Scribd Logo
Upload

Welcome to Scribd!

  • 27 views

    LEDGER

    Uploaded by

    NehaAgrawal
    The document defines a ledger as the principal book of accounting that collects all accounts debited and credited from the journal according to debit and credit rules. It provides key information such as the net result for each account on a given date. The ledger divides each account into two sides - debit and credit - and records journal page numbers. It allows understanding of business results, asset values, financial position, and amounts owed/due through categorized accounts. Multiple ledgers can be used for different account types like assets, liabilities, revenues, expenses, debtors, and creditors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    LEDGER

    Uploaded by

    NehaAgrawal
    27 views3 pages
    The document defines a ledger as the principal book of accounting that collects all accounts debited and credited from the journal according to debit and credit rules. It provides key information such as the net result for each account on a given date. The ledger divides each account into two sides - debit and credit - and records journal page numbers. It allows understanding of business results, asset values, financial position, and amounts owed/due through categorized accounts. Multiple ledgers can be used for different account types like assets, liabilities, revenues, expenses, debtors, and creditors.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document defines a ledger as the principal book of accounting that collects all accounts debited and credited from the journal according to debit and credit rules. It provides key information such as the net result for each account on a given date. The ledger divides each account into two sides - debit and credit - and records journal page numbers. It allows understanding of business results, asset values, financial position, and amounts owed/due through categorized accounts. Multiple ledgers can be used for different account types like assets, liabilities, revenues, expenses, debtors, and creditors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views3 pages

    LEDGER

    Uploaded by

    NehaAgrawal
    The document defines a ledger as the principal book of accounting that collects all accounts debited and credited from the journal according to debit and credit rules. It provides key information such as the net result for each account on a given date. The ledger divides each account into two sides - debit and credit - and records journal page numbers. It allows understanding of business results, asset values, financial position, and amounts owed/due through categorized accounts. Multiple ledgers can be used for different account types like assets, liabilities, revenues, expenses, debtors, and creditors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 3

    LEDGER

    Meaning of Ledger
     It is a principal book of accounting system.
     It is a collection of all accounts debited and credited in the journal.
     It follows the golden rules of debit and credit to record transactions in the account.
     It ascertains the net result of all transactions in respect of a particular account on a given date.

    Points to be noted in the ledger

    1. Every account in the ledger has a name which is written at the top of the account.

    2. Ledger account is divided in two equal parts. The left side part is known as debit (Dr.) side and the right
    side is known as credit (Cr.) side.

    3. JF column denotes the page (folio) number on which journal entry of this transaction has been recorded.

    Importance of Ledger/Utility of Ledger


    Ledger is an important book of Accounts. It contains all the accounts in which all the transactions of a business enterprise
    are classified. At the end of the accounting period, each account will contain the entire information of all the transactions
    relating to it.

    Following are the advantages of the ledger.


    a) Knowledge of Business Results: Ledger provides detailed information about revenues and expenses in one place. While
    finding out business results the revenue and expenses are matched with each other.
    b) Knowledge of Book Value of Assets: Ledger records every asset separately. Hence, you can get the information about
    the Book value of any asset whenever you need it.
    c) Useful for Management: The information given in different ledger accounts will help the management in preparing
    budgets. It also helps the management in keeping the check on the performance of the business it is managing.
    d) Knowledge of Financial Position: Ledger provides information abo ut the assets and liabilities of the business. From this,
    we can judge the financial position and health of the business.
    e) Instant Information: The business always needs to know what it owes to others and what the others owe to it. The ledger
    accounts provide this information at a glance through the account receivables and payables.

    Types of Ledger
    In large-scale business organizations, the number of accounts may run into the hundreds. It is not always possible for a
    businessman to accommodate all these accounts in one ledger. They, therefore, maintain more than one ledger.
    These ledgers may be as follows :

    1. Assets Ledger: It contains accounts relating to assets only e.g. Machinery account, Building account, Furniture account,
    etc.
    2. Liabilities Ledger: It contains the accounts of various liabilities e.g. Capital (Owner or partner), Loan account, Bank
    overdraft, etc.
    3. Revenue Ledger: It contains the revenue accounts e.g. Sales account, Commission earned account, Rent received an
    account, interest received account, etc.
    4. Expenses Ledger: It contains the various accounts of expenses incurred, e.g. Wages account, Rent paid account,
    Electricity charges account, etc.
    5. Debtors Ledger: It contains the accounts of the individual trade debtors of the business. Individuals, firms, and
    institutions to whom goods and services are sold on credit by business become the ‘trade debtors’ of the business.
    6. Creditors Ledger: It contains the accounts of the individual trade Creditors of the business. Individuals, firms, and
    institutions from whom a business purchases goods and services on credit are called ‘trade creditors’ of the business.
    7. General Ledger: It contains all those accounts which are not covered under any of the above types of the ledger. For
    example Landlord A/c, Prepaid insurance A/c, etc.

    BASIS FOR
    JOURNAL LEDGER
    COMPARISON

    Meaning The book in which all the The book which enables
    transactions are recorded, to transfer all the
    as and when they arise is transactions into separate
    known as Journal. accounts is known as
    Ledger.

    What is it? It is a subsidiary book. It is a principal book.

    Also known as Book of original entry. Book of second entry.

    Record Chronological record Analytical record

    Process The process of recording The process of


    transactions into Journal is transferring entries from
    known as Journalizing. the journal to ledger is
    known as Posting.

    How transactions Sequentially Account-wise


    are recorded?

    Debit and Credit Columns Sides

    Narration Must Not necessary.


    BASIS FOR
    JOURNAL LEDGER
    COMPARISON

    Balancing Need not to be balanced. Must be balanced.

    You might also like