Definition: The accounts payable ledger, also called the creditors ledger, is a subsidiary ledger that lists all of the vendors and suppliers that a company owes along with their account balances and details. In other words, the A/P ledger is a summary of all the current and outstanding accounts payable. This is a list that is not detailed in the general ledger of all the vendors and other companies that are owed money.
What Does Accounts Payable Ledger Mean?
In a typical accounting system, there is only on main accounts payable account in the general ledger. This keeps the ledger clean and organized without being cluttered with multiple accounts. The only problem is that companies rarely buy goods on account from a single vendor. Thus, they need to record multiple accounts to keep track of the money owed to each vendor.
That’s where the subsidiary ledger system comes into play. A separate subsidiary ledger is set up to track the details of each vendor account, so the general ledger doesn’t have to make tens or even hundreds of accounts payable accounts.
Example
The accounts payable ledger does just this. It tracks the amounts owed to different vendors along with the dates, order quantities, and other purchase information without cluttering up the general ledger with all of this detail. The general ledger simply pulls total balances from the accounts payable ledger and reports it in one accounts payable account.
The A/P ledger can be used to provide current information about vendor balances. It also acts as an internal control. Bookkeepers and managers can compare the subsidiary balance with the general ledger balance to help prevention errors. It also acts as an internal control by segregating they duties of employees. The employee who records the transactions on a daily basis is not the person who checks for errors.
