Subledger

A subledger, or subsidiary ledger, is a component of an accounting system that records detailed information for a specific account or group of related accounts. It provides granular data that supports the general ledger by tracking individual transactions and balances, while the general ledger holds summarized totals. This structure enhances traceability and helps manage large volumes of transactions.

Common subledgers include accounts receivable, accounts payable, inventory, fixed assets, payroll, and cash receipts. Entries are recorded in the subledger and then posted to the general ledger, typically to a corresponding control account such as Accounts Receivable Control or Inventory Control. The subledger contains detailed data by customer, vendor, item, asset, or payroll element, whereas the general ledger presents the overall financial position.

Period-end reconciliation is a key process: the totals in each subledger must align with the related control accounts in the general ledger. Discrepancies are investigated and resolved to ensure accurate financial statements. Subledgers are often managed within an enterprise resource planning (ERP) system or specialized modules that are integrated with the general ledger, allowing automatic posting and synchronization.

Benefits of subledgers include improved traceability, more detailed management reports, faster month-end closes, and stronger internal controls through segregation of duties and audit trails. Potential drawbacks are added system complexity and the need for ongoing reconciliation to prevent mismatches. Subledger concepts are widely used under GAAP and IFRS, and the term “subsidiary ledger” is also common in accounting literature.