Category: 

What Is an Accounts Receivable Subsidiary Ledger?

Article Details
  • Written By: Osmand Vitez
  • Edited By: PJP Schroeder
  • Last Modified Date: 04 September 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
The U.S. Coast Guard led the evacuation of more than 500,000 people from Lower Manhattan on 11 September 2001.  more...

September 27 ,  1940 :  The World War II Axis powers formed with the signing of the Tripartite Pact.  more...

A standard accounting system typically uses a series of ledgers and journals to retain various pieces of information that relate to business transactions. An accounts receivable subsidiary ledger is one such accounting book that falls under a control account. Accounts receivable lists all clients who owe the company money for previous purchases. The accounts receivable subsidiary ledger retains specific information for each of these customers. The information in each subsidiary ledger only relates to a single customer and typically holds information for the start of the customer’s relationship with the company.

A control account for the accounts receivable subsidiary ledger is typically the accounts receivable master account. The master account is simply an aggregate total of all outstanding balances in each subsidiary ledger. For example, if a company has 100 customers who owe money, each customer has an accounts receivable listing that indicates the current amount owed by the customer. The master account takes all the individual balances and rolls them into one number that goes onto the company’s balance sheet. Less information is in the master control account in the accounting books than is in the subsidiary ledger.

Ad

The accounts receivable subsidiary ledger may be specific to each company in the business environment. There is really no specific set of information that must have inclusion in the subsidiary ledger unless certain national accounting standards exist for this accounting practice. Companies can build them around information that best suits the needs of those reviewing this data. In some cases, certain information may be necessary in the accounts receivable subsidiary ledger as requested by a public accounting firm. Public accounting firms tend to provide guidance for setting up subsidiary ledgers, so each company is within certain compliance laws in the business environment.

Another closely related subsidiary ledger to the accounts receivable subsidiary ledger is the allowance for doubtful accounts. This account shows all individuals who are late paying their original open accounts receivable balances. This secondary subsidiary ledger lowers the asset balance of the accounts receivable master account. Depending on a company’s accounting policies, the balance sheet may only show the difference between the master accounts receivable account and the allowance for doubtful accounts total. A disclosure may be necessary to inform stakeholders about the amount of money a company will not expect to receive from previous sales; this amount results in lost cash for business expenses.

Ad

You might also Like

Recommended

Discuss this Article

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email