Difference between General Ledger & Sub Ledger 6


Sub ledger is the subset of General ledger in the accounting terms. The relation between sub ledger to general ledger is many to one. i.e. there can be multiple sub ledger accounts linked to same general ledger account.

In general terms, General ledger refers to the Chart of Account master and Sub ledger refers to the sub master of accounts which are linked to the main chart of account through posting profiles.

For example; ABC Company Ltd has 10 bank accounts which linked to different bank institutions. Company wants to maintain only one bank ledger account at chart of account level but at the same time wants separate tracking of transaction details of every bank account as well. Here company will maintain the details of all the bank accounts at sub ledger level and link all the sub ledger accounts to the main bank ledger account at general ledger or chart of account level. In this way if company wants to check its net bank balance, it will refer to the main account at chart of account level and if it wants to check the balance of a specific bank account, it will refer to the sub ledger level.

The total of the sub ledger should match to the line item amount on the general ledger. This corresponding line item in the general ledger is referred to as the controlling account.

Some of the more examples of General ledger account (controlling account) and Sub ledger account (Subsidiary account)

  • Account Receivables (General ledger account) & multiple Customer accounts (sub ledger or subsidiary accounts)
  • Account Payables (General ledger account) & multiple Vendor accounts (sub ledger or subsidiary accounts)

 

Happy Learning!


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6 thoughts on “Difference between General Ledger & Sub Ledger

  • Nageshwara Rao

    HI Team,

    Account Payables (General ledger account) & multiple Vendor accounts (sub ledger or subsidiary accounts)

    i need above line explanation please

    • ALTAF

      For example your total amount payable is 90,000/- to your 5 vendors, A,(25,000) B (10,000) C (30,000) D (12,000) E (13,000). So A,B,C,D and E are your sub ledger accounts of total PAYABLE account. Means PAYABLE account is your general ledger account. Sub ledger accounts come under one ledger head.

  • Nagesh

    HI Team,

    Account Receivables (General ledger account) & multiple Customer accounts (sub ledger or subsidiary accounts)

    Can you please explain the above line in detailed?

    • abhinav khanna

      Hi Nagesh,

      Ledger account used for Accounts Receivable is referred to as General ledger
      Customer accounts are referred to as subledgers.

  • Deepak Kalra

    My customer have 3 bank accounts but he wants to map all banks with one Main account.Now My query is how he will be able to do bank reconciliation at each bank level .it would be great if you please explain in details.

    • abhinav khanna

      Hi Deepak,

      If you are referring to Ax then the users can import the bank statement (in 2012 and above) and reconcile it. The impact of Journal entries will go to the main account while the reconciliation will effect at the Bank transaction (i.e. sub ledger level) and the bank transactions would be updated accordingly.
      let me know if this helps.