What is a Subsidiary Ledger?
Subsidiary ledgers are used as a per-account summary for the multiples of a particular transaction. As mentioned earlier, the sub-accounts for this article are the creditors; hence the creditors are the multiples of our AP-GL control account.
If we are to reconcile the Accounts Receivable GL control account, then our multiples would be the customers or borrowers of the business. Another example would be the Furniture, Fixtures & Equipment (FFE) GL control account; its multiples would be the description of each inventory item classified as FFE, e.g. chairs, computers, tables, delivery van, printer, etc.
Maintaining subsidiary ledgers for each multiple allows for traceability of data in an accounting system. In addition, it provides a summary of the accounting entries involving each creditor’s or borrower’s account. This would serve as ready references in determining how much is yet to be paid to the creditor or how much is yet to be received from the borrower.
Again, please take note that the summary of accounting entries referred to in an AP subsidiary ledger is on a per-creditor basis while the AP-GL control account is a summary of its debit and credit accounting entries per day. This will now prompt us to refer to another accounting tool called an “accountant's proofsheet."