How to Maintain an Accounts Payable Subsidiary Ledger and Why do Companies use it?

How to Maintain an Accounts Payable Subsidiary Ledger and Why do Companies use it?

Posted In | Finance | Accounting Software

What Are Accounts Payable Subsidiary Ledger?

An accounts payable subsidiary ledger is a ledger that records all of a company's accounts payable transactions. Accounts payable is the amount of money a company owes to its suppliers for goods or services that have been received but have not yet been paid for. 

 


What goes on in the Accounts Payable Subsidiary Ledger?

The accounts payable subsidiary ledger includes the company's outstanding obligations to pay vendors and suppliers.  Each account in the subsidiary ledger corresponds to a specific vendor or supplier and lists all outstanding invoices from that vendor or supplier.  The subsidiary ledger also includes any credits that the vendor or supplier may have issued to the company.  


What is a Subsidiary Ledger Account?

A subsidiary ledger account is an accounting record that details a specific account in the general ledger. The subsidiary ledger will contain all of the information that is needed to properly record transactions for the specific account. For example, if a company has a general ledger account for Accounts Receivable, the subsidiary ledger will contain all of the information about the individual receivables that make up the total amount of accounts receivable. This would include information such as the customer's name, the invoice number, the amount of the receivable, and the date the receivable is due.  


Which Accounts have Subsidiary Ledgers aside from Accounts Receivable?

Aside from accounts receivable, some common accounts with subsidiary ledgers include accounts payable, inventory, and fixed assets. 


Why do Companies use Subsidiary Ledgers for Accounts Payable and Accounts Receivable?

There are a few reasons why companies might use subsidiary ledgers for accounts payable and accounts receivable. One reason is that it can help to keep track of different types of transactions separately. For example, if a company has a lot of different suppliers, it might be helpful to have a separate subsidiary ledger for each supplier. This way, the company can easily see how much it owes to each supplier and keep track of payments. Another reason why companies might use subsidiary ledgers is that it can help to improve accuracy. If all of the transactions for accounts payable and accounts receivable are in one place, it can be easy to make mistakes. Having separate subsidiary ledgers can help to ensure that all of the transactions are recorded correctly. Overall, using subsidiary ledgers for accounts payable and accounts receivable can be helpful for various reasons. It can help to keep track of different types of transactions, improve accuracy, and make it easier to manage payments.


Why does the AP Ledger Require a Subsidiary Ledger?

The AP ledger requires a subsidiary ledger because it contains many transactions and needs to be organized in a way that makes it easy to find specific transactions. The subsidiary ledger contains all the information about each vendor, which makes it easier to track payments and reconcile accounts. The subsidiary ledger also makes it easier to generate reports, such as aging reports, that show how much money is owed to each vendor.  


What are the Two Common Kinds of Subsidiary Ledgers?

The two common kinds of subsidiary ledgers are the Accounts Receivable Ledger and the Accounts Payable Ledger.


How do you Record the Payables Ledger?

In accounting, a payables ledger records all amounts owed by a company to its creditors. 
The payables ledger is used to record the following information:

This information is used to track payments made to creditors and to record any changes in the amounts owed.


What is Another Name for the Account Payable Ledger?

The account payable ledger is also known as the trade creditor ledger. This ledger tracks all money owed to suppliers or other businesses (trade creditors) for goods or services purchased on credit. The account payable ledger will show the credit terms (how many days until payment is due), the original amount of the invoice, any discounts taken, any payments made, and the balance outstanding.