Based on my current accounting system I would need to begin a subsidiary ledger or accounts receivable
Based on my current accounting system I would need to begin a subsidiary ledger or accounts receivable ledger which "is a list of individual accounts with a common characteristic" (Wild 2020). Now that I am deciding to accept credit payments from customers it is important that I have a separate ledger to have a better idea of the current balance my customers. With just a general ledger I would be constantly combing through previous transactions to figure out which customers still owe money for the products. This would not only be tedious but could lead to errors on my end if I am not meticulous. Due to the additional ledger added I would need to not only check my general ledger but I would make a schedule of accounts receivable which "lists each customer and balance owed" (Wild 2020). By expanding my accounting system I can accept more customers and would not have to rely solely on my general ledger and journal to keep track of customers paying with credit. By using an accounts receivable ledger I can have a better view of credit balances and can easily verify when a customer has paid off their balance in full instead of either wasting time going through transaction history or losing money because I lost track of their balance.
Wild, J. (2020). Fundamental Accounting Principles (25th Edition). McGraw-Hill.
For your responses, focus on the following questions:
Do you agree with the response as far as their proposed expanded accounting system?
Do you have additional suggestions that would make their expanded accounting system more streamlined? Elaborate.
Support your responses with additional research and/or examples of your understanding of expanded accounting systems.
Be sure to post at least one reference in support of your explanations and conclusions.