This document discusses key aspects of ledgers, including their purpose, contents, and use. It begins by defining the ledger as the principal book that contains all accounts, where transactions recorded in other books are finally entered. The ledger allows obtaining complete information and checking arithmetical accuracy. It then covers posting transactions from journals to ledger accounts, balancing accounts by calculating the difference between total debits and credits, and closing nominal accounts by transferring balances to financial statements. Ledgers provide the final position of each account and are relied upon by tax authorities.

1. Prof. S.N.Gaikwad
Vice Chairman
Prof.S.R. Tajane
Faculty Member

3. After completion of this chapter you
should be conversant about:
Meaning and contents of ledger
Specimen of ledger
Posting of entries from journal to ledger
Balancing of ledger

4. Ledger is a principal or main book which
contains all the accounts in which the
transactions recorded in the books of
original entry are transferred. Ledger is also
called the ‘Book of Final Entry’ or ‘Book of
Secondary Entry’, because the transactions
are finally incorporated in the Ledger.
According to L.C. Cropper, ‘the book which
contains a classified and permanent record
of all the transactions of a business is called
the Ledger’.

5. The following are the advantages
of ledger:
a) Complete information at a
glance
b) Arithmetical Accuracy
c) Result of Business Operations
d) Accounting information

6. Dr. Account Name Cr.
Date Particulars J.F. Amo
unt
Rs.
Date Particulars J.
F.
Amou
nt in
Rs.
Date
Month
Year
To (Name of
credit account
in journal)
Date
Month
Year
By (Name of
debit account
in journal)

7. The process of transferring the entries recorded in
the journal to the respective accounts opened in
the ledger is called Posting.
In other words, posting means grouping of all
the transactions relating to a particular
account at one place.
Procedure of Posting
Posting of Compound Journal Entries

8. Balance is the difference between the total
debits and the total credits of an account.
When posting is done, many accounts may
have entries on their debit side as well as
credit side. The net result of such debits
and credits in an account is the balance.
Balancing means the writing of the
difference between the amount columns
of the two sides in the lighter (smaller
total) side, so that the grand totals of the
two sides become equal.

9. There are three possibilities while
balancing an account during a
given period. it may be a debit
balance or a credit balance or a nil
balance depending upon the debit
total and the credit total.

10. Balancing is done periodically, i.e., weekly,
monthly, quarterly, half yearly or yearly,
depending on the requirements of the business.
I. Personal Accounts : These accounts are generally
balanced regularly to know the amounts due to the
persons (creditors) or due from the persons
(debtors).
II.Real Accounts : These accounts are generally
balanced at the end of the financial year, when
final accounts are being prepared. However, cash
account is frequently balanced to know the cash on
hand.
A debit balance in an asset account indicated the
value of the asset owned by the business. Assets
accounts always show debit balances.

11. III. Nominal Accounts : These accounts are in fact, not
to be balanced as they are to be closed by transfer to
final accounts.
A debit balance in a nominal account indicates that it is
an expense or loss. A credit balance in a nominal
account indicates that it is an income or gain.
All such balances in personal and real accounts are
shown in the Balance Sheet and the balances in
nominal accounts are taken to the Profit and Loss
Account.

12. Basic distinction Journal Ledger
1. Book It is the book of primary entry It is the main book of account
2. Stage Recording of entries in these
books is first stage
Recording of entries in the
ledger is second stage
3. Process The process of recording of
entries in these books is
‘Journalising’
The process of recording of
entries in the ledger is called
‘Posting’
4. Transactions Transactions relating to person
or property or expense are
spread over
Transactions relating to a
particular account are found
together on a particular page
5. Net Effect The final position of the
particular account can’t be
found
The position of a particular
account can be ascertained with a
glance
6. Next Stage Entries are transferred to the
ledger
From the ledger trial balance is
drawn and other final accounts
are prepared
7.Tax Authorities Don’t rely upon these books Rely upon these books