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What Is an account Payable Subsidiary Ledger?
An accounts payable subsidiary ledger is an audit ledger that mirrors the transaction background and quantities owedto each supplier and also vendor. An accounts payable (AP) is essentially an expansion of credit transaction from a supplier that gives a business (the buyer in the transaction) time to pay for the supplies. The subsidiary ledger records every one of the accounts payables the a company owes. The payment terms are generally 30, 60, or 90 days.
An accounts payable subsidiary ledger is an accounting ledger that shows the transaction background and amounts owed to each supplier and vendor.An account payable (AP) is essentially an extension of credit from a supplier that offers a service (the buyer) time to pay for the supplies.The subsidiary ledger records every one of the accounts payables the a firm owes whereby the aggregate total is brought over come the general ledger.
The balance in the customer account is regular reconciled with the account payable balance in the general ledger come ensure accuracy. The accounts payable subsidiary ledger is likewise commonly described as the AP sub-ledger or subaccount.
understanding an accounts Payable Subsidiary Ledger
Companies have the right to have assorted payables owed to merchants or carriers at any kind of given time. This payables space short-term debts or IOUs native one firm to an additional company. The total amount the payables fan to service providers is tape-recorded as accounts payable on the general ledger.
The general ledger is a understand ledger comprise a an introduction of all the accounts that a company uses in operation its business. The subsidiary ledgers roll approximately the basic ledger, which documents the aggregate totals of the subsidiary ledgers. The general ledger, in turn, allocates these totals into assets, liabilities, and also equity accounts. Within most accountancy systems, the process is carry out via accountancy software.
When the financial statements room prepared, the account payable full is detailed with various other short-term financial responsibilities under the existing liabilities ar of the balance sheet. The accounts payable subsidiary ledger is a failure of the full amount that payables listed on the general ledger. In other words, the subsidiary ledger includes the individual payables owed to every of the suppliers and vendors, and the amounts owed.
Since companies deserve to have lot of orders with the same merchant and many different vendors, the account payable subsidiary ledger keeps monitor of what's owed without having actually to do numerous accounting entries top top the general ledger. The subsidiary ledger is basically a worksheet for all of the payables owed to suppliers.
The account payable subsidiary ledger is beneficial in providing internal audit controls. The account payable subsidiary ledger quantities can it is in crosschecked with the accumulation amount reported on the general ledger to prevent errors in reporting. Management can likewise check come ensure that each invoice native the vendors and suppliers space being recorded.
instance of an accounts Payable Subsidiary Ledger
As one example, let's say The Ford Motor agency has a general ledger balance that shows a complete accounts payable balance the $106 million. However, administration wants to check out which suppliers are owed and also the amounts owed.
The info needed have the right to be gleaned indigenous the account payable subsidiary ledger. The subsidiary ledger reflects the following:
Supplier A is fan $2 million because that tires.Supplier B is fan $6 million for automobile mats.Supplier C is fan $98 million for steel.
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The account payable subsidiary ledger is comparable to various other subsidiary ledgers in the it merely gives details that the control account in the general ledger. Other subsidiary account ledgers encompass the accounts receivable subsidiary ledger, the list subsidiary ledger, and the tools subsidiary ledger.