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Ledger: HAT IS Edger

A ledger is a record of accounts that summarizes the values of financial transactions per account, forming the basis for the balance sheet and income statement. It contains individual account pages where transactions are posted from journals. Posting transfers journal entries to the relevant accounts in the ledger. The ledger accounts for a sample company are given, showing transactions posted from the journal to accounts for cash, capital, purchases, a customer (Ali), and sales.

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Tara Gilani
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108 views5 pages

Ledger: HAT IS Edger

A ledger is a record of accounts that summarizes the values of financial transactions per account, forming the basis for the balance sheet and income statement. It contains individual account pages where transactions are posted from journals. Posting transfers journal entries to the relevant accounts in the ledger. The ledger accounts for a sample company are given, showing transactions posted from the journal to accounts for cash, capital, purchases, a customer (Ali), and sales.

Uploaded by

Tara Gilani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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LEDGER

1. WHAT IS LEDGER

A ledger is a record of accounts, each recorded individually with its balance. Unlike the journal
listing chronologically all financial transactions without balances, the ledger summarizes values
of one type of financial transactions per account, which constitute the basis for the balance
sheet and income statement.

Why ledger?

 Maintaining of ledger is a must in every accounting system.

 Ledger is the stepping stone for preparing Trial Balance.

 Possibility of errors of defalcations are reduced to the minimum

 Ledger is the destination of all entries made in journal or sub-journals.

 Ledger is the "store-house" of all information which subsequently is used for preparing
final accounts and financial statements.

2. MEANING OF POSTING

 Process of transferring the entries recorded in journal in the respective accounts in


ledger

 Can be carried out anytime


 May be either daily, weekly, fortnightly or monthly according to the convenience and
necessity of business

 It should be completed before the preparation of financial statements.

3. FORMAT

Ledger

DR CR
Date Particular J/F Amount Date Particular J/F Amount

FOR EXAMPLE:

Following are the transactions in the book of XYZ Co Ltd.

1 July: Mr. Moiz commenced business with cash RS 15000

5 July: purchased good for cash Rs 6000

10 July: goods sold to Mr. Ali Rs 7000

15 July: cash sales Rs 4000

JOURNAL ENTRY

Journal entry in the book of XYZ Co. Ltd.


Date Particulars L/F Dr. Amount Cr. Amount
1 July Cash A/c 15000
Dr 15000
To Capital A/c
5 July Purchase A/c 6000
Dr 6000
To Cash
10 July Mr. Ali A/c 7000
Dr 7000
To Sales
15 July Cash A/c 4000
Dr 4000
To Sales

4. LEDGER ACCOUNTS

Five accounts to be affected in the ledger:

 Cash A/c

 Capital A/c

 Purchase A/c

 Ali A/c

 Sales A/c

Cash Account
Dr. Cr.
Date Particular J/F Amount Date Particulars J/F Amount
1 July To capital 15000 5 July By purchase 6000
15 July To sales 4000 31 July By balance c/d 13000

19000 19000
1 Aug To balance b/d 13000

Capital Account
Dr. Cr.
Date Particular J/F Amount Date Particulars J/F Amount
31 July To balance c/d 15000 1 July By cash 15000

15000 15000
1 Aug By balance b/d 15000

Purchase Account
Dr. Cr.
Date Particular J/F Amount Date Particulars J/F Amount
5 July To cash 6000 31 July By balance c/d 6000

6000 6000
1 Aug To balance b/d 6000

Ali Account
Dr. Cr.
Date Particular J/F Amount Date Particulars J/F Amount
10 July To sales 7000 31 July By balance c/d 7000

7000 7000
1 Aug To balance b/d 7000

Sales Account
Dr. Cr.
Date Particular J/F Amount Date Particulars J/F Amount
31 July To balance c/d 11000 10 July By Ali 7000
15 July By cash 4000
11000 11000
1 Aug By balance b/d 11000

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