Accounting, Binder Ready Version: Tools for Business Decision Making - Standalone book
Accounting, Binder Ready Version: Tools for Business Decision Making - Standalone book
6th Edition
ISBN: 9781119191674
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
Question
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Chapter J, Problem 1Q
To determine

Describe the advantages of using subsidiary ledgers.

Expert Solution & Answer
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Explanation of Solution

Subsidiary ledgers refer to group of individual accounts with common characteristics and serves as an extension of the general ledger. Subsidiary ledgers relieve the general ledger, from the overburden of incorporating details of individual accounts. Example of subsidiary ledgers are the individual customers accounts comprising of the accounts receivable account of a business and accounts payable account. Subsidiary ledgers are usually maintained in alphabetical order.

Following are the advantages of the subsidiary ledgers:

  • In the subsidiary ledgers all the transactions relating to a single account (one customer or creditor), it’s up to date information and balance could be easily traced.
  • The subsidiary ledgers relieve the general ledger of incorporating huge numbers of individual account balances.
  • The errors relating to the individual account could be easily detected in a separate subsidiary ledgers rather than detecting it in the control general ledger accounts.
  • Maintaining subsidiary ledgers and control account make it possible to use the division of labor and do the job faster.

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