Accounts Payable Subsidiary Ledger Definition

What Is an Accounts Payable Subsidiary Ledger?

An accounts payable subsidiary ledger is an accounting ledger that presentations the transaction history and amounts owed to each supplier and supplier. An accounts payable (AP) is in large part an extension of credit score rating from a supplier that gives a industry (the shopper throughout the transaction) time to pay for the supplies. The subsidiary ledger information all of the accounts payables that a company owes. The price words are usually 30, 60, or 90 days.

The steadiness throughout the purchaser accounts is periodically reconciled with the accounts payable steadiness throughout the standard ledger to ensure accuracy. The accounts payable subsidiary ledger is also frequently referred to as the AP sub-ledger or subaccount.

Working out an Accounts Payable Subsidiary Ledger

Companies could have quite a lot of payables owed to vendors or suppliers at any given time. The ones payables are brief cash owed or IOUs from one company to another company. The whole amount of payables owed to suppliers is recorded as accounts payable on the standard ledger.

The entire ledger is a snatch ledger containing a summary of all the accounts that a company uses in running its industry. The subsidiary ledgers roll up to the whole ledger, which information the combo totals of the subsidiary ledgers. The entire ledger, in turn, allocates the ones totals into assets, liabilities, and equity accounts. Within most accounting strategies, the process is performed by the use of accounting instrument.

When the financial statements are able, the accounts payable total is listed with other brief financial tasks underneath the existing liabilities section of the stableness sheet. The accounts payable subsidiary ledger is a breakdown of all of the amount of payables listed on the standard ledger. In several words, the subsidiary ledger accommodates the individual payables owed to each of the suppliers and vendors, along with the amounts owed.

Since corporations could have multiple orders with the an identical supplier and a number of different vendors, the accounts payable subsidiary ledger helps to keep observe of what’s owed with out a want to make numerous accounting entries on the standard ledger. The subsidiary ledger is in large part a worksheet for all of the payables owed to suppliers.

The accounts payable subsidiary ledger is really helpful in providing inner accounting controls. The accounts payable subsidiary ledger amounts can be crosschecked with the combo amount reported on the standard ledger to prevent errors in reporting. Keep an eye on can also check out to make certain that each invoice from the vendors and suppliers are being recorded.

Example of an Accounts Payable Subsidiary Ledger

As an example, let’s believe The Ford Motor Company has an ordinary ledger steadiness that presentations an entire accounts payable steadiness of $106 million. Then again, keep watch over needs to see which suppliers are owed and the amounts owed.

The information sought after can be gleaned from the accounts payable subsidiary ledger. The subsidiary ledger presentations the following:

• Supplier A is owed $2 million for tires.
• Supplier B is owed $6 million for car mats.
• Supplier C is owed $98 million for steel.

The accounts payable subsidiary ledger is similar to other subsidiary ledgers in that it merely provides details of the keep an eye on account throughout the standard ledger. Other subsidiary account ledgers include the accounts receivable subsidiary ledger, the inventory subsidiary ledger, and the equipment subsidiary ledger.