Definition and Explanation of Ledger:
Define and explain the term
"ledger" What are the features or characteristics of ledger?
When all the transactions of a
given period have been
journalised, the next thing is to classify them according to the
accounts affected. All similar transactions must be brought together. For
instance, all transactions relating to cash must be put in one place.
Similarly, all transactions with a customer or a supplier must be assembled
at one place. The book in which this classification is done is called the
The ledger is a book which
contains a condensed and classified record of all the pecuniary transactions
of the business generally brought, transferred or posted from the books of
Ledger is called the king of
all books of accounts because all entries from the books of original entry
must be posted to the various accounts in the ledger. It should be noted
journal contains a chronological record while ledger contains a
classified record of all transactions.
Features of Ledger:
The following are the features
It has two identical sides -
left hand side and right hand side. The left hand side is called debit side
and right hand side is called credit side.
Debit aspects of all the
concerned transactions is recorded on the debit side, while credit aspect on
credit side according to date.
The difference of the total of
the two sides represent balance. The excess of debit side over credit side
indicates debit balance, while excess of credit side over debit side
indicates credit balance. If the total of the two sides are equal there will
be no balance.
Usually balance is drawn at
the year end and recorded on the deficit side to make the two sides equal.
This balance is known as closing balance.
The closing balance of the
current year will be the opening balance of the next year.