ledger account for college assignment .pdf
- 2. INDEX INTRODUCTON DEFINITION FORMAT OF LEDGER TYPES OF LEDGER UTILITIES OF LEDGER DIFFERENCE BETWEEN JOURNAL AND LEDGER PROCEDURE OF LEDGER POSTING BALANCING OF LEDGER POSTING
- 3. INTRODUCTION A ledger account is a journal in which a company holds data for all transactions and financial statements. The company’s general ledger is organised under the general ledger, and the balance sheet is assets, accounts receivable, accounts payable, shareholders, accounts payable, stocks, income, taxes, expenses, profits, losses, funds, loans, bonds. It is split into multiple accounts such as, stock, and salary. Wages etc.
- 4. A ledger, also called a general ledger, is a record of a business’s financial transactions. It summarises all the revenue and expenses of the business, plus the debts owed and assets owned. The transactions in a general ledger are organised into five main types; assets, liabilities, equity, revenue, and expenses. DEFINITION According to L.C. Cropper, “The book which contains a classified and permanent record of all transactions of a business is called the Ledger.”
- 5. FORMAT OF LEDGER Ledger is a T-format account where the debit is depicted on the left side, and the credit is depicted on the right side. The columns include date, particulars, journal folio (JF), and amount. 01. 02. 03. TRANSACTiON LEDGER JOURNAL/ SUBSIDIARY BOOKS
- 6. Debit: The debit side of an account represents when the debit increases. Credit: The credit side of an account represents when the credit increases. Date: The date on which the transaction takes place. Particulars: The contra entry of the concerned account according to the double entry system is shown under this head. Journal Folio: The reference number of the journal entry from the journal. Amount: It is the amount debited or credited to a particular amount during the transaction.
- 7. TYPES OF LEDGER 01 02 General ledger Sales ledger or debtor's ledger. . 03 Purchase ledger or creditor's ledger. .
- 8. 1. Sales Ledger Sales Ledger is a ledger in which the company maintains the transaction of selling the products, services or cost of goods sold to customers. This ledger gives the idea of sales revenue and income statement. 2. Purchase Ledger Purchase Ledger is a ledger in which the company organizes the transaction of purchasing the services, products, or goods from other businesses. It gives the visibility of how much amount the company paid to other businesses.
- 9. 3. General Ledger General Ledger is divided into two types – Nominal Ledger and Private Ledger. Nominal ledger gives information on expenses, income, depreciation, insurance, etc. And Private ledger gives private information like salaries, wages, capitals, etc. Private ledger is not accessible to everyone.
- 10. Utilities of ledger i) Quick information about a particular account Ledger account helps to get all information about a particular account like sales, purchases, machinery, etc., at a glance. For example, where there are several transactions with a debtor, the net amount due from a debtor can be known from the ledger account. ii) Control over business transaction From the ledger balances extracted, a thorough analysis of account balances can be made which helps to have control over the business transactions.
- 11. iii)Trial balance can be prepared With the balances of ledger accounts, trial balance can be prepared to check the arithmetical accuracy of entries made in the journal and ledger. iv) Helps to prepare financial statements From the ledger balances extracted, financial statements can be prepared for ascertaining net profit or loss and the financial position.
- 12. There are several reasons why ledger entries are oh-so-important. Ledger entries: Why are ledger entries important? Keep you organized Make it easier to find transactions Compartmentalize transactions Let you see the big picture of your company’s financial health Show you patterns in income and expenses
- 13. Journal is a subsidiary book of account that records transactions. Ledger is a principal book of account that classifies transactions recorded in a journal. The journal transactions get recorded in chronological order on the day of their occurrence. The ledger classifies the transactions from the journal under the respective accounts to which they are related. JOURNAL LEDGER DIFFERENCE BETWEEN JOURNAL AND LEDGER
- 14. The journal does not reveal the total results of a transaction. The Ledger accounts help reveal the result of transactions for a particular account. Each journal entry has a detailed narration of the transaction. The ledger accounts do not have a detailed narration of each transaction. The journal cannot help prepare the Trial Balance directly. The ledger helps to prepare the Trial Balance. A journal does not have an opening balance, and it is only concerned with the current transactions that occur on a day-to-day basis. Some ledger accounts have an opening balance, which is the closing balance from the previous year.
- 15. PROCEDURE OF POSTNG The format has two sides namely debit and credit with the date of transaction, account by which it is debited or credit, the JF note and respective amounts. A general ledger explains the further step of accounting commonly called posting accounting definition. It refers to keeping records or hold information of individual accounts operations separately that are mentioned in the journal.
- 16. First part of the Account: 1. Locate in the ledger, the first Account named in the journal. 2. Write the date of the transaction, in the date column, in debit-side of that account. 3. Enter in the debit-side of the ledger, in particulars column, the name of the Account credited with prefix “To”. 4. Write in folio column on the debit-side of the account, the page number of journal from which the entry is being posted. 5. Enter the amount, on the debit column of the ledger as per journal. 6. Similarly, write the ledger page number in the folio column of the Journal.
- 17. Second part of the other Account: 1. Locate in the ledger, the second Account named in the Journal. 2. Write the date of the transaction, in the date column on credit side of that Account. 3. Enter in the credit-side of the ledger, in particulars column, the name of the Account debited with prefix “By”. 4. Write in the folio column of the ledger, the page number of the journal from which the entry is being posted. 5. Enter the amount on the credit side of the ledger as per the journal. 6. Similarly, write the ledger page number in the folio column of the journal.
- 18. Example: Record the following transaction and post them into ledgers: On 1st Dec. 2004, Ram started business with a capital of Rs. 50,000
- 20. Balancing of ledger accounts Balancing means that the debit side and credit side amounts are totalled and the difference between the total of the two sides is placed in the amount column as ‘Balance c/d’ on the side having lesser total, so that the total of both debit and credit columns are equal.
- 21. ILLUSTRATON 1 Thmizhanban started book selling business on 1st January, 2018. Following are the transac- tions took place in his business for the month of January, 2018. Pass journal entries and pre- pare ledger accounts. 2018 Jan. 1 Started business with cash Rs. 3,00,000 Jan. 2 : Opened bank account by depositing Rs. 2,00,000 Jan. 5 : Goods bought from Tamilnadu Textbook Corporation for cash Rs. 10,000 Jan. 15 : Sold goods to MM Traders for cash Rs. 5,000 Jan. 22 : Purchased goods from X and Co. for Rs. 15,000 and the payment is made through net banking. Jan. 25 : Sold goods to Y and Co. for Rs. 30,000 and the payment is received through NEFT
- 27. 2. Direct ledger posting Prepare cash account from the following transactions for the month of January 2018. Jan 1 Commenced business with cash Rs. 62,000 Goods purchased for cash Rs. 12,000 Goods sold for cash Rs. 10,000 Wages paid Rs. 4,000 Furniture purchased for cash Rs. 6,000
- 29. Thank You