What is Ledger?
All transactions are recorded in books of accountsJournal is a book of entry in which all transactions are recordedIt gives us a summarised record of transactions relating to one particular accountSo it is important to summarise the transactions at one placeSubsidiary books sub journal books.
Ledger is a book in which all accounts are maintainedIt is recorded from journal and subsidiary booksJournal is a secondary book of accountsAn account in a ledger is called a ledger accountThere is no direct recording in ledgerCompanies’ financial statement is generated from a summary of a ledgerEvery transaction flow from one or more ledgers.
Content of ledger
It contains many pages.
Each page is maintained for one particular head of an account.
A ledger is maintained in bound book form.
All pages are serially numbered.
Page number of that account in a ledger is called in a ledger as ledger folio.
All are serially numbered.
Ledger involvesSales ledger, purchase ledger and General ledger.
There are three types of ledger Debtor, Creditor and GeneralDebtor ledger collects information from the sales journalSales journal give the information of customer owe money to the businessCredit ledger gets information purchase journal Creditor’s ledger gives information of which suppliers the business owes moneyGeneral ledger gets information from journalsEvery month all journals are collected and posted to General Ledger.