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What are the Types of Ledgers in Accounting?

Last Modified : Mar 21, 2024

Reviewed by: Bruce Sayer

In accounting, ledgers are crucial for recording and organizing financial transactions. They serve as the central repository where all transactions are compiled and categorized from the journal entries.

What is an Accounting Ledger?

An accounting ledger is essentially a comprehensive record used by businesses to compile all the data necessary for generating financial statements. This ledger encompasses a variety of accounts derived from journal entries, where initial transaction details are meticulously logged. The process involves categorizing and consolidating these details into an organized sequence of debits and credits within the ledger, making it known as the second book of entry due to its role in recording information for the second time.

The ledger captures a wide array of financial data, including but not limited to, assets, liabilities, income, expenses, and shareholder equity. While traditional methods might involve manually recording these details in a physical ledger, modern practices predominantly utilize electronic formats produced through accounting software, streamlining the process and enhancing accuracy and accessibility.

There are primarily three types of ledgers used in accounting, a general ledger, a subsidiary ledger and a sales ledger, each serving a unique purpose in financial reporting and analysis:

1. General Ledger

The general ledger is the foundation of a company’s accounting system. It contains all the accounts used to record transactions relating to the company’s assets, liabilities, equity, revenue, and expenses. Every financial transaction flows from the journal to the general ledger. The general ledger provides a complete record of financial transactions over the life of the company and is used to prepare the primary financial statements: the balance sheet, income statement, and cash flow statement.

  • Function: Serves as the main ledger that consolidates all transactions recorded in various journals.
  • Components: Includes accounts like cash, accounts receivable, accounts payable, sales revenue, and expenses.

2. Subsidiary Ledger

A subsidiary ledger, also known as a subledger or subaccount, contains the details that support a general ledger control account. For instance, if the general ledger has an account receivable control account, the subsidiary ledger for accounts receivable would list individual transactions with customers. Subsidiary ledgers help in tracking detailed information about specific accounts, making it easier to review and manage them without cluttering the general ledger with too much detail.

  • Function: Provides a breakdown of the transactions that contribute to a balance in a control account in the general ledger.
  • Types: Common types include the accounts receivable ledger (detailing individual customer transactions) and the accounts payable ledger (detailing individual supplier transactions).

3. Sales Ledger and Purchase Ledger

These are specialized types of subsidiary ledgers:

  • Sales Ledger (Customer Ledger): Records all transactions involving sales on credit to customers, tracking amounts owed by customers and payments received. It supports the accounts receivable account in the general ledger.
  • Purchase Ledger (Vendor Ledger): Records all transactions involving purchases on credit from suppliers, tracking amounts owed to suppliers and payments made. It supports the accounts payable account in the general ledger.

Real-World Example

Imagine a retail company that sells products both online and in-store. The company uses:

  • A General Ledger: To record all summary-level financial transactions, including daily sales, inventory purchases, operating expenses, and the financing of a new store.
  • Subsidiary Ledgers: To manage detailed transactions related to specific accounts. For instance, the accounts receivable subsidiary ledger tracks individual sales on credit to customers, detailing each customer’s purchases, returns, and payments. Similarly, the accounts payable subsidiary ledger manages detailed records of transactions with each supplier, including orders, returns, and payments.

This structure allows the company’s accounting department to efficiently manage and review detailed transaction data while maintaining a clear and concise general ledger for financial reporting and analysis.


The use of general and subsidiary ledgers in accounting ensures that financial information is accurately recorded, organized, and accessible for making informed business decisions, preparing financial statements, and complying with audit and regulatory requirements.


ABOUT eCapital

Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.

We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.

James Poston

James is an experienced product expert in receivables financing, trade finance including purchase order financing, and asset-based lending. In his role, he oversees eCapital’s sales strategy by driving business development and creating unified revenue generation processes across our organization. Utilizing his experience in developing strategic relationships and nurturing strong networks, James is positioned to expand our company’s market footprint and industry associations.

Prior to joining the eCapital organization, James served as Executive Vice President and Sales Director for Bibby Financial Services Canada. During that time, he participated in all aspects of the organization including operations, credit and finally business development where he was named a 40 under 40 Award recipient by Secured Finance Network.

James is a Chartered Professional Accountant and Certified Management Accountant and holds a Bachelor of Economics degree with concentrations in international relations and political economy from McGill University.

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