A ledger is a book or database in which double-entry accounting transactions are stored or summarized. A subsidiary ledger is a ledger designed for the storage of specific types of accounting transactions.

Once information has been recorded in a subsidiary ledger, it is periodically summarized and posted to an account in the general ledger, which in turn is used to construct the financial statements of a company. The account in the general ledger where this summarized information is stored is called a control account. Most accounts in the general ledger are not control accounts; instead, individual transactions are recorded directly into them.

A subsidiary ledger can be set up for virtually any general ledger account.  However, they are usually only created for areas in which there are high transaction volumes, which limits their use to a few areas.

Examples of subsidiary ledgers are:

  • Accounts payable ledger
  • Accounts receivable ledger
  • Fixed assets ledger
  • Inventory ledger
  • Purchases ledger


As an example of the information in a subsidiary ledger, the inventory ledger may contain transactions about receipts into stock, movements of stock to the production floor, conversion into finished goods, scrap and rework reporting, write-offs for obsolete inventory, and sales to customers.

Part of the period-end closing process is to post the information in a subsidiary ledger to the general ledger. Posting is usually a manual processing step, so you need to verify that all subsidiary ledgers have been appropriately completed and closed before posting their summarized totals to the general ledger. Otherwise, some late transactions may not be posted into the general ledger until the next reporting period.

Subsidiary ledgers are used when there is a large amount of transaction information that would clutter up the general ledger. This situation typically arises in companies with significant sales volume. Thus, there is no need for a subsidiary ledger in a small company.

In order to research accounting information when a subsidiary ledger is used, you need to drill down from the general ledger to the appropriate subsidiary ledger, where the detailed information is stored.

There is no need to set up subsidiary ledgers from a control or data access perspective, since you can usually restrict access to individual accounts in better accounting software packages.