The document provides an overview of ledger accounting, explaining its role as a main book of accounts where transactions are classified and summarized. It details the differences between journals and ledgers, the posting process, and various types of ledgers including debtors', creditors', and general ledgers. Additionally, it highlights the advantages of using ledgers, such as enhanced accuracy and comprehensive tracking of transactions related to assets, liabilities, income, and expenses.

1. This presentation is owned by
ABUL KALAM AZAD PATWARY
“for class 9-10[accounting]”

2. 7

3. LEDGER
Ledger is a main book of account in which various accounts of
personal, real and nominal nature, are opened and maintained. In
journal, as all the business transactions are recorded
chronologically, it is very difficult to obtain all the
transactions pertaining to one head of account together at one place.
But, the preparation of different ledger accounts helps to get a
consolidated picture of the transactions pertaining to one ledger
account at a time. Thus, a ledger account may be defined as a
summary statement of all the transactions relating to a person, asset,
expense, or income or gain or loss which have taken place during a
specified period and shows their net effect ultimately. From the
above definition, it is clear that when transactions take place, they
are first entered in the journal and subsequently posted to the
concerned accounts in the ledger. Posting refers to the process of
entering in the ledger the information given in the journal. In the
past, the ledgers were kept in bound books. But with the passage of
time, they became loose-leaf ones and the advantages of the same lie
in the removal of completed accounts, insertion of new accounts and
arrangement of accounts in any required manner.

4. WHAT IS LEDGER ?
When all the transactions of a given period have
been journalized, the next thing is to classify them according
to the accounts affected. All similar transactions must be
brought together. For instance, all transactions relating to
cash must be put in one place. Similarly, all transactions
with a customer or a supplier must be assembled at one
place. The book in which this classification is done is called
the ledger.
The ledger is a book which contains a condensed and
classified record of all the pecuniary transactions of the
business generally brought, transferred or posted from the
books of original entry.
Ledger is called the king of all books of accounts because all
entries from the books of original entry must be posted to
the various accounts in the ledger. It should be noted
that journal contains a chronological record while ledger
contains a classified record of all transactions.

5. FEATURES OF LEDGER:
The following are the features of ledger.
It has two identical sides – left hand side and right hand side. The left
hand side is called debit side and right hand side is called credit side.
Debit aspects of all the concerned transactions is recorded on the
debit side, while credit aspect on credit side according to date.
The difference of the total of the two sides represent balance. The
excess of debit side over credit side indicates debit balance, while
excess of credit side over debit side indicates credit balance. If the
total of the two sides are equal there will be no balance.
Usually balance is drawn at the year end and recorded on the deficit
side to make the two sides equal. This balance is known as closing
balance.
The closing balance of the current year will be the opening balance of
the next year.

6. ADVANTAGES OF LEDGER
The following are the advantages derived from ledger:
1) It is the ledger through which successful application of double entry
system of bookkeeping is ensured. Each and every transaction is
divided into two parts – receiver and giver – and recorded in the two
concerned accounts in ledger.
2) Transactions relating to different persons or concerns are recorded
in the account of each person or concern separately. As a result,
complete and reliable information is available in respect of each and
every account.
3) Different types of income and expenses are recorded in different
accounts separately. So, it is possible to ascertain the amount of
income and expenditure under each head and the overall result at the
year end through trading and profit and loss account.

7. 4) Separate account is opened for each item of assets and liabilities. It
is, therefore, possible to ascertain the value of different assets and
liabilities and the true financial position at the year end through
balance sheet.
5) Transactions being recorded primarily in journal and thereafter
finally in ledger, the possibility of errors and defalcations is remote.
6) Valuable information and statistics are collected from ledger
and supplied to the management to enable them to run the
concern efficiently.

8. 4) Separate account is opened for each item of assets and liabilities. It
is, therefore, possible to ascertain the value of different assets and
liabilities and the true financial position at the year end through
balance sheet.
5) Transactions being recorded primarily in journal and thereafter
finally in ledger, the possibility of errors and defalcations is remote.
6) Valuable information and statistics are collected from ledger
and supplied to the management to enable them to run the
concern efficiently.

9. Sub-division of ledger
In a big business, the number of accounts is numerous and it is found
necessary to maintain a separate ledger for customers, suppliers and
for others.
Usually, the following three types of ledgers are maintained in such big
business concerns.
(i) Debtors’ Ledger: It contains accounts of all customers to whom
goods have been sold on credit. From the Sales Day Book, Sales
Returns Book and Cash Book, the entries are made in this ledger. This
ledger is also known as sales ledger.
(ii) Creditors’ Ledger: It contains accounts of all suppliers from whom
goods have been bought on credit. From the Purchases Day Book,
Purchases Returns Book and Cash Book, the entries are made in this
ledger. This ledger is also known as Purchase Ledger.
(iii) General Ledger: It contains all the residual accounts of real and
nominal nature. It is also known as Nominal Ledger.

10. FORM OF LEDGER:
One account usually occupies one page in
the ledger. But if the account is big one it
may extend to two or more pages. The pages
of the ledger are vertically divided into two
equal halves.
The left hand half or side is known as the
debit (Dr.) side and the right hand half is
the credit (Cr.) side. Abbreviations “Dr.”
and “Cr.” are put on the top left and right
hand corners. Each half part is further
divided into four sections – (1) Date (2)
Particulars (3) Folio (4) Amount.

11. METHOD OF POSTING:
The act of separately transferring each entry from journal to the respective
account in the ledger is called posting. Posting consists of:
1) Recording the relevant amount on the left hand side of the
account which according to journal is to be debited.
2) Recording the amount on the right hand side of the
account which, according to the journal, is to be credited.
3) In the ledger account, the first entry on the debit side is
preceded by the word “To” and the first entry on the credit
side is preceded by the word “By.” The sign of ditto is placed
before the subsequent entries.

12. FOLIOING:
Folio means folded page of account books.
Account books are usually made of sheers of
paper folded at the middle and vertically
divided into two pages, each of which is
called a folio. For ready reference the pages
of our books should be numbered in
numerical order. When we post the various
entries from the journal into the ledger, we
should write the ledger page in the ledger
folio column of the journal and the page of
the journal in the journal folio column of the
ledger. This is known as folioing.

13. Distinction between journal and ledger
(i) Journal is a book of prime entry, whereas ledger is a book of
final entry.
(ii) Transactions are recorded daily in the journal, whereas posting
in the ledger is made periodically.
(iii) In the journal, information about a particular account is not
found at one place, whereas in the ledger information about
particular account is found at one place only.
(iv) Recording of transactions in the journal is called journalizing
and recording of transactions in the ledger is called posting.
(v) A journal entry shows both the aspects debit as well as credit but
each entry in the ledger shows only one aspect.
(vi) Narration is written after each entry in the journal but no
narration is given in the ledger.
(vii) Vouchers, receipts, debit notes, credit notes etc., from the
basic documents form journal entry, whereas journal constitutes
basic record for ledger entries.

14. Sub-division of ledger
In a big business, the number of accounts is numerous and it is
found necessary to maintain a separate ledger for customers,
suppliers and for others.
Usually, the following three types of ledgers are maintained in such
big business concerns.
(i) Debtors’ Ledger: It contains accounts of all customers to whom
goods have been sold on credit. From the Sales Day Book, Sales
Returns Book and Cash Book, the entries are made in this ledger.
This ledger is also known as sales ledger.
(ii) Creditors’ Ledger: It contains accounts of all suppliers from
whom goods have been bought on credit. From the Purchases Day
Book, Purchases Returns Book and Cash Book, the entries are made
in this ledger. This ledger is also known as Purchase Ledger.
(iii) General Ledger: It contains all the residual accounts of real and
nominal nature. It is also known as Nominal Ledger.

15. Subsidiary Ledger
As we all know about the ledger it is an accounting book in the double entry
system that is used to record and maintain transactions for a business. There are
different types of ledgers one of them is subsidiary ledger that is used to store
different types of transactions.
All the information stored and processed in subsidiary ledger is posted to a
specific account of the general ledger. The general ledger with all
this information is used to prepare the financial statements of the business. The
account that holds the information from the subsidiary ledger is called the control
account. A general ledger has a large number of accounts and most of them are not
control accounts as information is stored directly in to them.
A subsidiary ledger can be created for every account of the general ledger however
commonly this ledger is prepared for the accounts that are overcrowded or over
whelming with the transactions and recordings. Accounts for which we can
prepare subsidiary ledgers are the accounts payable, accounts receivable, sales
accounts, fixed asset ledger, inventory ledger and purchase ledger.
Subsidiary ledgers are used to avoid large amount of information cluttering and
accumulation in general ledger. This happens within the businesses having a large
number of sales volumes. Generally small companies do not need sales ledgers.
Subsidiary ledger can also be used for the research purposes and the date is
drilled down from the general ledger to the subsidiary ledger in order to find out
correct information.

16. PURCHASE LEDGER:
A purchase ledger can be defined as a sub ledger in business
accounting that is used to record all the purchases made by the
business in that accounting period. The entire amount that a
business is spending and transacting with its supplier is
aggregated at one place that is called a purchase ledger. The
purchase ledger also shows outstanding and paid purchases as
well. Almost all the transactions that are entered into purchase
ledger are tagged as accounts payable followed by the date on
which they are going to be paid and will be eliminated from the
accounts payable.
The record of a purchase ledger contains a large amount of information in
it including purchase date, code or the name of the supplier, invoice
number, purchase number, item identification code, amount paid for
purchase, tax paid for purchase and payment flags indicating payment is
made or the purchase is made on a credit. The most important piece
of information or document that is recorded in the purchase ledger is the
supplier invoice of the purchase. Credit memos issued by the supplier in
return of damaged goods or returned goods are also recorded in purchase
ledger.

17. SALES LEDGER
A sales ledger is an accounting document that displays a complete
itemization of all the sales made by the business along with presentation
of these sales in the respective date sequence. Sales ledger also
addresses credit issues such as product returns by the customers that
result in decreased revenue that is earned by the business as a result of
sales. The information on a sales ledger can be categorized as date on
which the sale is made, invoice number, customerdetails, item details,
amount of the sale, and amount of tax, value added charges and fright
rates.
In each accounting period the information on the corresponding sales
ledger is summarized and the summarized information is then posted to
the sales account of the general ledger. The detailed and
complete information of the sales ledger is kept aside from the general
ledger to avoid making is overwhelmed with the information.

18. 1) The figures of the sales ledgers are used in the
financial statements that are the figures of the sales
ledger appears at the top of the income statement.
2) The information in the sales ledger is also used for
the research purposes related to any kind of sales issue.
For example this information can be used for the trend
line analysis of the business sales
3) During auditing auditors can consult
the information recorded in the sales ledger in order to
find out the correct sales figure of the business.
In accounting sales ledger can be used in a number of different
ways:-