Accounting Demystified

Control Account/Subsidiary Ledger

If business is going well, you can imagine that a company could have a lot of customers, and therefore a lot of accounts receivable. If it were your company, you would want to keep track of what each customer owed you so that you could make sure that your customers were paying promptly. The general ledger is not the place for details about accounts; it should be used to summarize the company's financial information. To be more efficient, we use what's called a control account in the general ledger, and we also use a subsidiary ledger in which the details of each customer's account are kept. The total of the subsidiary ledger will equal the control account (the balance in the general ledger). The subsidiary ledger ...