Loading....
Coupon Accepted Successfully!

 

The Ledger

The ledger is the principal book of accounting system. It is the collection of all the accounts, debited or credited, in the journal proper and various special journals (about which you will learn in chapter 4). A ledger may be in the form of a bound register, or cards, or separate sheets may be maintained in a loose leaf binder. In the ledger, each account is maintained in a separate page or card.

Utilities of a Ledger:
  • A ledger is a very useful and important account of the organisation.
  • The net result of all transactions in respect of a particular account on a given date can be ascertained only from the ledger.
  • It facilitates easy posting and location of accounts.
For example, the management on a particular date wants to know its dues from a certain customer or the amount due particular supplier, such information can be found only in the ledger. This information cannot be ascertained from the journal because the transactions are recorded only in the chronological order and it lacks classification

Format of the account is shown in figure 3.6.

Name of the account
                                                                                                              
Dr.  Cr.

Date

Particulars

J.F.

Amount

Rs.

Date

Particulars

J.F.

Amount

Rs.

 

 

 

 

 

 

 

 

Fig. 3.6: Showing format of a ledger

 

 

According to this format each column will contain the following information


An account is debited or credited according to the rules of debit and credit.

Title of the account: The Name of the item is written at the top of the format as the name of the account. The name of the account ends with suffix 'Account'.

Dr. /Cr.: Dr. means Debit side of the account and Cr. Means Credit side of the account.

Date: Year, Month and Date of transactions are posted in chronological order in this column.

Particulars: Name of the item with reference to the journal is written on debit/credit side of the account.

Journal Folio: It records the page number of the journal in which the relevant transaction is recorded. This column is filled up at the time of posting.

Amount: This column records the amount in numerical figure, entered in the amount column of the journal.

Distinction between Journal and Ledger


The Journal and the Ledger are the most important books of the double entry system of accounting and are vital for an accounting system.

Following are the differences between a journal and a ledger:
 
  1. The Journal is the book of first (original) entry; while the ledger is the book of second entry.
  2. The Journal is the book for chronological record; but the ledger is the book for analytical recording.
  3. The Journal, as a book of source entry, gets greater importance as legal evidence than the ledger.
  4. Transaction is the basis of classification of data in the Journal; Account is the basis of classification of data incase of the ledger.
  5. Process of recording in the Journal is called Journalising; but the process of recording in the ledger is known as Posting.




Test Your Skills Now!
Take a Quiz now
Reviewer Name