What Are The Advantages Of Special Or Subsidiary Ledgers

The advantages of special or subsidiary ledgers are similar to the special journals.

Before we move to the advantages of special or subsidiary ledgers lets look at what are subsidiary ledgers.

Special or Subsidiary ledgers are ledgers used to simplify the General ledger , for example a business that sells goods on credit find it necessary to maintain a separate account for each customer and each creditor hence the use of a special Accounts Receivable Ledger and An Accounts Payable Ledger. Having such special ledgers, it eliminates multiple entries in the General ledger.

Some of the advantages of having special or subsidiary ledgers are:

• Reduces ledger detail. It simplifies the general ledger by having most of the information recorded in the subsidiary ledger hence facilitating the easier preparation of the financial statement.
• Permits better division of labor. Like the special journal, it enable individual special or subsidiary ledger to be maintained by a different person. With this division, we see one person can now work on the general ledger accounts while another person on the subsidiary ledger
• Permit better internal control. With different persons handling the general ledger and the subsidiary ledger, it allows better internal control. Don't forget that the individual subsidiary ledger must tally with the general ledger hence the general ledger acts as a controlling account. No unauthorized entry could be made in the subsidiary ledger as it would immediately put that record out of balance with the control(general ledger) account
• Lastly, it permits a different sequence of accounts wherein in the general ledger the sequence should facilities the preparation of the financial statement while the subsidiary ledger like accounts receivable/payable should preferably be in alphabetically sequence