LEDGER
ACCOUNTS
[Link] KUMAR .P
Accounting Process
Source Document
Journal
Ledger
Trial Balance
Financial Statement
Meaning
Ledger is a Book in Which Branch of T – accounts are
grouped together.
T – Shaped Account Which is contained in ledger
Book
Meaning
Ledger
General Debtors Creditors
Ledger Ledger Ledger
Contains T – Contains T –
Accounts of Accounts of
customers Supplier
Some questions arises
1. What is the remaining cash balance at the
end of the accounting period / Month ?
2. What was the total amount of purchase
done in the month / FY ?
3. What was the total amount of sales done
in the month / FY ?
Why do we need it ?
Summarizes all the financial transactions
listed in the books of prime entry (Journal and
Subsidiary Books)
And if it gives you one figure of each account
which will be taken into trial balance and then
to financial statement.
Posting
The Process of transferring the debit and credit
from journal to ledger is known as posting.
For Every name you take in journal you need a
ledger account
Types of Ledger Accounts
Asset Account
Types of Ledger Accounts
Expense Account
Types of Ledger Accounts
Liability Account
Types of Ledger Accounts
Income Account
Types of Ledger Accounts
Capital Account
PART 1
Understanding ledger posting with
Simple “T” Shape Account
Example 1
Business started with cash ₹ 200000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 2
Goods purchased for cash ₹5000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 3
Goods sold for cash ₹8000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 4
Wages paid in cash ₹6000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 5
Commission received in cash ₹1000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 6
Goods purchased on credit ₹1000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 7
Goods sold on credit ₹10000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 8
Goods purchased from Rahul ₹10000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 9
Goods sold to Shiva ₹15000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Example 10
Amount withdrawn for personal use ₹1000
Date Particulars L/ Debit amount Credit Amount
F
Particulars Amount Particulars Amount
Particulars Amount Particulars Amount
Ledger posting using proper Format
Chain of Decentralization
Work
specialization command
Departmentation Span of control Formalization
Ledger Format
Date Particulars J/F Amount Date Particulars J/ Amount
F
11 ) Machinery Purchased for cash ₹200000
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
12 ) Furniture purchased from Ram ₹20000
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
13 ) opened bank account ₹50000
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
14 ) Further capital introduced by cheque ₹55000
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
15 ) Goods purchased for cash ₹5000 at discount of 10 %
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
16 ) Goods sold to Ravi ₹20000 at discount of 10 %
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
17 ) Received ₹20000 in full settlement of ₹ 25000 from vijay
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
17 ) Received ₹20000 in full settlement of ₹ 25000 from vijay
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
18 ) Paid₹90000 in full settlement of ₹ 100000 to Ajay
Date Particulars L/ Debit amount Credit Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
18 ) Paid₹90000 in full settlement of ₹ 100000 to Ajay
Date Particulars J/F Amount Date Particulars J/ Amount
F
Date Particulars J/F Amount Date Particulars J/ Amount
F
TRIAL BALANCE FORMAT
Details Debit Credit
amount Amount
Capital ✓
Land and building ✓
Plant and machinery ✓
Equipment ✓
Furniture and fixtures ✓
Cash in hand ✓
Cash at bank ✓
Debtors ✓
Trade receivables ✓
Stock of finished goods ✓
Purchase ✓
TRIAL BALANCE FORMAT
Details Debit amount Credit Amount
Purchase return ✓
Carriage inward ✓
Carriage outward ✓
Sales ✓
Sales return ✓
Interest paid ✓
Commission or discount ✓
received
Salary ✓
Long term loan ✓
Bills payable ✓
Creditors ✓
Drawings ✓
Part 1
THANK
YOU
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
Details Debit MVR Credit MVR
Details Debit MVR Credit MVR
Trial Balance
• A trial balance is a two-column schedule showing account titles
with the balances. Debit balances on the debit side of the trial
balance and credit balances on the credit side of the trial balance.
Objectives (Purpose) of Preparing the Trial Balance
• To ascertain the arithmetical accuracy of the ledger accounts.
• To help in locating errors.
• To help in the preparation of the financial statements.
The Preparation of Trial Balance
1. Ascertain the balances of each account in the ledger.
2. List each account and place its balance in the debit or credit
column, as the case may be.
3. Compute the total of debit balances column.
4. Compute the total of the credit balances column.
5. Verify that the sum of the debit balances equal the sum of credit
balances.
Limitations of Trial Balance
• A trial balance that balances does not necessarily prove that all
the transactions have been recorded or that the accounting
process is error-free. This is because errors may have been made
even though the trial balance totals are in agreement. As long as
double entry is made for each transaction even though a wrong
amount or wrong account is used, trial balance will arithmetically
remain in balance.
The following balnces were taken from adams book on 31 December 2011 prepare trial
balance
Details Amount
Capital 7600
Motor vehicles 11000
Furniture and fittings 9000
Trade receivables 3800
Trade payables 4200
Bank 5000
Purchases 12000
Revenue 30000
Sales return 1000
Details Amount
Purchase return 1500
Advertising 2000
Rent paid 2400
Commission Paid 800
Interest received 600
Salaries 1400
Drawings 500
Loan from bank 5000
Revision
Define
• Scarcity
• Choice
• Oppurtunity cost
• PPC
• Law of demand
• Law of Supply
• Equilibrium price
• Free goods
• Economic goods
• Book keeping
• Accounting
• Prepare balance sheet clearly showing NCA, CA, Capital, NCL, CL
• Building 100000
• Motorvan 20000
• Inventory 20000
• Trade payable 5000
• Loan (5 years) 10000
• Cash 5000
• Capital ……………….
• page 10 activity 10
• Page 5 activity 1.6
• State and explain 2 factors of production
Ledger Revision
• Ahmed Started business by a cheque of MVR 10000
• Purchased goods of MVR 2000 by cheque
• Sold goods of MVR 1500 and received cheque
• Rent paid 300 by using Cheque
• Purchased goods from ABC traders MVR 1000
• Purchased furniture of MVR 500 and paid by cheque
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
DR. CR.
Date Details MVR Date Details MVR
A=L+C
L= A- C
C= A- L
Date Details Cash Bank Date Details Cash Bank
Date Details Folio Bank
• Enter the following transactions in the purchase journal and
purchase return Journal for the month of April 2014
• April 3 bought goods on credit from Yosuf MVR 3325
• April 4 returned goods to Yosuf MVR 760
• April 8 bought goods on credit from Hussain MVR 5400
• April 10 bought goods on credit from Eesa MVR 3780
• April 11 returned goods to Eesa MVR 900
Date Details Folio Bank
Date Details Folio Bank
