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CHAPTER 7

LEDGER ACCOUNTS

INTRODUCTION

After recording the transactions in the journal, recorded entries are classified and grouped into by preparation of accounts. The book which contains all set of accounts (viz personal, real and nominal accounts), is known as Ledger.

It is known as principal books of account in which account-wise balance of each account is determined. It is also called as a book of secondary entries because the transactions in the ledger are recorded after completion of the journal entries.

LEDGER ACCOUNTS

A ledger account contains a record of business transactions. It is a separate record within the general ledger that is assigned to a specific asset, liability, equity item, revenue type, or expense type. A ledger account is also known as an account. Examples of ledger accounts are:

• Cash Account

• Capital Account

• Debtor Account

• Salary Account

• Fixed assets Account

SPECIMEN OF LEDGER ACCOUNT

A Ledger account has two sides – debit (Left hand side of the account) and credit (Right hand side of the account). Each of the debit and credit side has four columns. (i) Date (ii) Particulars (iii) Journal Folio i.e., the page from where the entries are taken for posting and (iv) Amount.

Ledger Account Specimen

The visual table shown on the page is:

                         Account
          Dr.                              Cr.

| Date | Particulars | J.F. | Amount (₹) |
|      |             |      |            |

| Date | Particulars | J.F. | Amount (₹) |
|      |             |      |            |

The original diagram has the Debit (Dr.) side on the left and the Credit (Cr.) side on the right, with four columns on each side:

Debit side:

• Date

• Particulars

• J.F.

• Amount (₹)

Credit side:

• Date

• Particulars

• J.F.

• Amount (₹)

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POSTING

The process of transferring the debit and credit items from the Journal to their respective accounts in the ledger is known as Posting.

Separate account is opened in ledger book for each account.

BALANCING AN ACCOUNT

At the end of each month or year, it may be necessary to ascertain the balance in an account. This is not too difficult thing to do; suppose a person has bought goods worth Rs 1000 and has paid only Rs 850; he owes Rs 150 and that is the balance in his account.

Balancing of an account is to total both debit and credit sides of an account and putting the difference on that side which is shorter. If the credit side is bigger than the debit side, it is called credit balance. In the other case it is a debit balance.

The credit balance is written on written on the debit side as “To balance c/d”; c/d means “carried down”. By doing this, two sides will be equal. The totals are written on the two sides opposite one another.

Then the credit balance is written on the credit side as “By balance b/d”; b/d means “brought down”. This is the opening balance for the new period.

The debit balance similarly is written on credit side as “By Balance c/d”, the totals then are written on the two sides as shown above as then the debit balance written on the debit side as, “To Balance b/d”, as opening balance of the new period.

YouTube Link for Lecture:

Channel Name:

Lateef’s Commerce Academy

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Visual element included

The PDF contains one main visual on page 31: the Specimen of Ledger Account, showing the account divided vertically into Dr. (Debit) and Cr. (Credit) sides, with Date, Particulars, J.F., and Amount (₹) columns on each side.