Account receivable subsidiary ledger is a term in accounting records that refers to an additional book of accounts receivable, or a ledger that helps record receivables. Its function is to detail the receivables owned, received, and given by the company.
Actually, this explanation should be very technical, and I think it may only be needed for people who have studied accounting or work as an accountant. So to explain the account receivable subsidiary ledger , I will make an example based on an illustration that we can understand together, the important thing is that the point is like that, and its use is like that.
Here's the illustration:
Company A in January has receivables from company B, C. Company B has receivables of 1 million, while company C has receivables of 2 million. So the total receivables owned by company A at the beginning of January's books were 3 million, and that 3 million was what was written in the main book. In the main book only accounts receivable are discussed, it does not discuss about the accounts receivable of companies B and C.
For example, in the main book notes:
- January 1, company A has receivables of 3 million
- January 10, received payment of receivables of 1 million
- January 20, giving receivables 2 million
- January 30, company A has 4 million receivables
That is more or less the accounts receivable transaction report in the main book of the company , only discussing accounts receivable without discussing the parties involved. So the point is just to conclude, at the beginning of January company A has receivables of 3 million, and at the end of the month the amount of receivables increases to 4 million. Also, there are only records of additions and subtractions to accounts receivable. There is no information about companies B and C, and after all, all transactions other than accounts receivable are discussed in the main book.
So that's why there is a accounts receivable subsidiary book, aka Account Receivable Subsidiary Ledger , which functions as a breakdown of accounts receivable and clarifies the flow of accounts receivable transactions that occur. In the accounts receivable subsidiary book, the notes will be like this:
- January 1, company A has a debt of 3 million, company B owes 1 million, company C owes 2 million.
- January 10, company C paid a debt of 1 million, so company A owed 2 million left, company B owed 1 million, company C owed 1 million.
- January 20, company B owes another 2 million, so company A owes 4 million, company B owes 3 million, company C owes 1 million.
- January 30, the total receivables of company A are 4 million, of which company B owes 3 million and company C owes 1 million.
It seems that the difference is, in the main book only the total size and flow of transactions are mentioned without any mention of who is involved, while in the Account Receivable Subsidiary Ledger, the contents are the details, these details are not written in the main book.
If it is simplified again in everyday life, for example I owe people, and my money is out of 10 million, so I just have to say there are 10 million outside, this is the main book . Meanwhile, I have notes stored in the drawer of the house desk, 10 million, 1 million A, 2 million B, 3 million C, and 4 million D, this is the Account Receivable Subsidiary Ledger.
If there are friends who better understand the technicalities of accounting records, maybe you can correct my answer
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