What Is a Ledger?
A ledger is a collection of accounts in which a business records and organizes its financial transactions. The general ledger holds all accounts; subsidiary ledgers (subledgers) hold the detail behind specific accounts like accounts receivable or payable.
What a ledger is and why it matters
A ledger is where transactions live after they're journalized. Historically a physical book, today it's a database inside accounting software. The general ledger is the master, organizing every transaction by account so balances can be read off directly. Subsidiary ledgers sit beneath it, holding transaction-level detail — for example, the AR subledger lists every customer's individual balance, which together sum to the accounts-receivable control account in the general ledger. This structure keeps the general ledger clean while preserving the detail needed to answer "which customer owes what."
A worked example
A company's accounts-receivable control account in the general ledger shows a $50,000 balance. The AR subledger breaks that down by customer: Acme $20,000, Globex $18,000, Initech $12,000 — totaling $50,000. When Acme pays $5,000, both update: the subledger reduces Acme to $15,000, and the general-ledger control account drops to $45,000. The subledger detail always reconciles to the general-ledger total.
How firms handle it today
Firms work primarily in the general ledger and reconcile subledgers (AR, AP, inventory) to their control accounts at close, ensuring the detail matches the summary.
Related terms
- General ledger
- Subledger
- Journal entry
- Chart of accounts
- Trial balance
FAQ
What's the difference between a ledger and a journal?
A journal records transactions in date order as they happen; a ledger organizes them by account so balances can be read.
What is a subsidiary ledger?
A ledger holding the detailed transactions behind a general-ledger control account, such as the per-customer AR subledger.
Is the general ledger the same as a ledger?
The general ledger is the main, all-encompassing ledger; "ledger" can also refer to subsidiary ledgers that support it.