The General Ledger maintains high-level Control Accounts, while Subsidiary Ledgers store granular line-item details. Route each transaction and record update to its proper sub-ledger!
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Transaction EventA/R Control
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Ledgers Reconciled!
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Lesson: Control Accounts vs. Sub-Ledgers
A Control Account is a summary account in the General Ledger. A Subsidiary Ledger is a separate book that holds the detailed records supporting that single control total:
GL Control Account
Supporting Subsidiary Ledger
Granular Information Tracked
Accounts Receivable
A/R Customer Sub-Ledger
Individual customer names, credit limits, invoices billed, and cash received.
Accounts Payable
A/P Vendor Sub-Ledger
Individual vendor names, payment due dates, discount terms, and payments made.
Merchandise Inventory
Inventory Stock Cards (by SKU)
Quantity received, unit purchase cost, units sold, and current valuation per item.
Equipment / PPE
Fixed Asset Register
Specific machine tag, serial #, physical department, useful life, and individual accumulated depreciation.
The Reconciliation Rule: At the end of every period, the sum of all individual accounts in a subsidiary ledger must equal the balance in the General Ledger control account. If they disagree, an audit investigation is required!