Definition
A subsidiary account is the third level of a coded chart of accounts, such as 1101 Cash on hand or 1301 Trade receivables, and is usually the level where journal entries are posted. Its four-digit code begins with the code of the ledger account it belongs to, so balances roll up automatically to the statements.
How it works
Postable accounts should be specific enough that a reviewer knows what is inside without opening the ledger: "Bank: main operating account" rather than "Bank 1". At the same time, they should not multiply for each customer or project; those belong in dimensions on the entry line.
Flag accounts that need extra data. A receivables account should require a party on every line, a cost account may require a cost center. Enforcing it at posting saves hours of clean-up later.
When an account is no longer used, deactivate it rather than deleting it, so historical entries and comparisons stay intact.
Example: postable accounts under a ledger account
11 Cash and bank balances has these postable accounts.
| Code | Account |
|---|---|
| 1101 | Cash on hand |
| 1102 | Petty cash |
| 1103 | Bank: main current account |
| 1106 | Bank: foreign currency account |