Ledger – Principal Book of Accounts, Ledger Accounts & Posting

It consists of all accounts of the business enterprise whether real, nominal or individual. The primary function of a ledger is to classify or sort out all the items appearing in the journal or other subsidiary books under their appropriate accounts so that at the end of the accounting duration each account will consist of the entire information of all the deals relating to it in a summarised or condensed kind.

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For example, all the deals that have actually accompanied Mr. Mathur will be gone into in Mathur’s Account. All products relating to money, sales, purchases, incomes, discount rate, etc. appear in their particular accounts.

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Ledger Accounts

The book which consists of accounts is known as the ledger. Given that finding information pertaining to the financial position of a service emerges only from the accounts, the journal is likewise called the Principal Book. As an outcome, all the essential information relating to any account is readily available from the journal. This is the most essential book of the business and hence is rightly called the “King of All Books”. Also Called Book of Last Entry.

Journal Posting

As and when the transaction occurs, it is taped in the journal in the kind of journal entry. This entry is published once again in the particular journal accounts under double entry concept from the journal. This is called ledger posting.

  • The rules for writing up accounts of various types are as follows:
  • Assets: Increases on the left hand side or the debit side and decreases on the credit side or the right hand side.
  • Liabilities: Increases on the credit side and decreases on the debit side.
  • Capitals: The same as liabilities.
  • Costs: Boosts on the debit side and decreases on the credit side. Earnings or
  • gain: Boosts on the credit side and decrease on the debit side.

The student need to plainly understand the nature of debit and credit

A debit denotes:

  • ( a) When it comes to an individual that he has actually gotten some advantage against which he has actually currently rendered some service or will render service in future. When an individual ends up being liable to do something in favour of the firm, the truth is tape-recorded by debiting that person’s account: (connecting to Personal Account)
  • ( b) In case of items or properties, that the worth and the stock of such items or residential or commercial properties has increased, (relating to Genuine Accounts)
  • ( c) In case of other accounts like losses or expenses, that the firm has actually sustained specific costs or has lost cash. (connecting to Small Account)

A credit represents:

The truth is recorded by crediting him (relating to Personal Account) (

  • b) In the case of goods or homes, that the stock and value of such goods or homes has reduced. (relating to Genuine Accounts)
  • ( c) In case of other accounts like interest or dividend or commission received, or discount got, that the firm has actually made a gain (relating to Small Account)
  • Recommended

    • Accrued Liabilities
    • Capital Structure
    • Book Keeping
    • Interest on Capital
    • Accounting Price Quotes
    • Double Entry System
    • Capital Losses and Earnings Losses
    • Capital Expenditure and Profits Expense
    • Capital Receipts and Earnings Invoices

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