Purpose of Subsidiary Ledgers Definition

A subsidiary ledger provides a company a detailed record of specific items that are included in the balance of a general ledger controlling accounting. In a merchandising company, subsidiary ledgers are used to track the amounts of receivables from customers, amounts of money owed to suppliers, and quantities of products in inventory.

The advantage of using a subsidiary ledger is that it provides more detailed information than available in the general ledger. Information is intended to be used by the company's mangers and employees. These records are not used in the preparation of financial statements.

Related Accounting Tutorials:
Dealing with Seasonal Changes in Inventory
FIFO Method and Weighted Average Inventory Method
Perpetual Inventory System
Basic Equation for Inventory Accounts
Inventory Cost Flow Assumptions
Accounting Inventory Shrinkage Example Problem
Merchandising Accounting Journal Entry