Accounts Payable Ledger

Updated on April 30, 2024
Article byWallstreetmojo Team
Edited byPallabi Banerjee
Reviewed byDheeraj Vaidya, CFA, FRM

Accounts Payable Ledger Definition

Accounts Payable Ledger, also known as the creditor’s ledger, is the subsidiary ledger that lists down the details of the different suppliers or vendors of the company along with their account balances, highlighting the outstanding amount payable by the company.

Accounts Payable Ledger Definition

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The existence of an Accounts Payable ledger is not mandatory but preferable for keeping the books of accounts clean and organized. Such ledgers help keep track of payments receivable and payable for multiple years. It is a critical tool during the audit process and can be successfully linked in case of investigating individual entries.

Accounts Payable Ledger Explained

An accounts payable ledger, is an accounting document where all transactional details are recorded in a systematic manner for future reference. It records transaction details like outstanding invoices that the entity will have to pay to its suppliers. This is a very important accounting book that helps the business to keep track of its cash flows in a systematic manner.

Accounts payable general ledger contains different types of information that may include the details of the supplier, the amount of money owed to them, the order details, the payment terms and conditions, how much money is due, how much is already paid and if there are any penalties for delay in payment.

It tracks specific payable information for every invoice, including:

  • Invoice Date
  • Invoice Number
  • Name of Supplier/Vendor
  • Order Quantity
  • Amount Payable

The general ledger account balance for accounts payableAccounts PayableAccounts payable is the amount due by a business to its suppliers or vendors for the purchase of products or services. It is categorized as current liabilities on the balance sheet and must be satisfied within an accounting period.read more is compared to the ending accounts payable ledger balance to ensure that both accounts are matching. This comparison is made as part of the period-end (quarterly/yearly) closure process.

Through this record, the business is able to accumulate all information regarding payment history to its suppliers which is again used for the assessment of financial position of the entity and its capacity to meet the current obligations. It acts as a guide for the entity to track the payables and make payments on time, and maintain a good relation with them so that future correspondences become easier. This entire details also contribute to financial reporting, cash flow management and making budgets for the business.

There are various softwares and systems that are designed to maintain the accounts payable general ledger record so that the entire process is streamlined to provide valuable insight into the system.

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Let us analyze the below example of accounts payable ledger template for more understanding:

The purchase transactions for Titan Sports Gear Company are:

The accounting transactions were recorded under the perpetual inventory method in the following accounts payable journals entriesAccounts Payable Journals EntriesAccounts Payable Journal Entries refers to the amount payable accounting entries to the creditors of the company for the purchase of goods or services and are reported under the head current liabilities on the balance sheet and this account debited whenever any payment is been made.read more:

Purchase Journal

Merchandise Inventory A/C Dr……………………………………………$20,000

                Accounts Payable A/C……………………………………………………………$20,000

accounts payable ledger example 1.1

Cash Disbursement Journal

Cash Disbursement Journal example 1.2

General Journal

General Journal example 1.3

These journals would be further posted in the Accounts Payable as below:

accounts payable ledger example 1.4

Vendor Account: Mighty Sun Suppliers

The vendor/subsidiary ledgerSubsidiary LedgerA subsidiary Ledger is a list of individual accounts that bears a similar nature. It refers to an expansion of the conventional general ledger separately used to record all the transactions related to the accounts payable and accounts receivables in a detailed manner.read more would accordingly be updated for Might Sun Suppliers as:

Vendor Account example 1.5

As we can see from the above tables, the vendor balance for Mighty Sun Suppliers is $0 (NIL), and the accounts payable balance is also $0 (NIL). Since both of them are precisely matching, it is not essential to prepare an entire schedule of accounts payable. If any balance amount is pending, a separate schedule of accounts payable would be required.

The treatment for Accounts Receivable would also be in a similar manner.

However, there needs to be some caution and consistency required to be maintained. This example is just for one supplier and one month. There could be multiple entries and multiple vendors for a firm. Hence, there should be a proper mechanism with no room for errors sinceReconciliation is the process of comparing account balances to identify any financial inconsistencies, discrepancies, omissions, or even fraud. At the end of any accounting period, reconciliation involves matching balances and ensuring that debits (credits) from one account for one transaction is same as the credit (debits) to another account for the same transaction.read more reconciliationReconciliationReconciliation is the process of comparing account balances to identify any financial inconsistencies, discrepancies, omissions, or even fraud. At the end of any accounting period, reconciliation involves matching balances and ensuring that debits (credits) from one account for one transaction is same as the credit (debits) to another account for the same transaction.read more can be a difficult.

The above example very clearly explains the accounts payable ledger format and how the payables are tracked and recorded in the books of accounts. We identify the journal entries necessary for recording the same so that all details can be referred to in future for financial statements, reporting purpose, as during audits and budgetary purpose. It is essential to maintain these details in a systematic way with clarity and transparency.

Accounts Payable Explained in Video


Issues In Matching

Below are the ways through which the General LedgerGeneral LedgerA general ledger is an accounting record that compiles every financial transaction of a firm to provide accurate entries for financial statements. The double-entry bookkeeping requires the balance sheet to ensure that the sum of its debit side is equal to the credit side total. A general ledger helps to achieve this goal by compiling journal entries and allowing accounting calculations. read more control can get out of sync with the Accounts Payable:

  1. A manual entry has been made in one of the books, and no other record has been maintained. It will make reconciliation difficult.
  2. Posting to General Ledger (GL) from the Accounts payable module may have been turned off at some point in time. It is especially in the case of computerized recording of entries.
  3. A posting task may have been interrupted due to human error or power failure during the job. A transaction log should be considered for out-of-balance entries. If a complete batch is missing, the invoice history should be compared with the ledger.
  4. All posting may occur successfully at the time of entry, but the file got damaged in the interim. As a prevention method, copies of the file should be stored physically or electronically.


There are a few advantages of this financial concept of accounts payable ledger format which we will study in details below.

Chartered Accountants or individuals with a degree in commerce background can perform such tasks, making it easier for small offices and vendors to maintain such accounts.

This article has been a guide to Accounts Payable Ledger and its definition. We explain it with example, issues in matching, and advantages of the concept. You can learn more about accounting from the following articles –

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