![]() This is time-saving and reduces the possibility of human errors. While manually completed earlier, many companies use automated accounting packages that require minimum human intervention to prepare financial accounts at present. Sub ledger contains large volume of data due to its detailed reporting nature. General Ledger contains a limited volume of transactions since it is a summarized format. Many sub ledgers are linked to the general ledger. Sub ledger is an intermediary set of accounts that are linked to the general ledger.Ī single general ledger is maintained by a company. General ledger is the set of master accounts where transactions are recorded. What is the difference between General Ledger and Sub Ledger? Information on both levels are important in making various decisions therefore, the records should be accurate and complete. This structure allows the company to maintain accounting information at a summary level (in the General Ledger) and at a detailed level (in Sub Ledgers). Due to the high volume, it is not practical to record all individual receivables transactions in the general ledger ABC will create individual accounts for each receivable in the sub ledger to record transactions and transfer the balances of all accounts to a single account that collectively represent the total receivables. ABC is a company which does around 75% of their sales on credit as a result, it has many accounts receivables. Subsidiary ledgers can include purchases, payables, receivables, production cost, payroll and any other account type.Į.g. This account is referred to as the ‘ Control account’, and account types that generally have a high activity level is recorded here. In such cases, individual transactions are recorded in ‘subsidiary ledgers’, and the totals are transferred to an account in the general ledger. For large scale businesses where many transactions are conducted, it may not be convenient to enter all transactions in the general ledger due to the high volume. Cost of sales, marketing expenses, administration expensesĪlso referred to as ‘ subsidiary ledger’, this is a detailed subset of accounts that contains transaction information. Share capital, share premium, retained earnings Incomeįunds received as a result of conducting business transactionsĮconomic costs that a business incurs through its operations to earn revenueĮ.g. Securities that represent the owner’s interest in the companyĮ.g. Loan repayment, interest payable, accounts payable Equity Long term and short term financial obligations that should be settledĮ.g. Property, cash and cash equivalents, accounts receivables Liabilities Long term and short term resources that provide economic benefitsĮ.g. There are five main types of classes or accounts as follows. General ledger contains all the debit and credit entries of transactions and is separated with classes of accounts. The information for general ledger is derived from the general journal which is an initial book for entering transactions. ![]() This is the principal set of accounts where all transactions conducted within the financial year are recorded. Side by Side Comparison – General Ledger vs Sub Ledger The relationship between these two is that multiple sub ledgers are attached to the general ledger.Ĥ. The key difference between general ledger and sub ledger is that while general ledger is the set of master accounts where transactions are recorded, sub ledger is an intermediary set of accounts that are linked to the general ledger. General ledger and sub ledger are such accounts that record business transactions. A business conducts many transactions within an accounting year, and these should be recorded in different accounts according to corresponding accounting standards. Recording financial information is a lengthy and time-consuming process, and its end result is the preparation of year-end financial statements. Key Difference – General Ledger vs Sub Ledger
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