Ledger

 

Ledger

Learn how transactions are posted and classified in the Ledger

📘 What is a Ledger?

A Ledger is the principal book of accounts in which transactions recorded in the Journal are classified and posted into individual accounts.

In simple words, the Ledger helps us find the complete information relating to a particular account.

🎯 Why is a Ledger Important?

The Journal records transactions in chronological order, whereas the Ledger groups transactions account-wise.

  • It provides a separate account for each item.
  • It shows all transactions relating to an account.
  • It helps in finding the balance of an account.
  • It provides the basis for preparing the Trial Balance.

📊 Format of a Ledger Account

A Ledger account has two sides:

  • Left Side – Debit (Dr.)
  • Right Side – Credit (Cr.)
Debit Side          Credit Side

Date   Particulars   Amount         Date   Particulars   Amount

✍️ Posting from Journal to Ledger

After recording a transaction in the Journal, the amounts are transferred to the respective Ledger accounts. This process is called Posting.

The basic principle is simple:

Debit in Journal → Debit side of Ledger

Credit in Journal → Credit side of Ledger

💡 Example – Cash Introduced as Capital

Ravi started his business with ₹50,000 cash.

The Journal Entry is:

Cash A/c    Dr.   ₹50,000
    To Capital A/c   ₹50,000

Therefore, ₹50,000 will be posted to the Debit side of Cash Account and the Credit side of Capital Account.

⚖️ Balancing of Ledger

At the end of an accounting period, the two sides of a Ledger account are compared to determine the balance.

The difference between the Debit total and Credit total is known as the Balance of the account.

⭐ Key Points to Remember

  • Ledger is the principal book of accounts.
  • Transactions are classified account-wise in the Ledger.
  • Debit transactions are posted on the Debit side.
  • Credit transactions are posted on the Credit side.
  • Ledger balances help in preparing the Trial Balance.

📝 Practice Question

Question: Purchased goods for ₹10,000 in cash. Identify the Ledger accounts affected and state on which side each account will be posted.

Try it yourself before checking the answer.

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