What Is an Accounts Receivable Subsidiary Ledger?
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and price history of each and every purchaser to whom the business extends credit score ranking. The stability in each and every purchaser account is periodically reconciled with the accounts receivable stability inside the fundamental ledger to verify accuracy. The subsidiary ledger could also be continuously referred to as the subledger or subaccount.
Key Takeaways
- The accounts receivable subsidiary ledger shows the transactions and price history of each and every purchaser that has been extended credit score ranking.
- The stability inside the accounts receivable subsidiary ledger is reconciled with accounts receivables inside the fundamental ledger.
- Tracking exceptional purchaser expenses is one advantage of the accounts receivable subsidiary ledger.
- The accounts receivable subsidiary ledger provides detailed belief proper right into a business that can lend a hand it serve as in a further targeted taste.
Figuring out an Accounts Receivable Subsidiary Ledger
The accounts receivable subsidiary ledger shows all of the product sales made on credit score ranking thru a business. It provides details on the ones product sales thru showing invoice dates and numbers, credit score ranking memorandums, expenses made against the credit score ranking product sales, discounts, and returns and allowances. The sum of all invoices inside the accounts receivable subsidiary ledger will have to identical that of the accounts receivables on the fundamental ledger, also known as the control account.
The usefulness of the accounts receivable subsidiary ledger lies in the fact that it’s going to in all probability show, at a glance, the account status and amounts owed thru a decided on purchaser. For example, the full stability may show an entire accounts receivable stability of $100,000, then again it is going to now not show which purchaser owes how so much. This knowledge can be gleaned from the accounts receivable subsidiary ledger. The ledger will show, for instance, that Purchaser A owes $15,000, Purchaser B owes $25,000, Purchaser C owes $5,000, and so on.
Without this subsidiary ledger, a company with many customers would have factor tracking purchaser expenses and transactions. Like other subsidiary ledgers, the accounts receivable subsidiary ledger merely provides details of the control account inside the fundamental ledger. Other subsidiary ledgers include the accounts payable subsidiary ledger, inventory subsidiary ledger, and property, plant, and power subsidiary ledger.
Advantages of an Accounts Receivable Subsidiary Ledger
Even supposing maintaining an accounts receivable subsidiary ledger at the side of a fundamental ledger calls for added art work and documentation, it is in most cases worth the extra effort. The analysis that can go into the component supplied during the accounts receivable subsidiary ledger helps prepare a company and we could in it to perform in a further targeted method.
The accounts receivable subsidiary ledger may give belief into purchaser demographics thru profitability, prevent inside fraud, observe past-due duties, prepare different aspects of revenues, and keep away from purchaser overpayments.
The full ledger is not able to supply this so much component and so having an accounts receivable subsidiary ledger, or any other subsidiary ledger for that subject, is a real benefit to a company’s operations. It could most definitely a perfect deal assist in making helpful adjustments to a company’s business kind in providing the belief sought after to achieve higher revenues and targeted business enlargement. It could most definitely moreover lend a hand with managing provide belongings and provide liabilities.
