What is a subsidiary?

The

subsidiary is used in accounting to monitor the details of the main book account. In general, it is an account or group of related accounts that correspond to individual line items in the main book. The subsidiary allows companies to record details such as customer payments or purchase history without overwhelming the main book. Without subsidiaries, the main book would have to include so much information that it could not be used.

The main book account is the main record for the company. Accounts for assets, liabilities and income can be all the accounts of the main book. In a practical sense, the main book is a summary; It provides sums, but not details of where this money comes from or how it can be divided into individual components. Any main book that summarizes the subsidiary's account is called a check -up account or the main account.

The control account gives the overall image, but the subsidirus account gives the details. Daughter accounts are not part of the main book. Instead allow with withFlying to monitor the individual components of the check account. For example, a check -up account could indicate a $ 5,000 income. That $ 5,000 could include several checks from several different customers. A subsidiary would have an individual account for each customer to watch how many individual customers he paid and what he paid for.

The company will have only one main book for each account, but it can have as many subsidiaries as it needs to watch the details. Some companies may have hundreds or even thousands of subsidiaries depending on their customer base, how many creditors have and other details. The total number of subsidiaries is equal to the overall balance of the main book account or Total's balance of a group of subsidiaries.

In addition to maintaining organized companies, subsidiaries can also help control the flow of information. Customer service employees mayhave access to a specific subsidiary or a group of books to see the history of customer purchases and purchase formulas without accessing all the financial information of the company. Meanwhile, accounting companies can perform everyday work in the main book without having to wander with details of daughter's books.