Ledger: Format

Ledger account is one of the most crucial topics while studying accountancy. In simple terms, the ledger account can be described as a journal in which the company maintains all its data and transactions. The general ledger of the company is mainly maintained under the general ledger along with a balance sheet, which is further classified into several sub-parts, including taxes, loss, funds, accounts receivable, expenses, profit, assets, salaries, wages, liabilities, equities, account revenues, loans, bonds, payable, stockholders, stocks, and so on. 

You will get a detailed understanding of the concept of the ledger to account along with the ledger format, types of the ledger and other related topics such as balance sheet in detail. So, let’s get started with the Ledger study material without further ado.

Explain the General Ledger Accounts 

In simple terms, the general ledger account is a ledger where the company records all its transactions and financial statements and maintains accounts. Any financial statement regarding the company’s financial position rises only from the account as a result. The general ledger is also known as the principal book. Organisations are required to maintain a proper record of all transactions they make for business purposes. Accounting books are maintained for the systematic maintenance of business records.

 Generally, there are a number of things that a ledger account contains. These include particulars, dates, and j.f. The process of recording all the transactions in the ledger account is referred to as posting entries from the journal to the ledger account. 

Features of Ledger Account 

The following are the features of the ledger account –  

• A ledger book is referred to an account book in which an organisation’s transactions are recorded under different accounts

• The ledger account follows the double-entry system of bookkeeping

• The other name of the ledger account is the principal book of account

• All the entries related to assets, liabilities, capital and revenue are recorded here

• The ledger account helps in the preparation of the financial statement 

Template and Format of Ledger 

The following table shows the ledger format account –  

Types of Ledger Accounts 

There are mainly three types of ledger accounts. These are as follows-  

• General ledger 

The general ledger can be described as the master ledger of all accounts of the organisation. It records and summarises the transactions made by an organisation. There are several small sets of the ledger that come under the category of the general ledger. It is used for recording and maintaining the transactions in the financial statement. The general ledger has credit and debit entities to record all the data. While preparing the financial statement, the total of credit and debit entries should match. 

 The general ledger is further divided into two parts – 

• Nominal ledger – The nominal ledger consists of all nominal accounts, including losses, incomes, expenses, and gains

• Common examples of the nominal ledger are Purchases, Salaries, Sales, Rent, Stationery, Insurance, Depreciation, Returns Inward and Outward, and so on

• Private ledger – The private ledger consists of confidential accounts, including salaries, capital, drawings, etc which VIPs mostly access

• Purchase ledger 

The purchase ledger maintains the record of all the transactions made by the company with the supplier. It clearly represents purchases that are already made and that are outstanding. In case the purchasing volume is extremely low, the purchase ledger is not required. In contrast, the information can be stored easily in the general ledger account. 

•  Sales ledger 

If your business has only a single customer, there is no need to maintain the sales ledger. However, only a single account in the nominal will be more than enough. Business owners who have multiple customers and sell in credit are required to maintain the sales ledger. 

Example of Ledger Accounts 

Here are the examples of ledger accounts –

The examples of assets include – 

• Accounts receivable
• Cash
• Land
• Equipment

 Examples of Liabilities include –

• Accounts Payable
• Debt
• Accrued expenses
• Loans

 The example of Stock include – 

• Stockholders Equity
• Common Stocks
• Retained Earnings

 The example of Operative Revenues include – 

• Services Fees
• Sales

 Examples of Operating Expenses include – 

• Office Expenses
• Salaries and wages
• Depreciation Expense 

Importance of Ledger Balance 

For any business accounting, the ledger is the spine that records all business transactions done over a period of time. Here are several points depicting the importance of ledger balance. Let’s have a look –  

• Maintains the core information regarding the business 
• Knowledge of asset’s book value
• Useful for the management 
• Avoids confusion and disagreement 
• Systematic maintenance of business
• Business financial position
• Financial statement preparation
• Performance analysis

Conclusion 

With this, we end our study material on the ledger entry format, which is a ledger where the company records all its transactions and financial statements. Generally, there are a number of things that a ledger account contains. These include particulars, dates, and j.f. In this study material notes on the ledger entry format, we studied ledger and ledger book format in length.