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Understanding Ledgers

Your decision about what sorts of ledgers to maintain follows reasoning similar to the decision to maintain special journals. If you kept only one ledger, with detailed information about all accounts, it would lose much of its value as a summary document.

Therefore, it's normal to establish subsidiary ledgers that contain detailed information from the journals. You can then keep the detailed information about specific sales and specific purchases in the subsidiary ledgers, and transfer totals from them to a general ledger. Because of the frequency of transactions involving sales and purchases, many businesses maintain an Accounts Receivable subsidiary ledger and an Accounts Payable subsidiary ledger.


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