LEDGER AND TRIAL BALANCE

LEDGER:

Meaning :

After recording the business transaction in the Journal or special purpose Subsidiary Books, the next step is to transfer the entries to the respective accounts 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–

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

Important:

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)

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.

Important :

1. ‘To’ is written before the A/cs which appear on the debit side of leger.
2. “By” is written before the A/cs appearing on the credit side.
3. Use of these words ‘To’ and ‘By’ is optional.

Case II. - LEDGER POSTINGS FROM CASH BOOK LEDGER :

Meaning :

After recording the business transaction in the Journal or special purpose Subsidiary Books, the next step is to transfer the entries to the respective accounts 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–

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

Important:
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)

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.

Important :

1. ‘To’ is written before the A/cs which appear on the debit side of leger.
2. “By” is written before the A/cs appearing on the credit side.
3. Use of these words ‘To’ and ‘By’ is optional.

Important Points

1. Cash Book itself serves as a cash A/c also, therefore when cash book is maintained, cash A/c is not opened in the ledger.


2. When Bank column is maintained in the Cash Book, Bank A/c is also not opened in the ledger. The Bank column itself serves the purpose of Bank A/c.


3. Opening and closing balances of Cash Book will not be entered in the ledger anywhere.


4. As Cash Book serves the purpose of Cash/Bank A/c, it means that, only the second A/c (other than Cash A/c or Bank A/c) is to be opened in the ledger and posting is to be made for each entry in the Cash Book.

CBSE Accountancy Class XI ( By Mr. Kailash Gururani )
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