Ledger Accounts
Subject: Other
Overview
The ledger account or simply an account is a summarized statement of the financial transactions particularly relating to a subject, which may be a person, an asset, an expense or an income. This note has information about ledger accounts and its posting.Ledger Accounts
Format of Ledger
The ledger account or simply an account is a summarized statement of the financial transactions particularly relating to a subject, which may be a person, an asset, an expense or an income. It is a statement, which contains all transactions relating a particular thing for a specified period. The account has two main sides, left hand side and right hand side and in which all transactions relating to the subject concerned are recorded or either of its sides. The left-hand side of an account is popularly called debit side and the right-hand side the credit side.
Specimen of a ledger account
The format or ruling of a ledger account depends on the form of the account being prepared. An account can be either of a simple form or balancing form.
- 'T' shaped form
A simple form of ledger account is shaped like a English alphabet 'T' having two sides, left-hand side and the right-hand side which are commonly known as debit (Dr.) side and credit (Cr.) sides respectively. Each side of the account has the same four columns of date, particulars, journal folio, and amount. - Balancing Form
It is the alternative form of a ledger account. In this form, the debit or credit balance can be readily ascertained after every entry is posted in the account. Generally, these forms of ledger accounts are used in the firm such as bank where ledger balances are required to be ascertained after every transaction is posted.
Posting into ledger accounts
Posting means recording of transactions in the ledger book. It is the process of recording financial transactions in the concerned accounts contained in the ledger book. Posting is completed only when the two aspects of all financial transactions of a business that took place during a particular period are recorded in the ledger accounts. While posting in the ledger accounts, the following steps are taken:
- Open the page on which the concerned account is located with the help of an index in the ledger book.
- Enter the date of the transaction, in the 'Date'column on the concerned side of the account.
- Record the concerned reference account in the 'Particulars' column of the concerned side with the appropriate word 'To or By'.
- Enter the page number of either journal or subsidiary book 'Folio' column of the concerned side where the particular entry or account is located.
- Write the relevant amount in the 'Amount' column on the concerned date.
Example
The following are the transactions of Sunita for the week of Baisakh:
Marga 1: Goods of Rs.10,000 purchased from Ronita.
Marga 3: Withdrew cash of Rs.7000 from the bank.
Marga 5: Cash of Rs. 5000 paid to Ronita.
Marga 7: Cash sales made for Rs. 500.
Required
- Journal entries
- Ledger account
Journal Entries
| Date | Particular | L.F | Debit Rs. | Credit Rs. |
| Marga 1 | Purchase a/c.............................Dr. | 10,000 | ||
| To Ronita's a/c | 10,000 | |||
| (Being goods purchased from Ronita) | ||||
| Marga 3 | Cash a/c....................................Dr. | 7000 | ||
| To Bank a/c | 7000 | |||
| (Being cash withdrew from bank for office use) | ||||
| Marga 5 | Ronita's a/c................................Dr. | 5000 | ||
| To Cash a/c | 5000 | |||
| (Being cash paid to Ronita) | ||||
| Marga 7 | Cash a/c...................................Dr. | 500 | ||
| To Sales a/c | 500 | |||
| (Being cash sales) | ||||
| Total | 22,500 | 22,500 |
As per journal entries shown above the following accounts are required to open in the ledger:
- Purchase a/c
- Ronita's a/c
- Cash a/c
- Bank a/c
- Sales a/c
| Dr. | Purchase Account | Cr. |
| Date | Particular | JF | Amount | Date | Particular | JF | Amount |
| Marga 1 | To Ronita's a/c | 10,000 | Marga 30 | By balance c/d | 10,000 | ||
| 10,000 | 10,000 | ||||||
| Poush 1 | To balance b/d | 10,000 |
| Dr. | Ronita's Account | Cr. |
| Date | Particular | JF | Amount | Date | Particular | JF | Amount |
| Marga 5 | To Cash a/c | 5000 | Marga 1 | By Purchase a/c | 5000 | ||
| 5000 | 5000 | ||||||
| Dr. | Cash Account | Cr. |
| Date | Particular | JF | Amount | Date | Particular | JF | Amount |
| Marga 3 Marga 7 | To Bank a/c To Sales a/c | 7000 500 | Marga 5 Marga 30 | By Ronita's a/c By Balance c/d | 5000 2500 | ||
| 7500 | 7500 | ||||||
| Poush 1 | To Balance b/d | 2500 |
| Dr. | Bank Account | Cr. |
| Date | Particular | JF | Amount | Date | Particular | JF | Amount |
| Marga 30 | To Balance c/d | 7000 | Marga 3 | By Cash a/c | 7000 | ||
| 7000 | 7000 | ||||||
| Poush 1 | By Balance b/d | 7000 |
| Dr. | Sales Account | Cr. |
| Date | Particular | JF | Amount | Date | Particular | JF | Amount |
| Marga 30 | To Balance c/d | 500 | Marga 7 | By Cash a/c | 500 | ||
| 500 | 500 | ||||||
| Poush 1 | By Balance b/d | 500 |
Posting without Journal Entries
The financial transactions of a business can also be posted in ledger accounts without preparing the journal. While posting into the ledger without journal entries, the following steps are to be taken:
- Identify the two aspects of each of he transactions.
- Recognize the name of accounts for the two aspects of each of the transactions.
- Judge the accounts to be debited and credited for the transactions.
- Post into the concerned accounts on the relevant side along with the appropriate amounts.
Things to remember
- The ledger account or simply an account is a summarized statement of the financial transactions particularly relating to a subject, which may be a person, an asset, an expense or an income.
- The format or ruling of a ledger account depends on the form of the account being prepared.
- Posting means recording of transactions in the ledger book.
- It includes every relationship which established among the people.
- There can be more than one community in a society. Community smaller than society.
- It is a network of social relationships which cannot see or touched.
- common interests and common objectives are not necessary for society.
Videos for Ledger Accounts
Ledger
Posting in Ledger Accounts
Questions and Answers
Journalize the following transactions of a business:
|
Date |
Transactions |
|
a) |
Goods sold to Nima for Rs.10,000. |
|
b) |
Furniture costing Rs.5,000 were sold for Rs.4,000. |
|
c) |
Received cash of Rs.9,000 from Nima in full settlement of his account. |
|
d) |
Received loan of Rs.8,000 from the bank. |
Required:
Journal Entries
Nima’s account
Solution
Journal Entries
| Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
| a) | Nima’s a/c………………….Dr. | 10,000 | ||
| To sales a/c | 10,000 | |||
| (Being goods sold on credit) | ||||
| b) | Cash a/c…………………..Dr. | 4,000 | ||
| Loss on sales a/c……………………Dr. | 1,000 | |||
| To furniture a/c | 5,000 | |||
| (Being furniture sold at loss) | ||||
| c) | Cash a/c…………………Dr. | 9,000 | ||
| Discount allowed a/c………………..Dr. | 1,000 | |||
| To Nima’s a/c | 10,000 | |||
| (Being cash received from Nima and allowed discount to him) | ||||
| d) | Cash a/c………………….Dr. | 8,000 | ||
| To bank loan a/c | 8,000 | |||
| (being loan received from bank) |
| Dr. | Nima’s a/c | Cr. |
| Date | Particulars | JF | Amount (Rs.) | Date | Particulars | JF | Amount (Rs.) |
| a) | To sales a/c | 10,000 | c) | By cash a/c | 9,000 | ||
| By discount allowed a/c | 1,000 | ||||||
| 10,000 | 10,000 | ||||||
Journalize the following transactions of a business:
|
Date |
Transactions |
|
2070/10/10 |
Purchased furniture from Gandaki Furniture workshop for Rs.20,000. |
|
2070/10/15 |
Goods sold on credit Rs.5,000. |
|
2070/10/25 |
Furniture costing 5,000 has been sold for Rs.5,500 |
|
2070/10/27 |
Cash received from debtors Rs.4,900 and allowed discount Rs.100. |
Required:
Journal Entries
Furniture a/c
Solution:
Journal Entries
| Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
| 2070/10/10 | Furniture a/c…………………Dr. | 20,000 | ||
| To Gandaki Furniture workshop’s a/c | 20,000 | |||
| (Being furniture purchased on credit) | ||||
| 2070/10/15 | Debtor’s a/c……………………Dr. | 5,000 | ||
| To sales a/c | 5,000 | |||
| (Being goods sold on credit) | ||||
| 2070/10/25 | Cash a/c…………………..Dr. | 5,500 | ||
| To furniture a/c | 5,000 | |||
| To profit on sales a/c | 500 | |||
| (Being furniture sold on cash) | ||||
| 2070/10/27 | Cash a/c………………Dr. | 4,900 | ||
| Discount allowed a/c……………Dr. | 100 | |||
| To debtor’s a/c | 5,000 | |||
| (Being cash collected from debtors and allowed discount) |
| Dr. | Furniture a/c | Cr. |
| Date | Particulars | JF | Amount (Rs.) | Date | Particulars | JF | Amount (Rs.) |
| 2070/10/10 | To Gandaki Furniture Workshop a/c | 20,000 | 2070/10/25 | By cash a/c | 5,500 | ||
| 2070/10/25 | To profit on sales a/c | 500 | 2070/10/30 | By balance c/d | 15,000 | ||
| 20,500 | 20,500 | ||||||
| 2070/11/01 | To balance b/d | 15,000 |
Journalize the following transactions of a business:
|
Date |
Transactions |
|
2062/01/01 |
Goods purchased of Rs. 10,000. |
|
2062/01/09 |
Goods sold for Rs.25,000. |
|
2062/01/18 |
Goods purchased on credit from Rishav of Rs.30,000. |
|
2062/01/28 |
Paid to Rishav Rs.29,000 in full settlement of his account. |
Required:
Journal Entries
Purchase a/c
Solution
Journal Entries
| Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
| 2062/01/01 | Purchase a/c……………….Dr. | 10,000 | ||
| To cash a/c | 10,000 | |||
| (Being goods purchased) | ||||
| 2062/01/09 | Cash a/c…………..Dr. | 25,000 | ||
| To sales a/c | 25,000 | |||
| (Being cash sales made) | ||||
| 2062/01/18 | Purchase a/c…………………..Dr. | 30,000 | ||
| To Rishav’s a/c | 30,000 | |||
| (Being goods purchased from Rishav) | ||||
| 2062/01/28 | Rishav’s a/c | 30,000 | ||
| To cash a/c | 29,000 | |||
| To discount received a/c | 1,000 | |||
| (Being paid to Rishav and received discount) |
| Dr. | Purchase a/c | Cr. |
| Date | Particulars | JF | Amount (Rs.) | Date | Particulars | JF | Amount (Rs.) |
| 2062/01/01 | To cash a/c | 10,000 | 2062/01/30 | By balance c/d | 40,000 | ||
| 2062/01/18 | To Rishav’s a/c | 30,000 | |||||
| 40,000 | 40,000 | ||||||
| 2062/02/01 | To balance b/d | 40,000 |
Journalize the following transactions of a business:
|
Date |
Transactions |
|
a) |
Furniture costing Rs.4,000 were sold for Rs.3,500. |
|
b) |
Sold goods to Suman for Rs.9,000. |
|
c) |
Cash withdrawn from bank for office use Rs.8,000. |
|
d) |
Received cash from Suman Rs.8,500 and allowed discount to him) |
Required:
Journal Entries
Suman’s a/c
Solution:
Journal Entries
| Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
| a) | Bank a/c………………..Dr. | 3,500 | ||
| Loss on sales a/c………………Dr. | 500 | |||
| To furniture a/c | 4,000 | |||
| (Being furniture sold at a loss of Rs.500) | ||||
| b) | Suman’s a/c……………………Dr. | 9,000 | ||
| To sales a/c | 9,000 | |||
| (Being goods sold on credit) | ||||
| c) | Cash a/c……………………Dr. | 8,000 | ||
| To bank a/c | 8,000 | |||
| (Being cash withdrawn from bank for office use) | ||||
| d) | Cash a/c……………………Dr. | 8,500 | ||
| Discount allowed a/c…………………Dr. | 500 | |||
| To Suman’s a/c | 9,000 | |||
| (Being cash received from Suman and allowed him discount) |
| Dr. | Suman’s a/c | Cr. |
| Date | Particulars | JF | Amount (Rs.) | Date | Particulars | JF | Amount (Rs.) |
| b) | To sales a/c | 9,000 | d) | By cash a/c | 8,500 | ||
| By discount allowed a/c | 500 | ||||||
| 9,000 | 9,000 | ||||||
What is a ledger account?
The ledger account or simply an account is a summarized statement of the financial transactions particularly relating to a subject, which may be a person, an asset, an expense or an income. It is a statement, which contains all transactions relating a particular thing for a specified period.
What do you mean by posting?
Posting means recording of transactions in the ledger book. It is the process of recording financial transactions in the concerned accounts contained in the ledger book.
What are the steps that are to be taken while posting into the ledger without journal entries?
While posting into the ledger without journal entries, the following steps are to be taken:
- Identify the two aspects of each of he transactions.
- Recognize the name of accounts for the two aspects of each of the transactions.
- Judge the accounts to be debited and credited for the transactions.
- Post into the concerned accounts on the relevant side along with the appropriate amounts.
Quiz
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