Ledger

Ledger is the second step of accounting which is also the principal books of accounts. All the accounts appeared in the journal or subsidiary books are contained by the ledger account. It helps to make a classified record of all the transactions in a summarized form. It is the final destination of all the accounts created in the primary books and also the final source of all accounting information.

Some of the major definitions of ledger are:

"Ledger is a book of accounts which contains in a suitably classified form, the final and permanent record of trader's transactions."- V. J. Vickery

"A ledger is the most important book of accounts and is the final destination of the entries made in the subsidiary." - W. Pickles

From the above definition, it is clear that the ledger is a bound or register book which contains a large number of accounts. It is a principle book of accounts, which make the final record of all the transactions in a classified manner so as to provide detailed information about the financial transactions of the business.

Objectives

The main objectives of ledger are as follows:

1. To make a permanent record of all the financial transactions in a systematic manner.
2. To supply the detailed information on any account for a specific period of time easily and immediately.
3. To know the net effect of all the transactions on a particular account at a specific point in time. The net effect is the difference between debit and credit of the concerned account.
4. To help in preparing of the trial balance in order to examine the arithmetical accuracy of the books of accounts.
5. To serve as the principal account for obtaining all information of accounts at least cost and time.
   
   

Ledger Account

A ledger account is a statement of information on a particular head. It is the summary records of all the transactions relating to a particular person, property, income or expenses. It is the detail of the amount debited and credited to a particular person, income or expenses during a given period. The ledger account contains two sides which are debit and credit. Its left-hand side is called debit side and the right-hand side is called credit side. It shows the benefits on one side and sacrifices on another side for a specific period. At the end of a given period, it is balanced and closed to know the net effect or result.

Specimen of Ledger Account