Question

Differentiate between ledger and subsidiary books.

Answer 1

	Aspect	Ledger	Subsidiary books
1.	Nature	Book of final or secondary entry.	Books of original or prime entry.
2.	Purpose	Principal book containing classified and summarised information about accounts.	Facilitate the preparation of the ledger by recording transactions first.
3	Order of Recording	Transactions recorded in classified and analytical form (by account).	Transactions recorded in chronological order (date-wise).
4.	Information	Does not provide complete information in one place because debit and credit parts are recorded separately in different accounts.	Provides complete information about business transactions in one place.
5.	Process Name	Posting (transferring entries from subsidiary books to ledger).	Journalising (initial recording of transactions).
6.	Use in Final Accounts	Final accounts can be prepared directly from ledger balances.	Final accounts cannot be prepared directly from subsidiary books.