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    Accounting Standards Library
    Monday
    May132013

    What is the accounts receivable ledger?

    The accounts receivable ledger is a subledger in which are recorded all credit sales made by a business. It is useful for segregating into one location a record of all amounts invoiced to customers, as well as all credit memos and (more rarely) debit memos issued to them, and all payments made against invoices by them. The ending balance of the accounts receivable ledger equals the aggregate amount of unpaid accounts receivable.

    A typical transaction entered into the accounts receivable ledger will record an account receivable, followed at a later date by a payment transaction from a customer that eliminates the account receivable. If a customer does not pay the full amount of an invoice, a credit memo may be recorded to eliminate the residual balance.

    If you were to maintain a manual record of the accounts receivable ledger, it could contain substantially more information. The data fields in a manually-prepared ledger might include the following information for each transaction:

    • Invoice date
    • Invoice number
    • Customer name
    • Identifying code for item sold
    • Sales tax
    • Total amount billed
    • Payment flag (states whether paid or not)

    The primary document recorded in the accounts receivable ledger is the customer invoice. Also, if you grant a credit back to a customer for such items as returned goods or items damaged in transit, then you also record a credit memo in the ledger. An additional charge to a customer may appear in a debit memo.

    The information in the accounts receivable ledger is aggregated periodically (anywhere from daily to monthly) and posted to an account in the general ledger, which is known as a control account. The accounts receivable ledger control account is used to keep from cluttering up the general ledger with the massive amount of information that is typically stored in the accounts receivable ledger. Immediately after posting, the balance in the control account should match the balance in the accounts receivable ledger. Since no detailed transactions are stored in the control account, anyone wanting to research customer invoice and credit memo transactions will have to drill down from the control account to the accounts receivable ledger to find them.

    Before closing the books and generating financial statements at the end of an accounting period, complete all entries in the accounts receivable ledger, close the ledger for that period, and post the totals from the accounts receivable ledger to the general ledger. These steps are completed automatically in some accounting software packages when a user indicates that a period is to be closed.

    Similar Terms

    The accounts receivable ledger is also known as the accounts receivable subledger or accounts receivable subaccount.

    Related Topics

    Control account
    General ledger overview
    What is a subsidiary ledger?
    What is the purchase ledger? 

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