What is The difference Between Sub Ledger and General Ledger

Discussion RoomCategory: Interview QuestionWhat is The difference Between Sub Ledger and General Ledger
Admin Staff asked 1 year ago

Both subledger and general ledger are accounting concepts used to record financial transactions, but they have different purposes and functions.

A subledger is a subsidiary accounting system that is used to record and track specific transactions related to a particular category of accounts. For example, a company may have a separate subledger for accounts receivable, accounts payable, inventory, or fixed assets. Each subledger will contain detailed information about the transactions related to those accounts, such as the date of the transaction, the amount, the parties involved, and any relevant notes or comments. Subledgers are usually maintained by the accounting department, and the information from these subledgers is then summarized and recorded in the general ledger.

general ledger
On the other hand, a general ledger is the central accounting system that summarizes all the financial transactions of a business. It contains a summary of all transactions from all the subledgers, organized by account, and includes both debit and credit entries. The general ledger is used to prepare financial statements such as balance sheets, income statements, and cash flow statements. It provides a comprehensive view of the financial health of the company and is often used for reporting purposes.

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