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The principle book or computer file used for recording and calculating the sum of economic transactions which is measured in terms of a monetary unit of account by account type is known as Ledger. It calculates the transaction with debits and credits in separate columns and an initial monetary balance and the ending monetary balance of each account. The Ledger is always permanent which consists of the entire summary of all amounts entered in supporting journals. These list the individual transactions by date. The financial statements of every company are generated from the ledger’s summary total where every transaction flows from journal to ledgers. According to Ledger Assignment Help, the term Ledger is derived from two words, “liggen and leggen” meaning to lie or lay. There are certain terms included in Ledger. The ledger consisting of financial transactions made by the customers is known as sales ledger. This records the receivable accounts. The money spent by the company in order to purchase is known as purchase ledger. The five main account types i.e. assets, liabilities, capital, expenses and income comes under general ledger. Distributed ledger means the digital ledger which is shared and synchronized geographically across multiple sites, countries or institutions.
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Advantages and Disadvantages of Ledger
- The various advantages of Ledger are listed in Ledger Assignment Help.
1. Ledgers are used to prepare the trial balance. Without Ledger it is almost impossible to prepare the trail balance, because, by taking up the Ledger account balance, the trail balance is prepared.
2. Ledger is used in presenting the final position or final account which is prepared from a trial balance. Since trial balance is prepared from Ledger account balance, therefore, it is impossible to present the final account without Ledger.
3. Ledger is used for determining the results of each account. On the basis of double entry principle, we can obtain the results from each account from the ledger.
4. Ledger is also used to present the statistical information. The management uses the statistical information while decision making which is obtained from the Ledger accounts with their respective balances.
5. Ledger is used in presenting the financial position of an enterprise which can only be obtained when the ledger accounts are maintained properly.
- The disadvantages of ledger are explained in Ledger Assignment Help.
1. Use of ledger involves additional work like adding columns to the subsidiary books in order to prepare total figures and control accounts.
2. For very small purposes, using ledger proves costly because of its maintenance.
3. There might be error in entering the amount to the subsidiary book or entering the correct amount but to the wrong side.
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