Ledger Assignment Help | Ledger Homework Help

Ledger: Principal Book of Account

Notwithstanding the immense usefulness of the special journals or subsidiary books, It is not possible to get complete information regarding any individual account, may it be personal, real or nominal. Specifically, if we want to know: How much Charles, a customer over to the business? What is the amount payable to Arnold, a supplier of goods to the business? What is the amount of purchases and sales made during a particular period? How much cash has been spent on various items of expenses such as salaries, rent, stationery etc.? The owner or the manager or even the accountant cannot find out at a glance the information in respect of the items mentioned above. He will have to collect the details scattered all over the various journals. This is obviously tedious, cumbersome and time-consuming process. In order to overcome this difficulty, all the business transactions in a journal are summarized under specific or classified heads on an ‘account’ in the ledger so that the necessary information connected with an individual account is obtained with ease. The ledger contains in a summarized and classified form, a permanent record of all business transactions in the form of various accounts transferred to it from general journal and other books of original entry. For instance, all the transactions that have taken place with Mr. Charles are entered in Charles’s Account. Similarly all items relating to cash, sales, purchases etc., appear in their respective accounts. In this manner, this arrangement in the ledger helps in finding out the combined effect of entries for each business. It is, therefore, the principal book which supplies detailed information about the transactions connected with any individual account at a glance. In conclusion the ledger helps to achieve the following result, for a specified period: (i) all Personal Accounts would show how much money the business enterprise owes to his creditors and the amounts it can recover from its debtors. (ii) The Real Accounts would reflect the values of the properties. (iii) Nominal Accounts would reflect the source of income and also amount spent on various items or heads of expenses.

Standard Form of a Ledger Account

The following is the specimen ruling of the standard form of a ledger account:

Name of the Account
(Account Title)
  Dr.____________Debit Side___________________________Credit Side____________Cr.
Date 19...
Particulars (Account) Credited Journal Folio Amount Rs. Date 19... Particulars (Account) Debited Journal  Folio Amount Rs.
Jan. 1 To     Jan. 10 By    

The ledger account is divided into two equal sides as shown above by a dark colored verticle line in the middle of the account. The left-hand side is called the Debit Side (Dr. Side) and the right-hand side is called the Credit side (Cr. Side). The columns on both the debit-and-credit-sides are similar. The abbreviations Dr. and Cr. are placed at the top left-and-right-hand corners respectively. Amounts to be entered into the left-hand side are called debits and amounts to be entered into the right-hand side, credits. The verb ‘to debit’ means to make an entry into the left-hand side and verb ‘to credit’ means to make an entry into the right-hand side. The date column records the year, month and day on which the transaction has taken place. Next is the particulars column in which the source of the transaction is recorded. The source of the transaction is usually indicated by stating the name of the other account included in the journal entry i.e., to whom or to what the Account is Dr. or by whom or by what the Accounts is credit. The words ‘To’ are prefixed to the debit side entries and the words ‘By’ prefixed before the credit entries. In practiced, however the words ‘To’ and ‘By’ are rarely used The journal folio column is used to write the page number of the journal from which the entry has been transferred to the ledger. Finally in the amount column we record the amount mentioned in the journal for a particular accounts.

For more help in Ledger: Principal Book of Account please click the button below to submit your assignment: