Accounts Receivable Subsidiary Ledger
What Is an Accounts Receivable Subsidiary Ledger?
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of every customer to whom the business broadens credit. The balance in every customer account is occasionally accommodated with the accounts receivable balance in the general ledger to guarantee precision. The subsidiary ledger is additionally normally alluded to as the subledger or subaccount.
Figuring out an Accounts Receivable Subsidiary Ledger
The accounts receivable subsidiary ledger shows every one of the sales made on credit by a business. It gives subtleties on these sales by showing invoice dates and numbers, credit reminders, payments made against the credit sales, discounts, and returns and allowances. The sum of all invoices in the accounts receivable subsidiary ledger ought to approach that of the accounts receivables on the overall ledger, otherwise called the control account.
The value of the accounts receivable subsidiary ledger lies in the way that it can show, initially, the account status and sums owed by a specific customer. For instance, the general balance might show a total accounts receivable balance of $100,000, yet it won't show which customer owes how much. This data can be gathered from the accounts receivable subsidiary ledger. The ledger will show, for instance, that Customer An owes $15,000, Customer B owes $25,000, Customer C owes $5,000, etc.
Without this subsidiary ledger, a company with numerous customers would experience issues tracking customer payments and transactions. Like other subsidiary ledgers, the accounts receivable subsidiary ledger just gives subtleties of the control account in the overall ledger. Other subsidiary ledgers incorporate the accounts payable subsidiary ledger, inventory subsidiary ledger, and property, plant, and equipment subsidiary ledger.
Benefits of an Accounts Receivable Subsidiary Ledger
However keeping an accounts receivable subsidiary ledger notwithstanding an overall ledger requires more work and documentation, it is ordinarily worth the extra exertion. The analysis that can carefully describe the situation given by the accounts receivable subsidiary ledger coordinates a company and permits it to perform in a more targeted way.
The accounts receivable subsidiary ledger can give understanding into customer demographics by profitability, forestall internal fraud, monitor past-due obligations, coordinate various parts of incomes, and stay away from customer overpayments.
The overall ledger can't give this much detail thus having an accounts receivable subsidiary ledger, or some other subsidiary ledger so far as that is concerned, is a real benefit to a company's operations. It can enormously help with making supportive changes in accordance with a company's business model in giving the knowledge expected to accomplish higher incomes and targeted business expansion. It can likewise assist with overseeing current assets and current liabilities.
- The accounts receivable subsidiary ledger gives point by point understanding into a business that can assist it with working in a more targeted fashion.
- The accounts receivable subsidiary ledger shows the transactions and payment history of every customer that has been extended credit.
- Tracking outstanding customer payments is one benefit of the accounts receivable subsidiary ledger.
- The balance in the accounts receivable subsidiary ledger is accommodated with accounts receivables in the overall ledger.