It is emphasized at this point that the growth of a business does not necessarily entail an increase in the number of main ledger accounts. It is more likely that the small business for which a detailed costing system is not justified would require many more accounts representing analysis of expenditure than a large concern. In a large business the necessary detailed information should be provided by subsidiary systems of accounts controlled by and agreeing in total with a limited number of main ledger accounts such as are indicated in the preceding section.

The main or control ledger is thus the chief accountant’s personal instrument for watching the progress of the concern and reporting on the results to top management. He should be aware by a rapid scrutiny of the accounts of any trend or change in the financial position which requires immediate investigation; and by the use of a control ledger containing the minimum of accounts he would not be misled by masses of detailed information from which such accounts were made up.

The immediate source from which entries are made in such a control ledger are subsidiary books analyzed so as to group items into, say, monthly totals for posting to the control accounts.

Detailed information is obtainable from subsidiary ledger systems, each self-balancing in itself and each controlled by an account in the main or control ledger.

Subsidiary ledger systems of this nature include a debtors’ ledger with an account for each debtor, and analogous to the sales ledger, except that a debtors’ ledger contains all debtors, not merely those resulting from sales. Similarly, a creditors’ ledger includes all creditors’ ledger is not limited to suppliers’ accounts. Further subsidiary ledger systems can, as necessary, be created to show various types of fixed assets, stocks, material purchases and any analysis of other expenses which may be required.