What is the controlling account in the general ledger that summarizes debits and credits to the individual accounts in the customers ledger?

Definition of General Ledger Account

A general ledger account is an account or record used to sort, store and summarize a company's transactions. These accounts are arranged in the general ledger (and in the chart of accounts) with the balance sheet accounts appearing first followed by the income statement accounts.

Examples of General Ledger Accounts

Some of the more common balance sheet accounts and how they are further arranged in the general ledger include:

• asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment
• liability accounts including Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits
• stockholders' equity accounts such as Common Stock, Retained Earnings, Treasury Stock, and Accumulated Other Comprehensive Income

Some of the general ledger income statement accounts and how they are arranged include:

• operating revenue accounts such as Sales and Service Fee Revenues
• operating expense accounts including Salaries Expense, Rent Expense, and Advertising Expense
• nonoperating or other income accounts such as Gain on Sale of Assets, Interest Expense, and Loss on Disposal of Assets

General Ledger Control Accounts

Some general ledger accounts can become summary records and will be referred to as control accounts. In that situation all of the detail that supports the summary amounts in one of the control accounts will be available in a subsidiary ledger.

Examples of General Ledger Control Accounts

A common example of a general ledger account that can become a control account is Accounts Receivable. The summary amounts are found in the Accounts Receivable control account and the details for each customer's credit activity will be contained in the Accounts Receivable subsidiary ledger.

Other general ledger accounts that may become control accounts include Inventory, Equipment, and Accounts Payable.

A subsidiary ledger is a group of similar accounts whose combined balances equal the balance in a specific general ledger account. The general ledger account that summarizes a subsidiary ledger's account balances is called a control account or master account. For example, an accounts receivable subsidiary ledger (customers' subsidiary ledger) includes a separate account for each customer who makes credit purchases. The combined balance of every account in this subsidiary ledger equals the balance of accounts receivable in the general ledger. Posting a debit or credit to a subsidiary ledger account and also to a general ledger control account does not violate the rule that total debit and credit entries must balance because subsidiary ledger accounts are not part of the general ledger; they are supplemental accounts that provide the detail to support the balance in a control account.

The accounts receivable subsidiary ledger is essential to most businesses. Companies may have hundreds or even thousands of customers who purchase items on credit, who make one or more payments for those items, and who sometimes return items or purchase additional items before they finish paying for prior purchases. Recording all credit purchases, returns, and subsequent payments in a single account would make an individual customer's balance virtually impossible to calculate because the customer's transactions would be interspersed among thousands of other transactions. But the accounts receivable subsidiary ledger provides quick access to each customer's balance and account activity.

Companies create subsidiary ledgers whenever they need to monitor the individual components of a controlling general ledger account. In addition to the accounts receivable subsidiary ledger, companies often use an accounts payable subsidiary ledger (creditors' subsidiary ledger), which has separate accounts for each creditor, an inventory subsidiary ledger, which has separate accounts for each product, and a property, plant, and equipment subsidiary ledger, which has separate accounts for each long‐lived asset.