Accounting Ledger and How to Write Ledger

The first step in the procedure of recording transactions is to journalize and the second step is to post the transactions in the ledger. Ledger is known as the 'principal or chief' book of accounts. In ledger the financial information is classified by its nature and relevance.

The statement which records the transactions at one place relating to a particular subject is known as account. The book which contains all the accounts is known as ledger and the procedure of writing up the accounts is known as posting.

Accounting

The ledger is the most important book of account and is the destination of the entries made in the Journal or Sub-divided Journals. It is a collection of all the three types of accounts --Personal, Real and Nominal. If you are faced with questions like:

Accounting Ledger and How to Write Ledger

- How much a particular customer owes you?

- What is the amount payable by you to anyone of your suppliers?

- What is the amount of goods purchased by you during specific period ?

- How much sales you have affected during, say, last three months?

- What has been your expenditure on, say, labor during the period?

Then the quicker and easier way of ascertaining the relevant information is to turn to your ledger, find out the balance of the Customer's A/c or Supplier's A/c or Purchases A/c or Sales A/c or Wages A/c.

How to write Ledger

In ledger we maintain accounts. Each account is allotted one or more pages depending upon the requirement. Ledger is usually ruled in anyone of the following two alternatives. First alternative is followed in those cases where balance is required to be ascertained after every transaction e.g. Banks.

Second alternative is followed in those cases where balance is required to be ascertained only periodically, say after a month or quarterly. In your study of book-keeping and accountancy T- shape accounts will be used (alternative-two).

The transactions are entered in the ledger accounts in order of dates. Every entry must be dated which must be shown in the column meant for date. This is the first column on the left of each side of the account.

Record the relevant amount on the left-hand side of the account which, according to the journal is to be debited and record the amount on the right-hand side of the account which, as per journal, is to be credited (use 'amount columns' for this purpose). In ledger account each entry on the debit (left-hand) side commences with the word "To" and one the credit (right- hand) side with the word "By". In the 'particulars column' reference is made to the other account involved for providing cross reference. In the 'folio column' would be entered the page of the journal (or page of the relevant sub-divided journal) from which entry has been posted and in the folio column of journal, the page number of the ledger is written on which the relevant account appears.

Following the above procedure of recording the entries in the ledger will in fact amount to this The account receiving the benefit in shape of cash or goods will receive the debits and the account imparting i.e. giving away the benefit will receive the credits.

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