Ledger Accounts – Keeping Track of the Financial Transactions

Ledger is useful in maintaining the entire accounting statement of a company on a day to day basis. Debits are recorded on the left side of the ledger and credits are recorded in the right side of the ledger. There might be a third column to record running account balance.

PHOTO BY FLICKR.COM/TERCEROJISMO/

Ledger Accounts - Debit and Credit

Ledger is a book which contains various accounts of a company namely assets account, liabilities accounts, revenue accounts, capital accounts and expense accounts. Every business transaction is recorded under these heads. Ledger accounts contain all the accounts of the enterprise whether nominal or personal to which the transactions recorded in books of original entry is transferred. It is a summarised, classified, permanent record of financial transactions in the form of accounts. Therefore it is popularly known as the Book of Final Entry. Ledger accounts may be maintained in form of bound books, loose, leaf sheers, floppy diskettes, compact disks or any other mechanical device.

General Ledger Accounts - Primary Purpose

Ledger provides information about all the accounts in a business in only one book. Therefore general ledger accounts make it easier for you to ascertain how much money your business owes to its creditors and has to recover from its debtors from personal accounts. It also equips you with the knowledge of the value proposition and type of assets from real accounts. General ledger accounts also helps you establish with certainty the sources of income and the amount spent on various items heads of expenses from nominal accounts. It also facilitates the preparation of annual financial statements like Balance Sheet, Cash Flow Statement and Income Statement.

Ledger Software - Determining the Appropriate Option

You can even use software support to maintain your ledger regularly. The best ledger software is Microsoft Excel. However, before taking help of any software you need to arrange all the details of the transactions. You can then hire someone for data entry to enter the data for you and then you can sum up the credit side and the debit side to check whether the transactions have been recorded accurately. Software helps in keeping an updated record of all transactions like sales journals, disbursement and receipts. You can also check for any inaccuracy immediately with the help of software and take necessary actions.