General vs. Subsidiary Ledger

3Accounting can easily be termed as the backbone of any business or company. It is through accounting processes that the company manages to keep tabs on the transactions of the firm. They are the only ways of knowing just how profitable the business transactions are and vice-versa. However, there are various kinds of ledgers or journals used for this [particular function. There are the subsidiary ledgers and the general ledgers. The two hold rather the same financial information although the general ledger tends to be more diverse since it contains information all the transactions done. There are however a couple of differences between the two as well as similarities.

  • History

The two journals share the same history. They both originated from the father of accounting; Luca Pacioli. He is the one who invented the concept of using journals and ledgers in accounting. He also established the double-entry system of which he referred to as self-balancing. In this case, he meant that the debits and credits are supposed to balance in order for the ledger to be correct. However, the only difference in this case is that the general ledger is meant to contain more general information whereas the subsidiary ledger is meant to contain specific and detailed information.

  • Facts

Usually, subsidiary ledgers are meant to contain very detailed data concerning the financial situation of the firm. However, this information is never mixed up with the data filled into the general ledger. The very large business organizations are the ones most likely to use subsidiary ledgers. The main reason behind this is that the subsidiary ledger contains quite a number of various transactions. This way, the company can easily keep tabs on each and every financial sector of the company. General ledgers on the other hand are just that; general. They do not actually get in the whole aspect of capturing specific financial aspects of the firm.

  • Functions

As stated earlier, subsidiary ledgers are more common in very large organizations. This is mainly due to their ability to separate the various accounting responsibilities and duties within the firm. Each employee gets assigned a different subsidiary ledger to maintain. However, the general staff is assigned with the general ledger. At the end of the day, the findings of the subsidiary ledgers are brought together in the general ledger to come up with a more general view of how the organization is performing. It is now the job of the staff accountants to go through both ledgers and make sure that the information rhymes.


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