Question

What is the purpose of the subsidiary ledgers? Name two types of accounts which would typically require the use of special journals.

Answer 1

Answer: A subsidiary ledger is an addition of general ledger that groups similar accounts whose combined balances equal the balance in a specific general ledger account. It is primarily designed for the storage of specific types of accounting transactions. The main purpose is to give details about the individual items comprising the general ledger account balance; and locate errors in individual accounts

A special journal refers to any accounting journal in the general journal that is used for recording and posting frequent transactions of similar types such as sales, purchases, cash receipts, and cash disbursements account journals. It is required to categorize transactions into different types and groups, thus helps accountants and book keepers to keep track of different business activities, and saves time and less error prone