LEDGER AND TRIAL BALANCE

Learning Objectives – Students will be able to tell -

1. Meaning and Importance of Ledger.
2. Format of Ledger.
3. Postings from Journal.
4. Postings from Cash Book and other Subsidiary Books.
5. Closing and Balancing of Ledger Accounts.
6. Trial Balance - Meaning, objectives and Preparation.
7. Meaning and importance of Suspense A/c.

LEDGER

Meaning : After recording the business transaction in the Journal or special pur-pose Subsidiary Books, the next step is to transfer the entries to the respective ac-counts in the Ledger. Ledger is a book where all the transactions related to a particular account are collected at one place.

Definition : The Ledger is the main or Principal book of accounts in which all the business transactions would ultimately find thier place under various accounts in a duly classified form.

Importance :   Main point is

To know the collective effect of all the transaction pertaining to one particular A/c

By this classification / collective effect we are able to know the following –

• How much amount is due from each customer and how much amount the firm has to pay to each supplier/ creditor.
• The amount of Purchase and Sales during a particular period.
• Amount paid or received on account of various items.
• Ultmate position of Assets and Capital.
• For the preparation of Trial Balance which helps in ascertaining the Arithmatic Accuracy of the Accounts.

Ledger is also called the Principal Book of Accounts

Performa for Ledger

Each ledger account is divided into two equal parts.

Left Hand Side → Debit side (Dr)

Right Hand Side → Credit side (Cr)

Name of the Account

Posting in the Ledger – This will be dealt separately from Journal Entries and each Subsidiary Book.

Case I – Posting from Journal Entries.

• If an account is debited in the journal entry, the posting in the ledger should be made on the debit side of that particular account. In the particular column the name of the other account (which has been credited in the Journal entry) should be written for reference.
• For the A/c credited in the Journal entry, the posting in the ledger should be made on the credit side of that particular A/c. In the particulars column, the name of the other account that has been debited (in the Journal entry) is written for reference.Amount paid or received on account of various items.

Important :

• 'To' is written before the A/cs which appear on the debit side of leger.
• "By" is written before the A/cs appearing on the credit side.
• Use of these words 'To' and 'By' is optional.

Example 1 : Simple Journal Entry.
On 1^st August 2011, goods are sold for cash Rs. 2,000.

SOLUTION -
Journal Entry

Ledger A/c

CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
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