Expanding the Ledger - Expanding the LedgerSubsidiary...

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Expanding the Ledger—Subsidiary Ledgers Nature and Purpose of Subsidiary Ledgers Imagine a business that has several thousand charge (credit) customers and shows the transactions with these customers in only one general ledger account— Accounts Receivable. It would be virtually impossible to determine the balance owed by an individual customer at any specific time. Similarly, the amount payable to one creditor would be difficult to locate quickly from a single Accounts Payable account in the general ledger. Instead, companies use subsidiary ledgers to keep track of individual balances. A subsidiary ledger is a group of accounts with a common characteristic (for example, all accounts receivable). The subsidiary ledger frees the general ledger from the details of individual balances. A subsidiary ledger is an addition to, and an expansion of, the general ledger. Two common subsidiary ledgers are: 1. The accounts receivable (or customers’ ) subsidiary ledger , which collects transaction data of individual customers. 2. The
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.

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Expanding the Ledger - Expanding the LedgerSubsidiary...

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