CHAPTER 8
Introduction: journal records all business transaction separately
and date-wise. The transactions relating to a particular person, asset, expense
or income are recorded at different places in the journal as they occur on
different dates. Hence, it fails to bring the similar transactions together at
one place. Thus, to have a consolidated view of the similar transactions
different accounts are prepared in the ledger.
A ledger account may be defined as a summary statement of all the transactions
relating to a person, asset, expense, or income, which have taken place during
a given period of time and show their net effect. So every entry record in the
journal must be posted into the ledger. It is a register having a number of pages,
which are serially numbered. One account is usually assigned one page in the
ledger. It is the principal book of accounts.
Performa of
an account
DR.
CR.
DATE
|
PARTICULAR
|
J.F
|
AMOUNT
|
DATE
|
PARTICULAR
|
J.F
|
AMOUNT
|
·
Debit on the left hand side and credit on the
right hand side.
·
The left side of the account describes the
benefit received by the firm and the right side describes the information about
the benefit received by the firm and right side describes the information about
the benefit given by the firm.
·
The debit aspect of business transaction
should be recorded on the debit side, this is known as debiting the account.
·
The credit aspect of the transaction is
recorded on the credited side of the account, which is known as crediting the
account.
CLASSIFICATION
OF LEDGER
The number of transactions depends on the size of the business
firm. When the firm is smaller in size, its transactions are usually limited ,
hence, only one ledger account maybe enough but with the expansion of business,
the number of transactions will also increase, so there is a possibility of
have more number accounts like:
Debtor’s ledger: when the
customer purchases goods on credit basis, they become the debtor’s pf the firm
and all their transactions are recorded in one book as known as debtor ledger.
Creditor’s
ledger: when the firm purchases goods on credit basis the suppliers
become creditor and these transactions are recorded in the book known as
creditor ledger.
General
ledger: when the company record all the accounts related to assets,
income and expenditure in one book, which is known as general ledger. In this
account this accounts related to real account and the balance of all types of
account related to nominal accounts always show only debit balance. On the
other hand all the accounts related to nominal accounts always show only debit
balance. On the other hand all the accounts related to incomes show only credit
balances.
Self-ledger: when accounts related to the proprietor of the
business are recorded in one book which is known as self-ledger.
BALANCING
THE ACCOUNT:
Generally, the balances of various accounts in the ledger are
tallied either at the end of the accounting year or whenever the business needs
information.
The following is the procedure to balance the account:
·
Take the totals of both sides and find out
the difference between debit and credit.
·
The total of lesser sides should deducted
from the total amount of the higher side, the difference is called as balance
carried down
·
Date of balance c/d should be show as balance
b/d on the next day, on the opposite side
·
Sometimes the totals of both the sides of an
account are equal. In such case balance c/d or balance b/d does not occur.
BASIC OF COMPUTER SYSTEM
COMPUTER TRICKS
HOW TO PROTECT BUSINESS RISK?
SHORTCUT KEY OF MS-OFFICE
ACCOUNTING TERMS
ACCOUNTING CONCEPTS
ACCOUNTING CYCLE
GOLDEN RULES OF ACCOUNTS
JOURNAL ENTRIES
LEDGER POSTING
TOP 5 GAME LIKE PUBG
LEDGER POSTING
Reviewed by Sonu Singh
on
August 29, 2018
Rating:
Reviewed by Sonu Singh
on
August 29, 2018
Rating:
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