transactions in the bank statement that are not backed up by any evidence.