What is a subsidiary ledger?

A subsidiary ledger is indeed a group of individual ledgers tied to the general ledger. It provides detailed information about specific accounts within the general ledger, allowing for a greater granularity of data. For example, accounts receivable and accounts payable are often tracked in their own subsidiary ledgers, which help manage the individual transactions and balances for each customer or vendor. This structure supports the overall accounting system by enabling more accurate and detailed reporting while also facilitating easier tracking and reconciliation of individual accounts.

The primary purpose of a subsidiary ledger is to provide detailed information that supports summarized data in the general ledger. As such, it ensures that the accounting records remain organized and that financial information is readily accessible for review and reporting.

Other choices do not correctly capture the essence of what a subsidiary ledger represents. A summary of all financial transactions refers more to the general ledger itself rather than to a subsidiary ledger. Specialty journals are distinct from subsidiary ledgers, as they focus on specific types of transactions, such as sales or purchases, rather than compiling individual accounts. Finally, a record of cash transactions only would pertain to a cash ledger or cash account rather than a complete subsidiary ledger that covers various types of accounts and transactions.