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    What is the purpose of subsidiary ledgers? What are the possible ramifications of not using subsidiary ledgers?

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    What is the purpose of subsidiary ledgers? What are the possible ramifications of not using subsidiary ledgers?

    © BrainMass Inc. brainmass.com October 9, 2019, 9:19 pm ad1c9bdddf
    https://brainmass.com/business/t-accounts/purpose-subsidiary-ledgers-180688

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    Problem: What is the purpose of subsidiary ledgers? What are the possible ramifications of not using subsidiary ledgers?

    Solution:

    A business may have accounts of thousands of customers (account Receivable) and Suppliers (Accounts payable). If only one account is maintained for these several customers or creditors it will be difficult to trace the balance of each individual customer or creditor on any specific date. subsidiary ledger is maintained to keep a track of individual accounts. Subsidiary ledger provides details of individual balances which are not available in general ledger. It is the expansion of General ledger. In general ledger two control accounts are maintained as ...

    Solution Summary

    The solution explains the concept and the application of using subsidiary ledgers, and then states four reasons why they are important (including explanations).

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