The key difference between General Ledger and Sub Ledger is that 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 transaction and entry for the same is done in different account mainly, there are five types of accounts assets, liabilities, equity, income, and expense.
A subsidiary ledger is the subset of the general ledger in the accounting. It is not possible to record all transactions in the general ledger; hence transactions are recorded in sun ledger in a different account, and their total sum is reflected in the general ledger. Ledger helps in the understanding of the financial of business and helps in the analysis of transactions.
What is General Ledger?
The general ledger is a set of master accounts where transaction record. It is the principal set of accounts and records all financial transactions. The general ledger contains all debit and credit entries of transaction and entry for the same is done in different account mainly, there are five types of accounts assets, liabilities, equity, income, and expense. But there are limitations in the recording of the transaction, so the sum of a different subset of sub-ledger is added in the general ledger. It is also referred to as a chart of account master. General ledger control sub-ledger.
Examples of the general ledger are account receivableAccount ReceivableAccounts receivables refer to the amount due on the customers for the credit sales of the products or services made by the company to them. It appears as a current asset in the corporate balance sheet.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.
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What is Sub Ledger?
Sub-ledger is also known as a subsidiary ledger. It is a detailed subset of accounts that contains transaction information and is the subset of the general ledger in the accounting. It is not possible to the general ledgerGeneral LedgerA general ledger is a book of accounts that records the everyday business transactions in separate ledger accounts. The entries made in a ledger can be verified by getting a NIL balance on summing up all the ledger account amounts in the trial balance.read more; hence transactions are recorded in sub-ledger in a different account, and their total sum is reflected in the general ledger. The total of 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.
Examples of the Subsidiary ledger are customer accounts, vendor accounts, bank accounts, and fixed assets. The groups of transactions have common characteristics. Sub-ledger is part of the general ledger, but the Trial balance is not prepared by using a general ledger.
General Ledger vs. Sub Ledger Infographics
Here we’re going to give you the top General Ledger vs. Sub Ledger differences
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Key Differences Between General Ledger and Sub Ledger
- GL is a set of master accounts where transactions are recorded, whereas Sub-ledger is an intermediary set of accounts linked to the SL.
- Examples of the general ledger are account receivableAccount ReceivableAccounts receivables refer to the amount due on the customers for the credit sales of the products or services made by the company to them. It appears as a current asset in the corporate balance sheet.read more, account payable, cash management, bank management, and fixed assets, and Examples of sub-ledger are customer accounts, vendor accounts, bank accounts, and fixed assets.
- The groups of transactions have different characteristics in the general ledger, whereas in the Subsidiary ledger, the groups of transactions have common characteristics.
- There can be only one ledger account in the GL, and there can be many sub-ledger accounts.
- GL contains a limited volume of data, whereas Sub-ledger includes a large quantity of data.
- Chart of accountsChart Of AccountsChart of Accounts (COA) is a list of all the accounts in which a business records its regular operational expenses. It is used to collect information for preparing a Company’s financial statements. read more, whereas sub-ledger does not have charts of accounts.
- General ledger has no such requirement for the ledger account, whereas the total of sub-ledger should always match with the line item amount on the general ledger.
- GL control sub-ledger, whereas Sub-ledger is part of the general ledger.
- The trial balance is prepared by using a general ledger, whereas trial balance is not prepared by using a general ledger.
Comparative Table
| General Ledger (GL) | Sub Ledger (SL) |
|---|---|
| It is a set of master accounts where accounting transactions are recorded. | Sub-ledger 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 assets. |
| 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, and transactions are recorded, and SL is an intermediary set of accounts linked to the general ledger. GL contains all debit and credit entries of transactions, and entry for the same is done. GL has all account which is 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 which means that each financial transaction affects at least two sun ledger accounts and 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.
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