How do we reconcile differences/variances of General Ledger versus Subsidiary Ledgers?

 thanks for the invitation

there three main steps to reconcile the general ledger with sub ledger

1- compare between the general ledger and sub

2-  investigate and justify the reason of the differences

3- adjust the general ledger or sub

Reconciliation of the general ledger to sub-ledgers: -The general ledger is a collection of al balance sheet and income statement accounts. the general ledger includespecially all journal entries posted to accounts. -A sub -ledger is detailed record of transactions for an individual account. -As there always room for a human error 'it's important to reconcile the general ledger balance to the sub- ledger balance on a periodic basis to spot such errors. 'When there are difference between them"there would be reconcilin items, which need to be analyzed and corrected,. -Two important accounts that should be reconciledone on a monthly basis are accounts receivable and accounts payable. -Sometimes amounts are included into a sub -ledger but not on the ledger.

Thank you for the invatation It is same if we are talking about 2 companies After we know the reason of the differences we accountant in general and sub start record the entries to reconcile all transactions

Sub ledger is the subset of General ledger in the accounting terms. The relation between sub ledger to general ledger is many to one. i.e. there can be multiple sub ledger accounts linked to same general ledger account.

In general terms, General ledger refers to the Chart of Account master and Sub ledger refers to the sub master of accounts which are linked to the main chart of account through posting profiles

The total of the sub ledger should match to the line item amount on the general ledger. This corresponding line item in the general ledger is referred to as the controlling account.

Some of the more examples of General ledger account (controlling account) and Sub ledger account (Subsidiary account)

• Account Receivables (General ledger account) & multiple Customer accounts (sub ledger or subsidiary accounts)

 Firstly compare G/L balance to the sub-ledger balance; if it is not equal you need to proceed analyzing the G/L and sub-ledger balances to identify the differences.

 

Then investigate the reasons for difference(s) and we should decide where (i.e. G/L or sub-ledger) adjustments should be made.

In fact, the ledger should have the summation of all separate ledgers,  So we should follow transaction by transaction from the sub ledgers up to the sum in the general ledger