Ledger - The Principal Book

Ledger

Imagine your bank’s record book or your slip book. One glance at the entries and you exactly know the summary of your deposits or withdrawals.

Ledger

An account is a summarized record of transactions at one place relating to a particular head. All the accounts put together constitute a ‘ledger’

What does a Ledger include?

It usually includes accounts for items like current assets, fixed assets, liabilities, revenue and expense items, gains and losses.

Each General Ledger is divided into debits and credits sections. The left hand side lists debit transactions and the right hand side lists credit transactions.

Ledger Maintaining

Ledger is composed by posting transactions recorded in the sales book, purchases book, cash book and general journals book.

Sales Book Purchase Book Cash BookGeneral Journals

Ledger

Ledger MaintainingThe general ledger can be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger.

For E.g. An accounts receivable subsidiary ledger would contain a separate account for each credit customer, tracking that customer's balance separately. This subsidiary ledger would then be totaled and compared with its controlling account (in this case, Accounts Receivable) to ensure accuracy as part of the process of preparing a trial balance.

Categories of grouping

Assets

Liability

Owner's equity

RevenueExpense

(Gains)

(Loss)

There are five (seven) basic categories in which all accounts are grouped

The main seven categories of the general ledger may be further subdivided into sub ledgers to include additional details of such accounts as cash, accounts receivable, accounts payable, etc.

Balancing Ledger

Because each bookkeeping entry debits one account and credits another account in an equal amount, the double-entry bookkeeping system helps in ensuring that the general ledger is always in balance, thus maintaining the accounting equation

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