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General Ledger vs Sub Ledger

Updated on April 16, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

The key difference between General Ledger and Sub Ledger is that the General ledger prepared by the company is the set of the different master accounts in which the transactions of the business are recorded from the related subsidiary ledgers, whereas, Sub ledger act as an intermediary account set that is linked with the general ledger.

Differences Between General Ledger and Sub Ledger

Recording of financial information is books of account as per standard accounting principle. Both ledgers are used to record a financial transaction. The general ledger is the principal set of accounts. It records all financial transactions. The general ledger contains all debit and credit entries of transactions, and entry for the same is done in different accounts mainly; there are five types of accounts: assets, liabilities, equity, income, and expense.

Ledger helps understand the financing of business and helps analyze transactions. A subsidiary ledger is the subset of the general ledger in accounting. It is impossible to record all transactions in the general ledger; hence transactions are recorded in the sun ledger in a different account, and their total sum is reflected in the general ledger.

What is General Ledger?

The general ledger is a set of master accounts where transaction records. It is the principal set of accounts and records all financial transactions. The general ledger contains all debit and credit entries of transactions, and entry for the same is done in different accounts mainly. There are five types of accounts: assets, liabilities, equity, income, and expense. But there are limitations in recording the transaction, so the sum of a different subset of sub-ledger is added to the general ledger. General ledger control sub-ledger. It is also referred to as a chart of account masters.

Examples of the general ledger are account receivableAccount ReceivableAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more, account payable, cash management, bank management, and fixed asset. It is a group of accounts with different characteristics, and trial balance is used by using a general ledger.

General Ledger VS Sub Ledger

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What is Sub Ledger?

Sub-ledger is also known as a 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. It is a detailed subset of accounts that contains transaction information and is the subset of the general ledger in accounting. It is not possible to 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; hence transactions are recorded in a sub-ledger in a different account, and their total sum is reflected in the general ledger. The total of the sub-ledger should always match with the line item amount on the general ledger. So, it contains detailed information regarding the business transactionThe Business TransactionA business transaction is the exchange of goods or services for cash with third parties (such as customers, vendors, etc.). The goods involved have monetary and tangible economic value, which may be recorded and presented in the company's financial statements.read more and financial accounts. It can include purchase, payable, receivable, production cost, and payrollPayrollPayroll refers to the overall compensation payable by any organization to its employees on a certain date for a specific period of services they have provided in the entity. This total net pay comprises salary, wages, bonus, commission, deduction, perquisites, and other benefits.read more.

Sub-ledger is part of the general ledger, but the Trial balance is not prepared using a general ledger. Examples of the Subsidiary ledger are customer accounts, vendor accounts, bank accounts, and fixed assets. The groups of transactions have common characteristics.

General Ledger vs. Sub Ledger Infographics

Here we’ll give you the top General Ledger vs. Sub Ledger differences.

General Ledger vs. Sub Ledger Infographics

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Key Differences Between General Ledger and Sub Ledger

Comparative Table

General Ledger (GL)Sub Ledger (SL)
It is a set of master accounts where accounting transactions are recorded.Sub-ledgerSub-ledgerA subledger is a subset of several general ledgers used in accounting that may include all accounts receivable, payable, prepaid expenses, or fixed assets associated with financial transactions. It is extremely difficult to keep track of all transactions in a large organization's common ledger; therefore, a subledger is the ideal solution for recording entire transactions.read more is an intermediary set of accounts linked to the general ledger.
Examples of the GL are account receivable, account payable, cash managementCash ManagementCash Management refers to the appropriate collection, handling, & disbursement of cash for ensuring financial stability & avoiding insolvency risk. read more, bank management, and fixed asset.Examples of sub-ledger are customer accounts, vendor accounts, bank accounts, and fixed assetsFixed AssetsFixed assets are assets that are held for the long term and are not expected to be converted into cash in a short period of time. Plant and machinery, land and buildings, furniture, computers, copyright, and vehicles are all examples.read more.
The groups of transactions have different characteristics.The groups of transactions have common characteristics.
There can be only one ledger account.There can be many sub-ledger accounts.
It contains a limited volume of data.It contains a large volume of data.
It has a chart of accounts.It does not have charts of accounts.
There is no such requirement for the ledger account.The total of the Subsidiary ledger should always match with the line item amount on the general ledger.
It controls the sub-ledger.It is part of the general ledger.
The trial balance is prepared by using a general ledger.The trial balance is not prepared by using a general ledger.

Final Thoughts

Both are used to record a financial transaction. The GL is a set of master accounts, transactions are recorded, and SL is an intermediary set of accounts linked to the general ledger. GL contains all debitDebitDebit represents either an increase in a company’s expenses or a decline in its revenue. read more and credit entries of transactions, and entry for the same is done. GL has all accounts needed in double-entry accounting booksDouble-entry Accounting BooksDouble Entry Accounting System is an accounting approach which states that each & every business transaction is recorded in at least 2 accounts, i.e., a Debit & a Credit. Furthermore, the number of transactions entered as the debits must be equivalent to that of the credits. read more meaning each financial transaction affects at least two sun ledger accounts. Each entry has at least one debit against which one credit transaction is there. Sub-ledger is a detailed subset of accounts that contains transaction information.

This article has been a guide to General Ledger vs. Sub Ledger. Here we discuss the top differences along with infographics and a comparison table. You may also have a look at the following articles –

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  1. Nano cheneka Heyi says

    Thank you

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