Supporting Records - BC Bookkeeping Tutorials|dwmbeancounter.com

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Supporting Records

Special Journals Records
General Ledger Control Accounts and Subsidiary Ledgers

Hopefully by now you know, the General Ledger is a special record where each account that we want to track and keep up with has a separate page or pages. This book (record) is organized into major sections just like the Accounting Equation that we studied in my Introductory Course. Do you have any idea what these sections might be ? Come on this question is not that hard. The general ledger's major sections are Assets, Liabilities, Owner's Equity, Revenues, Expenses, and Draws. Simply stated a General Ledger is just a book containing the summarized financial transactions and balances of the accounts for all of a business's assets, liabilities, equity, revenue, and expense accounts.
How the pieces fit together
In addition to Special Journals and regular General Ledger Accounts we also use some additional supporting records.

Special General Ledger Accounts-Control Accounts
A Control Account is a general ledger account that provides a summarized balance of the detailed balances of the individual records maintained in a subsidiary ledger.

General Ledger Control Accounts only provide us with total amounts. The Accounts Receivable Control Account provides us with the total amount that customers owe us. The General Ledger Accounts Payable Control Account only provides us with the total amount that we owe to suppliers.

Subsidiary Ledgers
A subsidiary ledger is a group of similar accounts whose combined balances equal the balance in a specific general ledger account. The general ledger account that summarizes a subsidiary ledger's account balances is called a control account. The Subsidiary Ledger's purpose is to provide detail information about transactions that are summarized in a General Ledger Control Account.

Without Subsidiary Ledgers it would be difficult without doing a time consuming analysis to provide answers to some of the following types of questions:
How much does ABC Company owe us and are any invoices past due ?
Every customer that owes us money and how much ?
What type of specific equipment and vehicles do we own and how much have we depreciated them ?
How much do we owe XYZ Supplier and are we late with any payments ?
Every supplier we owe and how much ?
What loans do we have, how much do we still owe on them, and with whom do we have them ?
If we maintain an Inventory of products in our business, how many of XXX product do we have on hand and what is its cost and selling price ?
How much have we paid Joe Blow this year ?

Can your business easily provide the answers to the above questions ?

After posting all transactions to the Control Accounts and Subsidiary Ledgers, the balance of the Control Accounts and the sum of the detailed records in the Subsidiary Ledgers should always be the same. In other words, a control account deals with summarized information while a subsidiary ledger deals with detailed information.


What's Next ?

What Journal Do I Use ?
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