Ledger
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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.
Objectives
The main objectives of ledger are as follows:
- To make a permanent record of all the financial transactions in a systematic manner.
- To supply the detailed information on any account for a specific period of time easily and immediately.
- To know the net effect of all the transactions on a particular account at a specific point in time. The net effect is the difference between debit and credit of the concerned account.
- To help in preparing of the trial balance in order to examine the arithmetical accuracy of the books of accounts.
- To serve as the principal account for obtaining all information of accounts at least cost and time.
Ledger Account
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.
Specimen of Ledger Account
- The ledger is the second step of accounting.
- Ledger is a principle book of accounts, which make final record of all the transactions in a classified manner so as to provide detailed information about the financial transactions of the business.
- A ledger account is a statement of information on a particular head.
Very Short Questions
| 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:
- To make a permanent record of all the financial transactions in a classified manner.
- To supply detailed information on any account for a given period easily and immediately.
- To know the net effect of all the transactions on a particular account at a given point of time. The net effect is the difference between total debit and credit of the account concerned.
- To help to prepare trial balance in order to examine the arithmetical accuracy of the books of accounts.
- To serve as the principal account for obtaining all accounting information at least cost and time.
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Trial balance is prepared to check accuracy of ______.
Cash flow statement balances
Balance sheet balances
Ledger accounts balances
Income statement balances
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Which of the following is the correct terminology for the right hand side of a hand-written ledger account?
Positive
Negative
Credit
Debit
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In a hand-written accounting system where would you record a decrease in an asset?
On the debit side of the ledger account for the asset
Nowhere in the ledger accounts
On both sides of the ledger account for the asset
On the credit side of the ledger account for the asset
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Who should be allowed to enter adjusting entries through the general journal?
Sales
None of the answers are correct
Purchasing
Controller
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Which of the following are used to document journal entries that are made in the general journal?
Vouching packets
General authorizations
Journal vouchers
Bank reconciliation
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Ledger is a primary book in which all the transactions are posted in a ______.
accounting cycle
same place
None of the answers are correct
classified manner
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ASK ANY QUESTION ON Ledger
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ashish dhakal
Ask any queries on this note.draw a specimen of ledger
Mar 07, 2017
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