Shae Fahey Accounting I 2013 - 2014
Chapter 11 Definitions & Concepts
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Subsidiary ledger: a ledger that is summarized in a single general ledger account
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Accounts payable ledger: subsidiary ledger containing only accounts for vendors from whom merchandise is purchased on account or other items are bought on account
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Accounts receivable ledger: subsidiary ledger containing only accounts for charge customers
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Controlling account: account in general ledger that summarizes all accounts in subsidiary ledger
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Balance of controlling account equals total of all account balances in its related subsidiary ledger
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Vendor number for any vendor is a 3-digit number o Example: American Paint is the vendor, and the vendor number is 210
 The first digit, 2, shows that the controlling account is a liability
 The second and third digits, 10, show the vendor number assigned to American
Pain
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Accounts arranged in alphabetical order within subsidiary ledger
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When balance of vendor account in accounts payable or accounts receiver ledger is changed, the balance of the controlling account (accounts payable or accounts receivable) is also changed
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Each new account is opened by:
1.
Writing the vendor name on the heading of the ledger account
2.
Writing the vendor number on the heading of the ledger account
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Schedule of accounts payable: listing of vendor accounts, account balances, and total amounts due all vendors o Schedule of accounts payable prepared after all entries in journal are posted
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Accounts receivable are assets and assets have a normal debit balance, so the form used in the accounts receivable ledger has a Debit Balance column instead of a Credit Balance column, as we see in the accounts payable ledger
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Some businesses record both customer name and customer address on the ledger form
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However, address information is usually kept in a separate name and address file

Shae Fahey Accounting I 2013 - 2014 o Eliminates having to record the customer address on the ledger form each time a new ledger page is started or the address changes
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Schedule of accounts receivable: listing of customer accounts, account balances, and total amount due from all customers o Schedule of accounts receivable is prepared after all entries in a journal are posted
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Account name, account number, and account balances are recorded on the new page of an account in a general ledger
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Each amount in the general columns of a cash payments journal is posted individually to the general ledger account written in the Account Title column o Only monthly total of each special amount column is posted to a general ledger account