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.
