Contents of Ledger

Ledger is a  collection of books or accounts that records account transactions. Each account has a starting balance or a carry forward balance, and  each transaction is recorded as  a debit or credit in a separate column, with the ending balance or ending balance recorded. In the field of cryptocurrencies and NFTs (Non-Fungible Tokens), ledgers are essentially  hardware wallets and are the safest way to store cryptocurrencies or non-fungible tokens. 

Ledger includes:

Sales ledger

Accounts receivable have been recorded. This ledger consists of  financial transactions made by the customer to the company. 

Purchase ledger

Records the money  the company spends on purchases. 

General ledger

Represents five major account types: assets, liabilities, income, expenses, and capital. 

For each debit recorded in the ledger, there must be a corresponding credit in order for the debit to match the total credit. 

Types of ledger accounts on the basis of their purpose

General ledger

Ledger collects information from journals. Every month, all journals are summed up and posted to the general ledger. Therefore, the purpose of the general ledger is  to organise and summarise  individual transactions recorded in all  journals. 

Debtors ledger

The accounts receivable ledger collects information from  sales journals. The purpose of the Debtor Ledger is to provide information about which customers are borrowing the company’s money  and how much. 

Creditors ledger

The accounts payable ledger collects information from the purchase journal. The purpose of the accounts payable ledger is to provide information about which supplier the company is borrowing money from, and what it is. 

Examples of ledger accounts

Examples of general ledger include cash, receivables, inventory, fixed assets,  accrued expenses, accrued expenses, liabilities, capital, income, cost of goods sold, salaries and wages, office expenses, depreciation expenses, and income tax expenses. 

Accounting for Ledger accounts

The information is stored in a ledger  with opening and closing balances that are debited and credited during the accounting period. Individual transactions are identified in the ledger by transaction number or other notation so that you can investigate why the  transaction was entered in the ledger. Transactions can be triggered by normal business activities which  may include reconciliation transactions that require the use of customer invoices or  supplier invoices, or  journal entry. 

Presentation of ledger accounts

Ledger account information is aggregated into account-level totals displayed in  balance sheet reports and used to prepare financial statements. 

Storage of ledger accounts

The general ledger can be in the form of  electronic records if the accounting software package is used, or  in the form of written ledger pages if the accounting records are manual. 

Ledger posting

Each time a transaction occurs, it is marked in the form of a journal entry and recorded in the journal. In addition, this entry is posted again to each journal account. This is done from the journal using the principle of double-entry bookkeeping. This is known as general ledger posting. There are some rules that you must follow when creating journals for the following accounts. 

Rules for writing Journal entries ledger accounts

Liabilities

It decreases on the debt side  and increases on the credit side. 

Assets

In the case of assets, the number on the left side increases or it can be said to be the debit side. Although this decreases with the size of the loan or on  the right side. 

Capitals

This follows the same rules as debt. 

Gains or income

This reduces the target side. The credit side is also increasing. 

Expenses

General ledger spending decreases on the credit side and increases on the debit side. 

Conclusion

The general ledger contains summary information from the journal and is recorded as debits and credits. The general ledger is used to create financial statements and contains a list of all active accounts, called a chart of accounts. The general ledger is influenced by normal operations and can be manually or electronically documented.