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Understanding the Ledger in Accounting

Module 4 focuses on the Ledger, detailing its meaning, utility, and the differences between Journal and Ledger. It explains the importance of the Ledger in summarizing transactions, preparing trial balances, and assisting in final accounts preparation. The module also includes practical examples of transactions and their posting into the Ledger.

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THOKOZANI MBEWE
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25 views7 pages

Understanding the Ledger in Accounting

Module 4 focuses on the Ledger, detailing its meaning, utility, and the differences between Journal and Ledger. It explains the importance of the Ledger in summarizing transactions, preparing trial balances, and assisting in final accounts preparation. The module also includes practical examples of transactions and their posting into the Ledger.

Uploaded by

THOKOZANI MBEWE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Module 4 - LEDGER

Module 4 - Lesson

LEARNING OBJECTIVES

 To know the meaning and utility of Ledger


 To understand the difference between Journal and Ledger
 To analyse the Format of Ledger
 To acquire knowledge on posting Ledger from Journal

INTRODUCTION

Meaning of Ledger

Ledger is also an important book of Account. Ledger is a book in which personal,


real and nominal accounts are maintained in a summarized and classified form.
In other words, it is a book containing accounts to which debits and credits are
posted from books of original entry. Ledger is a combination of all accounts and
is a permanent record. Ledger is also known as the principal book of accounts as
well as book of final entry. The purpose of preparing the ledger is to

 Summarize the transactions for each account at one place.


 Determine the debit or credit balance of each account.
 Help in reconciling balances with third parties.
 Know the assets and liabilities.

UTILITY OF LEDGER

1. Provides Complete Information of a particular Account:

Complete information relating to a particular account is available at one place in


the ledger.

2. Information of Income and Expenses:

In ledger, a separate account is maintained for each income and expense. The
amount of total income and total expenses is known from the ledger account.

3. Preparation of Trial Balance:

Ledger helps in preparing Trial Balance which ensures arithmetical accuracy of


the transactions recorded in books of account.

4. Helpful in preparing Final Accounts:


After preparing Trial Balance, Final Accounts are prepared to know the
profitability and financial position of the business.

Difference between Journal and Ledger:

FORMAT OF LEDGER ACCOUNT

Format of Ledger Account

The format of Ledger account has been explained in an earlier chapter. For
convenience, it is being repeated here.

1. Journalise the following transactions and post them into the


Ledger:

2019

April 1 Ramesh started business with cash 1,00,000

April 2 Paid into bank 70,000

April 3 Bought goods for cash 5,000

April 4 Drew cash from bank for office 1,000

April 13 Sold to krishna goods on credit 1,500

April 20 Bought goods from shyam on credit 2,250

April 24 Received from Krishna 1,500


April 28 Paid cash to shyam 2,150

Discounted allowed by him 100

April 30 Cash sales for the month 8,000

April 30 Paid Rent 500

April 30 Paid salary to Ram 3,000

Solution:

In the Books of Rames


LEARNING OUTCOMES

 Meaning and utility of Ledger


 Difference between Journal and Ledger
 Format of Ledger
 Posting Ledger from Journal

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