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In double entry system of book keeping for each and every transaction, let it be payment, sales, purchase etc. journal entry is always passed however keeping in view that transactions are so many and are on different dates so it is difficult to know the details of one particular account so the need arise for subsidiary books where we can see the summary of transaction under one book like sales register, purchase register Ledger etc.
But point to be noted here is that there is only one book which is book of prime entry and subsidiary book, that book is cash book.
The main benefit of subsidiary books is that individual creditor or debtor wise balance could be found easily, also expenses could be traced head wise.
Subsidiary ledgers have several advantages:
1. They show in a single account transactions affecting one customer or one creditor, thus providing up-to-date information on specific account balances.
2. They free the general ledger of excessive details. As a result, a trial balance of the general ledger does not contain vast numbers of individual account balances.
3. They help locate errors in individual accounts by reducing the number of accounts in one ledger and by using control accounts.
4. They make possible a division of labor in posting. One employee can post to the general ledger while someone else posts to the subsidiary ledgers.
5. At the same time, an accounting sub-ledger substantiates General Ledger balances with transaction-level detail. This enables Finance teams to drill down from the GL to see detailed balances without needing to go back to individual business teams or source systems. This improves finance’s confidence in reported results and reduces time spent on reconciliation and audit.
