Loose Leaf: In the pre-computer era, accounting personnel had to record each change by hand. The pages were actual pieces of paper and were normally housed in a large ledger book. These books, designed specifically for accounting, provide rulings for money items and other necessary notations.
Card Ledger: Another pre-computer ledger system was the card ledger. Account information was recorder on individual cards and housed on a device similar to a rolodex. Envision accounting records of a dental office with each customer having their own card displaying the date, the amount of each bill and the receipt of any payment.
Computer Ledger: Today, most businesses use some type of computerized accounting software. These programs automatically adjust the account when a transaction is entered. Individual accounts can be viewed and printed at any time.
Another learning device is the T-Account. Unlike the equation analysis sheet, which is only used by accounting learners, accountants frequently use the T-Account. It is not a formal way to present data, but it is useful to quickly decipher the effects of any transaction. Examine the T-Account layout:
The first steps to establishing T-Accounts and developing a ledger is to record individual account names and opening balances. The account names and opening balances are obtained from a company's opening balance sheet.
Examine the balance sheet for Atlantic Fleet, a rental company owned by Charles Stanson in Campbellton, New Brunswick. The preliminary (opening) balance sheet contains the assets acquired, the costs incurred and the owner's net worth when establishing the business. The company is about to open its door and begin operations. The data from this statement will be used to set up the accounts of the ledger in T-Account form.
The opening balance for an Asset account is recorded on the left side of the T-Account. The opening balance for a Liability account or an Owner's Equity account is recorded on the right side of the T-Account.
Initially, it may be difficult to recall on which side of the T-Account the opening balance is recorded. An easy way to remember is to envision a balance sheet with a T-Account drawn on top.
When the T-Account is drawn on top of the balance sheet:
The assets fall on the left side; thus, the opening balance falls on the left side.
The liabilities and owner's equity fall on the right side; thus, their opening balances fall on the right side.