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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
1.First of all we make a journal entries of the transaction.
2.From journal entries we do the posting in the respective ledgers accounts
3.Beginning from the very first entry, we have to see that whose ledger is being prepared, is debited or credited.
4.If the particular ledger account is debited in the journal entry, than we will post it to the debit side of ledger a/c.
2.If the particular ledger is being debited in the journal entry, than we will post the entry to the debit side of that particular ledger.
1.Whenever we post any entry to the debit side of ledger we prefix TO.
2.Whenever we post any entry to the credit side of ledger we prefix BY.
3.The balancing figures of Personal a/c can ONLY be either To bal c/c or By bal c/d.
4.The balancing figures of Real a/c can be ONLY By bal c/d.
Purchase a/c, Sales a/c, Purchase return a/c, Sales return a/c and Stock a/c and all direct expenses– these accounts are transferred to TRADING A/C.
The rest of the Nominal accounts are transferred to P/L account, respectively.
What are ledger and its example in accounting?
In personal A/c either have debit balance or credit balance
Case 1: Credit balance ledger
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 5 | Xxx | By —- | 10 |
To bal. c/d | 5 | ||||
10 | 10 | ||||
By Bal C/d | 5 |
Example Debit balance ledger
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 10 | Xxx | To —- | 5 |
By bal. c/d | 5 | ||||
10 | 10 | ||||
By bal. B/d | 5 |
Note : Real A/c always have debit balance
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 10 | Xxx | By —- | 5 |
By Bal c/d A/c | 5 | ||||
10 | 10 | ||||
either have debit side or credit side balance .If its debit side balance its an expense or loss or it its a credit side balance its a Income or gain.
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 5 | Xxx | By —- | 10 |
To P/L a/c | 5 | ||||
10 | 10 | ||||
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 5 | Xxx | By —- | 10 |
To P/L a/c | 5 | ||||
10 | 10 | ||||
Date | Particular | Amount | Date | Particular | Amount |
Xxx | To —- | 10 | Xxx | By —- | 5 |
By Trading A/c | 5 | ||||
10 | 10 | ||||
First of all we have to make journal entry then posting for respected journal entry to ledger.
Cash A/c Dr 100000
To Capital A/c 100000
(being business stared)
Purchase A/c 10,000
To X 10,000
3. Purchase Goods for cash Rs.7000
Purchase A/c 7,000
To cash A/c 7,000
(being goods purchase for cash)
4. Sold goods for cash Rs 6000.
Cash A/c Dr. 6,000
To sales A/c 6,000.
(being goods sold)
5. Paid Rent by cash Rs 6000
Rent A/c Dr. 6000
To cash A/c 6000
(being rent paid)
what are ledger and its example in accounting?
Capital A/c
Particular | Amount | Particular | Amount |
To Cash | 100,000 | ||
By Bal. C/d | 100,000 | ||
100,000 | 100,000 |
CASH A/c
Particular | Amount | Particular | Amount |
To Capital A/c | 100,000 | By purchases a/c | 7,000 |
To sales | 6,000 | By rent A/c | 6000 |
By Bal. C/d | 93,000 | ||
106000 | 106000 |
Purchase A/c
Particular | Amount | Particular | Amount |
To cash A/c | 7,000 | ||
To X | 10,000 | ||
By trading A/c | 17,000 | ||
17,000 | 17,000 |
X
Particular | Amount | Particular | Amount |
By purchases A/c | 10,000 | ||
To Bal. c/d | 10,000 | ||
10,000 | 10,000 |
sales A/c
Particular | Amount | Particular | Amount |
By cash A/c | 6,000 | ||
To trading A/c | 6,000 | ||
6000 | 6000 |
Rent A/c
Particular | Amount | Particular | Amount |
To Cash A/c | 6000 | ||
To Trading A/c | 6,000 | ||
6000 | 6000 |
After preparation of the ledger, trial balance checks the mathematical accuracy .
A trial balance is just prepared to check the Mathematical accuracy of the books of accounts.
The balancing figures from the respective Ledgers accounts is posted to the trial balance And if the trial balance’s debit and the credit Sides are equal, than the mathematical accuracy Is proved and if the debit and the credit sides Totals do not match than it means that some Errors have been created.
Trial balance
Particular | Amount | Amount |
Capital A/c | 100000 | |
Cash A/c | 93,000 | |
Purchase A/c | 17,000 | |
Sales A/c | 6,000 | |
X | 10,000 | |
Rent A/c | 6000 | |
116,000 | 116,000 |
The journal and ledger both play an important role in the accounting process. It primarily recorded the business transactions in the journal and thereafter, posted into the ledger under respective heads. While it posted many financial transactions in both the journal and ledger, there are significant differences in the purpose and function of each of these accounting books.
what are ledger and its example in accounting?
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Journal | Ledger |
It relates to the book of accounts that record every business transaction in chronological order. | It relates to the book of accounts, which contains the entries classified based on affected account types, after being first posted into a general journal and then finally making its way into a general ledger. |
It is the initial point of entry of any kind of business transaction to make it to the company’s book of accounts. | It is the assisted point of entry in accountancy for recording a transaction after it enters the accounting system through a general journal. |
We recorded every entry based on chronological order. | We recorded every entry based on affected account types. |
It supports the concept of duality, i.e., every transaction reported under the double-entry accounting practice. | It also supports the view of duality, i.e., every transaction recorded under the double entry accounting system. |
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