 Hello in this lecture we will define subsidiary ledger according to fundamental accounting principles while 22nd edition the definition of subsidiary ledger is list of individual subaccounts and amounts with a common characteristic linked to a controlling account in the general ledger. When we're thinking about a subsidiary ledger we're thinking about a special ledger putting the information into a special way a way that is in accordance with certain characteristics and that will then tie out to the controlling ledger the general ledger. Two common types of subsidiary ledgers will be for the accounts of accounts receivable and accounts payable. For example if we take a look at the accounts receivable we see the amount on the balance sheet or the trial balance and that represents of course what is owed to the company from customers. If we want more detail about that information we can go to the typical area the general ledger to see more backup of that information this information being input by date in this case. So now we have the activity by date making up the end balance that is then recorded in the balance sheet or the trial balance but this doesn't give all the information we need because obviously we want to know who owes us that money. We would like to organize this data in a subsidiary ledger in such a way that we can say who owes us the money. For example Smith a customer owes us 5000 Ryan owes us 15 000 Adams owes us 7 000 that's what's making up that 27 000 making up the subsidiary ledger for accounts receivable which is in a certain type of order according to category in this case customer tying out to the general ledger tying out to the trial balance or balance sheet. Similar thing for the accounts payable we have accounts payable this is who we owe money to the vendors that we owe money to. If we want more detail about that we can of course look at the general ledger giving us more detail but that detail is in order by date it's in order by when the transactions happened giving us that total balance down here that ties out to the trial balance or the balance sheet but we would really like to see a subsidiary ledger that is breaking this information down by vendor for example office depot we owe office depot we owe ans food 640 we owe ours auto 320 that's what's making up that 106 40 the subsidiary ledger being broken out by special category that category in the case of accounts payable subsidiary ledger being by vendor and showing us the total in terms of by vendor that total tying out to the controlling account tying out to the general ledger tying out to the trial balance tying out to what would be on the balance sheet