Subledger vs General Ledger: Key Differences Explained

In modern accounting, maintaining an accurate "gold source of truth" requires a clear understanding of the relationship between the General Ledger (GL) and Subledgers (also known as subsidiary ledgers). While both are essential components of a company's financial records, they serve different purposes and operate at different levels of granularity.

What is a General Ledger?

The General Ledger (GL) is the master accounting record for a business. It contains a complete summary of all financial transactions organized by account, as defined in the chart of accounts. The GL is used to prepare the primary financial statements: the balance sheet, income statement, and cash flow statement. It provides a high-level view of the company's financial health.

What is a Subledger?

A subledger is a detailed subsidiary record that contains transaction-level data for a specific account category. Common examples include:

• Accounts Receivable (AR) Subledger: Detailed records of amounts owed by each customer.
• Accounts Payable (AP) Subledger: Detailed records of amounts owed to each vendor.
• Inventory Subledger: Detailed records of stock levels, costs, and movements.
• Fixed Assets Subledger: Detailed records of equipment, depreciation, and disposal.

The Relationship: How They Work Together

Subledgers feed data into the General Ledger. Typically, individual transactions are recorded in the subledger, and then a summary of those transactions is posted to a corresponding "control account" in the GL. For example, the total of all customer balances in the AR subledger must equal the balance in the Accounts Receivable control account in the General Ledger.

Key Differences at a Glance

• Granularity: Subledgers contain individual transaction details (e.g., specific invoices); the GL contains summarized totals.
• Purpose: Subledgers are for operational management and audit trails; the GL is for financial reporting and high-level analysis.
• Volume: Subledgers handle the high-volume data "noise," keeping the GL clean and manageable.

Why Modern Teams Use Subledgers

As companies scale, the volume of transactions makes recording everything directly in the GL impossible. Modern operational ledgers like NAYA allow teams to maintain highly granular subledgers that automatically sync with the GL. This provides the best of both worlds: deep visibility for operations and audits, combined with a performant, reliable master record for reporting.