Why Is It Important To Update The Balance Of Subsidiary Ledgers Accounts

Why We Update The Subsidiary / Sub-Ledger Accounts Balances? / The Importance Of Updating Subsidiary Ledger Accounts Balances / Sub Ledger Accounts Balances

It is important to update the balance of Subsidiary Ledgers as it reflects in the Main or Master or Control Ledger Account as the information entered into subsidiary ledgers are added up in one master ledger account. This one master ledger account is linked with all of the subsidiary ledger accounts.

For example, the accounts receivable subsidiary ledger accounts balances, which are used for one single master or control ledger account is Accounts Receivable Control Ledger Account, are given below:

 

                                                                    Mr. A     =    Rs. 3000

                                                                    Mr. B     =     Rs. 2000

                                                                    Mr. C     =    Rs. 1500

                                                                                         _________

             Accounts Receivable (Control Ledger)  =     Rs. 6500

                                                                                         _________

The total of these Accounts Receivable Subsidiary Ledger Accounts is Rs. 6500 which is the updated balance of Accounts Receivable Control Ledger Account.

Any update in accounts receivable subsidiary ledger’s Mr. A, Mr. B and Mr. C is collectively affects master or control accounts receivable ledger account.

So, it is very important to update the balance of subsidiary ledger or subledgers with the correct information, otherwise, any mistake in subsidiary ledgers are carried forward into one master ledger account.