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It is a book that a company uses to record detail information about the money it has paid and received. Ledger is destination of all the entries made in the journal. Any transaction what so ever can’t be posted directly in ledger, it has to be through journal. Ledger has transactions recorded in debit account and credit account. This means, all the transaction will have debit and credit side. The difference between both the sides is called balance and this balance is recorded in debit or credit side whichever is lesser which becomes the opening balance for the next year.
Types of ledger accounts:
A company has lots of transactions to be recorded for the whole year and it may require a lot of space to record this transactions. For this reason, business can opt for several ledgers instead of one which is classified as under:
- 1) Sales ledger:
Book where personal accounts of all the credit customers are maintained. They are also called as debtor. The balance in customer’s account informs the amount customer owes to business. The amount to be received from creditor is known as a current asset in the balance sheet.
- 2) Purchases ledger:
Book where personal accounts of credit suppliers are maintained. A credit supplier is also called as creditor. The balance of creditor’s account is the amount company owes to supplier. The amount payable is shown as the current liability in the balance sheet.
- 3) General ledger:
Book where all the other accounts are maintained beside Sales and purchases.
Advantages of ledger accounts
Advantages of ledger accounts assignment help can be understood by looking at the below advantages of ledger account. Our expert make it easy for you to maintain ledger account, helping any business to understand its transactions properly specially related to the money it is suppose to receive or give. Using this information business can make any changes appropriate for the improvement.
*.Transaction related to different concern or person are recorded separately. As a result, reliable and complete information is available in respect of every account.
* A ledger account includes the date, description and balance of each account.
* With the help of ledgers, trial balance is prepared. A trial balance is prepared by taking up the ledger account balance which further helps to prepare final accounts.
* The ledger account with their respective balances is the actual source of statistical information used by the management for decision making.
* Ledger account is the source to prepare final account which informs the financial position of a business.
* Ledger accounts ensure successful application of double entry system of book keeping. Each and every transaction in ledger is divided into 2 parts- receiver and giver which are recorded in 2 different accounts.
* Ledger account plays an important role as it evaluates company’s capital and profit and loss.
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