We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Subsidiary Accounts?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Subsidiary accounts are accounts that are associated with what is known as a subsidiary ledger. These accounts generally represent individual customer accounts and are used to record all the transactions associated with each of those customers. When managed properly, the sum total of the consolidation of subsidiary accounts tracked in the accounting records will balance perfectly with the balance in the control account of the general ledger.

The function of subsidiary accounts is important to just about any type of business that provides terms of payment to its client base. For example, a utility company provides services that are billed on a monthly basis. The customer or subscriber then has a specific period of time in which to pay that monthly bill without the assessment of late fees or charges.

In order to track the usage and the payment activity of each utility customer, the business will establish a subsidiary account for that customer in the accounting records. Each of the subsidiary accounts carry complete information on all customers, including the account number assigned to each individual customer. As the bill for each customer is issued, that invoiced amount is entered into the account along with the invoice number and the issue date. Once a payment for that invoice is remitted, it is posted to the account, reducing the outstanding balance due.

The collective activity in the subsidiary accounts is also mirrored in the control account that is maintained as part of the general ledger. When invoices are issued, those are accounted for in not only the subsidiary accounts but also in the Accounts Payable area of the ledger. As customers remit payments, those are accounted for in the Accounts Receivable area of the ledger as well as in the customer’s own subsidiary account. Assuming that all the necessary postings are made in a timely manner. This approach helps to keep the accounting books balanced at all times while still making it easy to retrieve account information and history on each customer.

Thanks to the use of accounting software, the process of posting to the control account in the general ledger while also posting to the customer subsidiary accounts is much easier than in times past. Often, the accounting software is configured to allow for the entry of the data on one screen. From there, the software records the post in both the control account and in the individual customer’s subsidiary account simultaneously. This approach can help eliminate issues such as posting to the customer account but forgetting to post in the control account of the general ledger, or vice versa.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.