There is a distinction between the general ledger and the subsidiary ledger.
The following are the eight most significant points of distinction between the general ledger and the subsidiary ledger:
1. The meaning of the phrase
It is the general ledger account that consolidates all subsidiary ledger accounts and that is added to the trial balance in order to create the final trial balance.
In accounting, a subsidiary ledger is a subcategory of the general ledger to which journal entries are initially submitted.
2. The total number of accounts
In order to ensure that all accounts are properly reflected in the trial balance, general ledgers are established for each account. Because they are master accounts, there is a restriction to the number of them.
Subsidiary ledger accounts are formed for all account kinds inside the broader general ledgers, and these accounts are then linked together. As a result, they account for a substantially greater proportion of total ledgers than general ledgers. Accounts payable, for example, is a general ledger that may contain several individual creditor subsidiary ledgers within the same accounting period.
3. The total number of entries
The number of entries posted to the general ledger is limited since the general ledger is primarily used to publish the balances of the subsidiary ledger.
The number of entries posted to the subsidiary ledger is significantly higher than the number of journal entries passed since practically every journal entry passed is posted to one or more subsidiary ledgers.
4. The postings are listed in the following order:
Balances to general ledgers are posted after entries to subsidiary ledgers have been posted, and they are tallied and balanced before being posted to general ledgers.
Amounts are posted to subsidiary ledgers after journal entries have been passed through the system. As a result, entries are recorded to subsidiary ledgers first before being posted to the general ledger.
5. Balances are transferred across accounts.
The balances in the general ledger are transferred to the trial balance, which serves as the foundation for the preparation of financial statements in the end.
The balances of subsidiary ledgers are transferred to the general ledger that corresponds to the subsidiary ledger.
6. A portion of the trial balance
General ledger accounts flow into the trial balance and, as a result, are included in the trial balance calculation.
The accounts of subsidiary ledgers are closed and merged into the accounts of the general ledger. As a result, they are excluded from consideration in the trial balance.
7. The reason for the visit
Generate the general ledger in order to aggregate all account balances and to prepare the trial balance for the financial statements.
In order to maintain thorough and precise records of financial transactions that have been submitted to the journal, the supplementary ledger must be prepared.
8. Illustrative Cases
Accounts payable, accounts receivable, fixed assets, and bank accounts are all examples of general ledger accounts, as are many others.
Individual creditor accounts, individual debtor accounts, and individual bank accounts are all examples of subsidiary ledger accounts in general ledger accounting.
In conclusion, the general ledger vs the subsidiary ledger is as follows:
In a company’s accounting system, both general ledgers and subsidiary ledgers play a critical role in the organization’s financial reporting. The subsidiary ledger accounts serve as a link between the journal and the general ledger accounts, whereas the general ledger accounts are the conduit via which the trial balance is reached and recorded. It is common practise to publish all journal entries to a general ledger or a subsidiary ledger, or a combination of the two, depending on the nature of the transaction.