Accounts Payable Ledger

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on August 25, 2021

What Is Accounts Payable Ledger?

Accounts Payable Ledger is a subsidiary ledger that lists the individual accounts of creditors; also referred to as the creditors’ ledger.

What Is a Subsidiary Ledger?

A subsidiary ledger is a ledger that contains only one type of account, such as the accounts payable ledger.


When a business has only a few creditors, it is possible to maintain a separate Accounts Payable account for each creditors. If a business has many creditors, which is often the case, having an individual ledger account for each creditor could result in a very large and unwieldy ledger.
Imagine, for example, that a business makes credit purchases from 200 different creditors. Then, envision the size of its ledger if, in addition to all other accounts, a separate account was maintained for each creditor. A single ledger would be too large to handle efficiently and would make it difficult to prepare a trial balance or financial statements.
To overcome these problems, accounts for creditors are often set up in a separate ledger. A separate ledger containing only one type of account is called a subsidiary ledger. A subsidiary ledger containing only creditors’ accounts is called an accounts payable ledger or a creditors’ ledger. When subsidiary ledgers are used, the main ledger, containing the accounts needed to prepare financial statements, is called the general ledger.

Format of Accounts Payable Ledger

Accounts in the accounts payable ledger are designed to show the balance owed to each creditor. The three-column account form, as shown below is usually used.

Accounts Payable Ledger

Liability accounts normally have credit balances. Therefore, with rare exceptions, creditors’ accounts will have credit balances. Thus, the three-column account form shown above is more suited for creditors’ accounts than the four-column account form commonly used in the general ledger.
Accounts in the accounts payable ledger are usually not assigned numbers. Instead, they are arranged in alphabetical order to make it easy to add new accounts and remove inactive accounts.
The balances of creditors’ accounts in the accounts payable ledger are summarized by the Accounts Payable account in the general ledger. That is, when all posting is complete, the balance of the Accounts Payable account will equal the sum of the balances of the creditors’ accounts. Thus, the Accounts Payable account is said to control the accounts payable ledger. A controlling account is an account in the general ledger that summarizes accounts in a related subsidiary ledger.


To illustrate the controlling account/subsidiary ledger relationship, let’s look at the amounts owed by July bowman, a health and beauty supplies distributor, on March 31, 2019.
Judy maintains an accounts payable subsidiary ledger, which is summarized by an Accounts Payable controlling account in her general ledger. Below figure shows the relationship between the two.

Posting to the Accounts Payable Ledger

Each entry in the purchases journal represents a purchase on account and requires an individual posting to the subsidiary ledger account of the creditor from whom the purchase was made. Posting to creditors’ accounts is a five-step process. To illustrate, the below figure shows how Lakeside’s November 2 journal entry recording a purchase from Key Suppliers is posted to the accounts payable ledger. The entry is posted using the following steps:
Step 1: Enter the date of the journal entry in the Date column of Key Suppliers’ account.
Step 2: Enter the amount of the journal entry, $575, in the Credit column of Key Suppliers’ account.
Step 3: Calculate the balance of Key Suppliers’ account, and enter it in the Balance column of the account. Since there was no previous balance, the balance of Key Suppliers’ account is $575. Had there been a previous balance, the current posting of $575 would have been added to that balance to obtain a new balance.
Step 4: Enter P1 (purchases journal, page 1) in the P.R. column of Key Suppliers’ account.
Step 5: Enter a check mark in the P.R. column of the purchases journal. The check mark indicates that an individual posting has been made to the accounts payable ledger. A check mark is used because accounts in the subsidiary ledger are not assigned numbers.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.

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