Accounts Receivable Ledger

What is an Accounts Receivable Ledger?

Definition: The accounts receivable ledger, also called the customers ledger, is a subsidiary ledger that lists all the customers that owe money to the company along with their current balances. In other words, the A/R ledger is a summary of all current and outstanding accounts receivable at the end of a period. This individual detail of every customer’s balance is not listed or recorded in the general ledger (GL).

Accounts receivable ledger is a book or computer file in which the money that customers owe a company is recorded. The accounts receivable ledger is also known as the accounts receivable subledger or accounts receivable subaccount.

What Does Accounts Receivable Ledger Mean?

The accounts receivable ledger is a sub-ledger in which is recorded all credit sales made by a business. It is useful for segregating into one location a record of all amounts invoiced to customers, as well as all credit memos and (more rarely) debit memos issued to them, and all payments made against invoices by them. The ending balance of the accounts receivable ledger equals the aggregate amount of unpaid accounts receivable.

A typical transaction entered into the accounts receivable ledger will record an account receivable, followed at a later date by a payment transaction from a customer that eliminates the account receivable. If a customer does not pay the full amount of an invoice, a credit memo may be recorded to eliminate the residual balance.

In a standard accounting system, the general ledger only contains one main accounts receivable account. This account equals the sum total of all customer account balances at the end of a period. There is no detail the main account to keep the general ledger clean and uncluttered.

Think about it this way. A company could have hundreds or thousands of customers with account balances. If the GL had to include detail for each account, it would create a mess and make it difficult for bookkeepers to navigate the GL. That’s why the accounts receivable ledger holds all the details, so the GL account can be slimmed down.

The accounts receivable ledger records and organizes purchases made by each customer and tracks the balances of each account. Each credit purchase recorded in the subsidiary ledger includes a date, description of the purchase, amount, as well as payment terms. The A/R ledger is also used to track the payments made by each customer.

The data fields in a manually-prepared ledger might include the following information for each transaction:

  • Invoice date
  • Invoice number
  • Customer name
  • Identifying code for item sold
  • Sales tax
  • Total amount billed
  • Payment flag (states whether paid or not)

The primary document recorded in the accounts receivable ledger is the customer invoice. Also, if you grant a credit back to a customer for such items as returned goods or items damaged in transit, then you also record a credit memo in the ledger. An additional charge to a customer may appear in a debit memo (or in a separate invoice).

The information in the accounts receivable ledger is aggregated periodically (anywhere from daily to monthly) and posted to an account in the general ledger, which is known as a control account. The accounts receivable ledger control account is used to keep from cluttering up the general ledger with the massive amount of information that is typically stored in the accounts receivable ledger. Immediately after posting, the balance in the control account should match the balance in the accounts receivable ledger. Since no detailed transactions are stored in the control account, anyone wanting to research customer invoice and credit memo transactions will have to drill down from the control account to the accounts receivable ledger to find them.

Before closing the books and generating financial statements at the end of an accounting period, complete all entries in the accounts receivable ledger, close the ledger for that period, and post the totals from the accounts receivable ledger to the general ledger. These steps are completed automatically in some accounting software packages when a user indicates that a period is to be closed.


When a customer purchases a product on credit, the store debits its A/R balance and credits a sale account. When the customer makes a payment to pay down his account balance, the debits cash and credits the A/R balance. Both of these transactions are tracked in the subsidiary ledger, so at the end of the period the bookkeeper can print a report with the total balances owed by each customer. They can also use this ledger for debt collection purposes on customers who aren’t making their payments.