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What is ledger in accounting?
Ledger is a summary of all transactions in a journal. A ledger is a record of all business transactions made by a firm. This is often called as chart of accounts.
General ledger has three account types namely assets, liabilities and equity accounts. Most of the firms have almost same accounts like cash, account payable and retained earnings, but some may have specialised accounts for specific projects.
Types of ledgers are −
Sales ledger −Maintains sales transactions (service or goods sold) of a firm
Purchase ledger −Maintain purchase transactions (services, goods purchased) of a firm
General ledger −Records expenses, income, depreciation etc. in nominal ledger and records salaries, wages, capitals etc., in private ledger
Ledger account examples
| Assets | Liabilities | Stock | Operation revenues | Operating expenses |
|---|---|---|---|---|
| Cash | Debt | Stockholder equity | sales | Salaries and wages |
| Land | Account payables | Common stock | Services fees | Office expenses |
| Account receivables | Loans | Retained earnings | Depreciation expense | |
| Equipment | accrued expenses |
General ledger account format
| Name of the business | ||||||
|---|---|---|---|---|---|---|
| Name of the document – General ledger | ||||||
| Date | Particulars | Dr (OR) Cr | Account no. | Post ref | Debit | Credit |
| Xx/xx/xxxx | Owners fund (Rs. 100000) | |||||
| Bank | Dr | Xxxxxxx | ||||
| Capital | Cr | Xxxxxxx | ||||
| Xx/xx/xxxx | Purchases | |||||
| Bank | Decrease in Cr | |||||
| Property | Increase in Dr | |||||
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