Will Kenton is an experienced on the economy and also investing laws and regulations. He formerly held senior editorial duties at historicsweetsballroom.com and also Kapitall Wire and also holds a MA in business economics from The brand-new School for Social Research and Doctor of approach in English literary works from NYU." data-inline-tooltip="true">Will Kenton

Chip Stapleton is a collection 7 and series 66 license holder, CFA Level 1 exam holder, and also currently stop a Life, Accident, and also Health license in Indiana. He has actually 8 years suffer in finance, indigenous financial planning and wealth monitoring to that company finance and also FP&A.

You are watching: Separate customer accounts receivable are called subsidiary accounts.

What Is an account Receivable Subsidiary Ledger?

An accounts receivable subsidiary ledger is an accounting ledger that mirrors the transaction and payment background of each customer to whom the organization extends credit. The balance in each customer account is periodically reconciled through the account receivable balance in the basic ledger to ensure accuracy. The subsidiary ledger is also commonly referred to as the subledger or subaccount.

The account receivable subsidiary ledger shows the transactions and also payment background of each customer that has actually been prolonged credit.The balance in the accounts receivable subsidiary ledger is reconciled v accounts receivables in the basic ledger.Tracking outstanding customer payment is one advantage of the account receivable subsidiary ledger.The accounts receivable subsidiary ledger provides detailed insight right into a business that can help it run in a more targeted fashion.

knowledge an account Receivable Subsidiary Ledger

The accounts receivable subsidiary ledger shows all the sales make on credit by a business. It provides details on these sales by mirroring invoice dates and also numbers, credit transaction memorandums, payment made against the credit sales, discounts, and also returns and allowances. The sum of every invoices in the account receivable subsidiary ledger have to equal that of the accounts receivables ~ above the basic ledger, also known as the regulate account.

The usefulness of the accounts receivable subsidiary ledger lies in the reality that it have the right to show, at a glance, the account standing and amounts owed by a particular customer. For example, the basic balance may show a complete accounts unification balance the $100,000, but it will certainly not show which customer owes exactly how much. This information can be gleaned from the account receivable subsidiary ledger. The ledger will certainly show, for example, the Customer A fan $15,000, client B owes $25,000, customer C owes $5,000, and also so on.

Without this subsidiary ledger, a company with plenty of customers would have difficulty tracking customer payments and also transactions. Like other subsidiary ledgers, the account receivable subsidiary ledger merely provides details the the control account in the basic ledger. Other subsidiary ledgers incorporate the accounts payable subsidiary ledger, list subsidiary ledger, and property, plant, and equipment subsidiary ledger.

advantages of an account Receivable Subsidiary Ledger

Though keeping an accounts receivable subsidiary ledger in addition to a general ledger requires much more work and also documentation, the is commonly worth the extra effort. The evaluation that can go into the detail noted by the account receivable subsidiary ledger helps organize a firm and allows it to carry out in a much more targeted manner.

The account receivable subsidiary ledger can provide insight into customer demographics by profitability, prevent inner fraud, monitor past-due obligations, to organize different facets of revenues, and also avoid client overpayments.

See more: How Many Ml Is One Quart To Milliliters, Us Quarts (Liquid) To Milliliters

The basic ledger is no able to provide this lot detail and so having actually an accounts receivable subsidiary ledger, or any type of other subsidiary ledger for the matter, is a real advantage to a company"s operations. That can substantially assist in making helpful adjustments come a company"s organization model in giving the insight needed come achieve higher revenues and also targeted service expansion. It can also help with controlling current assets and current liabilities.