Ainsworth Accountants: Accounts, Tax and Business Advisors.

Sales Ledger (or Accounts Receivable)

The Sales Ledger is frequently in software known as "Accounts Receivable" or "Customer Accounts".

The Sales Ledger is your record of sales, and whether or not you have received the money, and how much you are still owed.

On the Balance Sheet the total amount still owed to you by Customers will usually be called "Trade Debtors" or “Accounts Receivable”.

The Sales Ledger has an Account for every Customer. Each such Customer Account carries all the transactions for the one Customer, these are:
• Sales Invoices
• Sales Credit Notes
• Payments Received

In Accounting Software, by recording these three types of transactions, you will get an immediate calculation of the money owed to you.

The accounting software will also allow you to allocate or apply the money received to the sales invoice it relates to. These transactions are then regarded as cleared.

If you run an open items or unpaid invoices report, you will see just the unpaid invoices, rather than all the previous paid invoices, which is usually a much bigger report and not frequently needed.

If trading is healthy, many of the Customer Accounts will be carrying balances at any given time, hopefully just the most recent unpaid sales invoices.

As with all Accounts and Ledgers, the transactions will be recorded as Debits and Credits.

To make the accounting records complete, the Sales Ledger has to be 'represented' in the General Ledger, even though they themselves are separate ledgers.

This is achieved by the concept of Control Accounts. On the General Ledger there will be a Control Account for the Sales Ledger.

Every time a transaction is recorded in the Sales Ledger (eg. Sales Invoice), an identical record is kept in the Sales Ledger Control Account on the General Ledger. This is the way that the General Ledger stays in balance.

Please read the section on Accounting Controls for checks you can make on the Sales Ledger.

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