Subledger Vs. General Ledger: What Are the Key Differences?

A sub-ledger is an intermediary financial record that links with the general ledger. It provides a detailed analysis of the balances existing for each account. SkiptocontentCompaniesrelyontheiraccountingfunctiontorecordandreporttransactionsaccurately.Thisfunctionprovidesthebaseforthecompanytopreparefinancialstatements.Initially,theprocessstartswhenafinancialtransactionoccurs.Theaccountingfunctionprocessesthattransactionandrecordsitinthebooks.Usually,thisprocesshappensthroughanautomatedsystem.Allfinancialtransactionsgointothebooksofprimeentry.Initially,itisthefirstareawherethesetransactionsentertheaccountingsystem.Similarly,thesebookscomeinseveralforms.Theymayincludethecashbook,salesbook,purchasesbook,generaljournal,etc.Companiesmayconsistofmorebooksofprimeentrybasedontheirneeds.Fromthere,thetransactionsgointotheledger.Beforeenteringtheledger,companiessumalltransactionsandpostthetotaltotheledger.However,somepeoplemayconfuseaboutwhethertheyshouldincludethesetotalsinthegeneralledgerorsub-ledger.Thesearetwoverydifferentaccountingregardsinthepurposetheyserve.Beforeunderstandingthedifferencebetweenthem,itiscrucialtostudyeachindividually.WhatisGeneralLedger?Thegeneralledgerisanaccountingrecordthatcompanieskeepasapartoftheiraccountingfunction.Itrepresentsasystemwherecompaniesmaintaintheirrecordsrelatingtofinancialinformation.Ontopofthat,thegeneralledgersegregatesthoserecordsintodebitandcreditaccounts.Thegeneralledgerservesacrucialpurposeinpreparingfinancialstatements.Itformsthebaseforthetrialbalance.AdvertisementsThegeneralledgerrecordseveryfinancialtransactionunderaseparateaccount.However,itusuallyincludesthetotalsofthoserecords.Essentially,itsummarizesandcategorizeseachtransactionintoadifferentaccount.Asstatedabove,thisaccountcanbedebitorcreditbasedonthataccount.Usually,theseaccountsfallintomorecategories.Relatedarticle Non-OperatingIncome:Explanation,Example,AndMoreThegeneraljournalincludesaccountsofseveraltypes.Theseincludeassets,liabilities,equity,income,expenses,contraaccounts,etc.Similarly,eachaccounthasatypebasedonitscategory.Usually,assetandexpensegeneralledgersaredebitaccounts.Theothertypesofgeneralledgeraccountsfallundercredits.Contraaccountscanrelatetobothsides.Thegeneralledgerusesthebooksofprimeentryasabase.Asstatedabove,companiespostthetotalofeachbookinitafterregularintervals.Theseintervalsmayinvolvedaily,weeklyormonthlyposting.Ateachyear-end,companiescloseeveryaccountwithinthegeneralledger.Thisprocesscreatesabalanceineachaccount.Thesebalancesthenbecomeapartofthetrialbalance.Overall,thegeneralledgerisanaccountingrecordtosummarizeandcategorizefinancialtransactions.Itservesacriticalpurposewithintheaccountingprocess.Usually,thisledgertakesinputfromthebooksofprimeentry.Subsequently,financialtransactionsgetsummarizedandbecomeapartofthetrialbalance.Thegeneralledgeriscrucialinaccumulatingvarioustransactionsundersimilaraccounts.WhatistheSubledger?Thegeneralledgerincludesasummarizedformofvariousfinancialtransactions.However,itmaynotprovideadetailedanalysisofhowthesetransactionsoccurred.Ontopofthat,othercrucialinformationmayalsoberequiredrelatedtothosetransactions.Therefore,companiesalsomaintainasub-ledgerorsubsidiaryledger.Itprovidesdetailsofthetransactionspostedtothegeneralledger.Thesub-ledgerincludesasubsetofseveralgeneralledgeraccounts.Usually,itprovidesdetailsonspecificareas,includingaccountsreceivables,accountspayables,fixedassets,etc.Havingmoreinformationthanthegeneralledgeroffersishighlycrucial.Thedetailsmayincludethesourceofthosetransactions,thedate,description,originalbalance,etc.Relatedarticle WhatIsFeed-forwardControl?-Definition,Types,AndMoreAsub-ledgerdoesnotprovideinformationtogointotheaccountingsystem.Inmostcases,itissecondarytothegeneralledger.Essentially,thesub-ledgeronlyimprovesthequalityoftheinformationprovidedinthelatter.AdvertisementsFormostcompanies,thisinformationisonlynecessaryinternally.Therefore,thesub-ledgerdoesnotenhancetheinformationprovidedinthefinancialstatements.However,itdoesnotimplythatthesub-ledgerisfutile.Onthecontrary,itcanbehighlycrucialinmaintainingdetailedrecords.Althoughthesub-ledgerissecondarytothegeneralledger,thebalanceonbothshouldagree.Inthiscase,thegeneralledgeractsasacontrollingaccountfortheformer.Evenauditorscheckthattheaccountbalancesforbothrecordsmatchasapartoftheirauditprocedures.Overall,thesubsidiaryledgerisasecondaryfinancialrecordthatenhancestheinformationinthegeneralledger.Itprovidesdetailedinformationonthefinancialtransactionspostedtothelatter.Furthermore,thesub-ledgeriscrucialinvariousareas.Themostcriticalofthoseincludeaccountspayable,accountsreceivable,andprepaidexpenses.Subledgerbalancesshouldalsoagreewiththeircorrespondinggeneralledgeraccountbalances.AdvertisementsSubledgerVs.GeneralLedger:Whatarethekeydifferences?Thesub-ledgerandgeneralledgerhavemanydifferences.Althoughtheformerisoptionalandmaynotbemandatoryunderaccountingrules,theyarestillcrucial.Nonetheless,bothplayacriticalroleintheaccountingsystemforacompany.Theprimarydifferencesbetweensub-ledgersandgeneralledgersincludethefollowingareas.DefinitionAsub-ledgerisanintermediaryfinancialrecordthatlinkswiththegeneralledger.Itprovidesadetailedanalysisofthebalancesexistingforeachaccount.However,itdoesnotcontributetothepreparationoffinancialstatements.Ontheotherhand,thegeneralledgerisacrucialaccountingrecord.Itincludesasetofaccountswithbalancestorecordfinancialtransactions.Relatedarticle WhatisAdministrativeServicesOnly(ASO)?AdvertisementsNumberofaccountsThesub-ledgermayincludevariousaccountsforaspecificitem.Eachcanprovidecrucialdetailsondifferentaspectswithinthoseareas.Usually,companiescanchoosehowmanysub-ledgerstocreate.However,thegeneralledgeronlyincludesoneledgeraccountforeacharea.Itiscrucialtomaintaintheseaccountsseparatelytodifferentiatethemwithinthetrialbalance.QuantityofinformationThesub-ledgerisaninternalrecordthatcompaniesprepareasapartofthemanagerialaccountingprocess.Itdoesnotfallunderthesameregulationsandrulesasthegeneralledger.Therefore,companiescanchoosethequantityofinformationthatgoesintoit.However,thegeneralledgercomeswithinspecificrules.Companiescanonlypostlimitedfinancialinformationwithinthoserecords.AdvertisementsRelationshipDespitethedifferences,thegeneralledgerandsub-ledgeralsorelatetoeachother.However,theirrelationshipdiffersbasedontheitemunderconsideration.Thesub-ledgerenhancestheinformationprovidedwithinthegeneralledger.Essentially,itisapartofthelatter.However,thegeneralledgeractsasacontrolaccountforthesub-ledger.ChartofaccountsThesub-ledgerdoesnothaveachartofaccounts.Itenliststhefinancialaccountscompaniessetupforrecordingtransactions.Sincesub-ledgersrelatetothegeneralledger,theydon’tneedachartofaccounts.However,thesamedoesnotapplytothegeneralledger.Asstatedabove,eachaccountwithinthisledgerincludesatype.Thistyperelatestothechartofaccountsforthatunderlyingcompany.SummaryThefollowingtablesummarizesthedifferencesbetweenasub-ledgerandageneralledger.AdvertisementsSubledgerGeneralledgerDefinitionItprovidesdetailedinformationaboutthefinancialtransactionspostedinthegeneralledger.Itisaprimaryaccountingrecordthatincludesasetofaccountstorecordfinancialtransactions.NumberofaccountsItmayincludemanyaccountsdependingontheneedsofacompany.Includesoneaccountforeveryarea.QuantityofinformationIncludesdetailedandhighervolumeofinformationaboutfinancialtransactions.Itonlyincludeslimitedinformationdependingonaccountingconventions.RelationshipItisapartofthegeneralledgerandenhancestheinformationwithinit.Servesasacontrolaccounttothesub-ledger.ChartofaccountsDoesnotrequireachartofaccounts.Requiresachartofaccounts.Postnavigation←PreviousPostNextPost→RelatedPostsreportthisadTrendingSmallBusinessAccounting:4CrucialReportsWhatisaBusinessReference?IsTurboTaxWorthIt?CompleteReviewForTaxFilersHowDifficultisanAccounting-relatedJob?IsItReallyStressing?IsDoorDashWorthItAfterTaxesIn2022?reportthisadreportthisadAdvertisementsreportthisadx