An account that records financial transactions for a specific customer, vendor or job is a subsidiary ledger.
A general ledger control account's information is kept in a subsidiary ledger. Following its entry into a subsidiary ledger, information is periodically compiled and sent to a control account in the general ledger, which is then utilized to create a company's financial statements.
The majority of the general ledger's accounts are not control accounts; rather, individual transactions are entered there directly. When there is a lot of transactional data that would clog up the general ledger, subsidiary ledgers are used. This circumstance frequently occurs in businesses with significant sales volumes.
Consequently, a subsidiary ledger is not required in a small business.
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