General Ledger Accounts Classification Examples Help

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Meaning of ledger: A ledger is a book which contains all the accounts whether personal, real, or nominal. It contains a classified and permanent record of all the transactions of a business.


i. Each ledger account is divided into two parts. The left side of the ledger is known as the debit side and the right side is known as the credit side. The words‘Dr.’ and ‘Cr.’ are used to denote Debit and Credit.
ii. The name of the account is mentioned in the top (middle) of the account.
iii. The date of the transaction is recorded in the date column.
iv. The word ‘To’ is used before the accounts which appear on the debit side of
an account in the particulars column and ‘By’ is used before the accounts which appear on the credit side of an account.

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The general ledger accounts are classified into following seven classifications

i. Assets
ii. Liabilities
iii. Stockholder’s Equity
iv. Operating revenues
v. Operating expenses
vi. Non-Operating revenues
vii. Non-Operating expenses
General Ledger Accounts Classification Explanation
This can be well explained with the help of an example
Example: Mr. Ram started business with cash $400000 on 1st June 2016.
Journal entry for this transaction would be
Cash a/c Dr. $400000
To Ram’s Capital a/c $400000
In ledger Cash account will be debited by Ram’s Capital a/c and Ram’s Capital account will be credited by Cash a/c.
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