Ledger is the second step of accounting which is also the principal books of accounts. All the accounts appeared in the journal or subsidiary books are contained by the ledger account. It helps to make a classified record of all the transactions in a summarized form. It is the final destination of all the accounts created in the primary books and also the final source of all accounting information.
Some of the major definitions of ledger are:
"Ledger is a book of accounts which contains in a suitably classified form, the final and permanent record of trader's transactions."- V. J. Vickery
"A ledger is the most important book of accounts and is the final destination of the entries made in the subsidiary." - W. Pickles
From the above definition, it is clear that the ledger is a bound or register book which contains a large number of accounts. It is a principle book of accounts, which make the final record of all the transactions in a classified manner so as to provide detailed information about the financial transactions of the business.
The main objectives of ledger are as follows:
A ledger account is a statement of information on a particular head. It is the summary records of all the transactions relating to a particular person, property, income or expenses. It is the detail of the amount debited and credited to a particular person, income or expenses during a given period. The ledger account contains two sides which are debit and credit. Its left-hand side is called debit side and the right-hand side is called credit side. It shows the benefits on one side and sacrifices on another side for a specific period. At the end of a given period, it is balanced and closed to know the net effect or result.
|Bases of differences||Journal||Ledger|
|Step||Journal is the first step of the accounting cycle.||Ledger is the second step of the accounting cycle.|
|Meaning||It is a primary book in which all the financial transactions are recorded in the same place.||It is a primary book in which all the transactions are posted in a classified manner.|
|Process||The process of recording transactions in a journal is called journalizing.||The process of transferring transactions from journal to the ledger is called posting.|
|Basis||It is the basis for preparing ledger.||It is the basis for preparing trail balance.|
|Information||It provides detail information about the financial transactions.||It provides summary information about the financial transaction|
|ssNarration||It requires narration.||It does not require narration.|
|Result||It does not show the net result of the transactions performed.||It shows the net result of the transaction performed.|
The ledger is the second step of accounting. It is the principal book of accounts. It contains all the accounts appeared in the journal or subsidiary books. It makes a classified record of all the transactions in summarized form. It is the final destination of all the accounts created in the primary books. It is the final source of all accounting information.The following are the main definitions of ledger:
According to V. J. Vickery, "Ledger is a book of accounts which contains in a suitably classified form, the final and permanent record of trader"s transactions."
According to W. Pickles, "A ledger is the most important book of accounts and is the final destination of the entries made in the subsidiary."
From the given definition, we say that a ledger is a bound or register book which contain a large number of the account. it is the principal book of the account which make a final record of all the transaction in a classified manner.
The following are the main objectives of preparing a ledger account:
Trial balance is prepared to check accuracy of ______.
Income statement balances
Cash flow statement balances
Ledger accounts balances
Balance sheet balances
Ledger is a primary book in which all the transactions are posted in a ______.
None of the answers are correct