Sub ledger

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Sub ledger
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Sub Ledger, called as a subsidiary ledger or a journal as well, is a book or database that helps to keep specific transactions segregated on separate accounts. One sub ledger may have a large number of individual accounts and all activities posted in sub ledger can relate to different area (e.g. sales, purchases, cash disbursements). The balance of sub ledger is usually reflected in the general ledger as summary-level entry. The sub ledgers are applied predominantly in large companies due to their nature and high volume of transactions(Bragg S.M. 2011, p. 29-30).

Common sub ledgers

The balance of below sub ledgers are called in general ledger accordingly. Listed sub ledgers are three of the most common examples, however it is possible to create a subsidiary ledger for almost all account in the general ledger, e.g. work in progress(Warren C., Reeve J., Ducha J. (2008), p. 218):

  • Accounts receivable (or customer ledger) – sales invoices and receipts that reflect all funds received from clients
  • Accounts payable (or creditor ledger) – list of transactions related to amount owned to a particular vendors that helps to manage invoices and payments
  • Inventory ledger – financial records associated with individual items on stock that provide the information about quantity, movements, prices and costs
  • Fixed assets ledger (or equipment ledger) – list of transactions related to each assets separately that support managing purchases, sales and allocation of items
  • Projects subsidiary ledger – financial activities associated with a specific project that helps to monitor capital expenditure, labor and overhead costs and compare them easily with budgets
  • Cash management ledger – cash receipts and payments that enable to reconcile the sub ledger balance with bank statements, including fund transfers between bank accounts.
  • Payroll subsidiary ledger – financial records of costs related to employees for providing their services in specific period of time, e.g. salaries, wages, bonuses. Maintaining separate payroll ledger helps to keep detailed information about earnings, contribution or deduction.

Sub ledger posting procedure

Posting on sub ledger is an easy way to manage all information and have full visibility of transactions. Despite of the fact that booking on sub ledger has similar procedure to general ledger (from accounting perspective), it requires some additional activities to ensure the correctness of data(Needles B.E, Powers M., Crosson S.V. (2010), p. 305):

  • Entering each transaction with required information (e.g. date, customer name, invoice number) on sub ledger account
  • At the end of month posting the balance of sub ledger to general ledger
  • Verifying the accuracy of the posting by comparing controlling account in general ledger with sub ledger balance.

Advantages of sub ledgers

In literature there are four advantages of subsidiary ledger mentioned(Weygandt J.J., Kieso D.E., DeFranco A.L, Kimmel P.D. (2004), p. 178):

  • Providing up-to-date information related to specific customer or vendor due to showing transactions in a separate accounts
  • Avoiding of excessive data in general ledger thanks keeping vast number of information in sub ledger account
  • Helping to catch the errors due to better visibility of transactions and using control accounts.
  • Facilitating the division of labor and defining responsibilities to employees
  • Moving transactions easily due to low sizes of ledgers.


Author: Łukasz Buczak