LEDGER Dr.

Aleem Ansari
WHAT IS A LEDGER?
oIt is a principal book of accounts where similar transaction relating to a particular person or
property or revenue or expense are recorded. In other words, it is a set of accounts.
oIt contains all the accounts of the business enterprise whether real, nominal or personal.
oThe main function of a ledger is to classify or sort out all the items appearing in the journal or
other subsidiary books under their appropriate accounts so that at the end of the accounting
period each account will contain the entire information of all the transactions relating to it in a
summarized form.
oFor example, all the transaction that have taken place with Mr. Mathur have been entered in
Mathur’s Account. Similarly, all items relating to cash, sales, purchases, salaries, discount etc.
appear in their respective accounts.
oHence, the ledger helps in finding out the combined effect of entries for each individual
accounts and also for the entire business.
oThe following is the specimen ruling of the standard for of ledger account:
Dr Cr
. Name of the Account .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

oFeatures of ledger-
1. The ledger account is divided into two sides- the left hand side is known as debit side
while the right hand side is known as credit side.
2. The name of the account is written in the middle of the account.
3. J.F. denotes folio or page number on which its journal entry may be found.
 RELATIONSHIP BETWEEN
JOURNAL AND LEDGER
oBoth journal and ledger are the important books used under double entry system of book
keeping.
oThe following are points of comparison between the two:
1. The transactions are recorded first in journal and then they are posted to the ledger. Thus,
journal is the book of first or original entry while the ledger is the book of second entry.
2. The journal is the book for chronological record while the ledger is the book for the analytical
record.
3. Journal is more reliable as compared to the ledger since it is the book in which the entry is
passed first.
4. The process of recording transactions is termed as ”Journalizing” while the process of
recording transaction in the ledger is known as “Posting”.
LEDGER POSTING
oThe term “Posting” means transferring the debit and credit items from the journal to their respective
accounts in the ledger.
oIt may be noted that the exact names of accounts used in the journal should be carried to the ledger.
oThe following rules should be kept in mind while posting transactions in the ledger from the journal:
1. Separate accounts should be opened.
2. The concerned account which has been debited in the journal should be debited in the ledger i.e.,
the debit of the journal entry is posted to the debit side. However, reference should be made of
other account which has been credited in the journal. (Vice-versa)
3. It is customary to use the words “To” and “By” while making posting in the ledger. The word “To”
is used with the accounts shown on the debit side of the ledger account while the word “By” is
used with the accounts which appear on the credit side of the ledger account.
4. J.F.- Page number of the journal from where the entry is transferred.
5. The date of the transaction is written on the date column.
 Date Particulars L.F. Debit Amount Credit Amount
(Rs.) (Rs.)
2020
April’ 2 Purchase A/c Dr. 15,000
To Cash A/c 15,000
(Good in trade purchased for cash)

Dr Cr
Purchases A/c
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
2020 2020
April’ 2 To Cash A/c 15,000 April’31 By Balance c/d 15,000

15,000 15,000
Dr Cr
Cash A/c
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
2020 2020
April’ To Balance c/d 15,000 April’2 By Purchases A/c 15,000
31
15,000 15,000
Illustration:
2019 Transactions Rs.
April, 1 Purchased furniture on credit from Fancy Furniture Stores 57,000
April, 29 Mathur from whom Rs. 10,000 were to be received is declared insolvent. A cheque of Rs.
2,500 is received from official receiver as first and final dividend.

Date Particulars L.F. Debit Amount Credit Amount

April, 29
Dr Cr
. Furniture A/c .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Dr Cr
Fancy Furniture Stores A/c
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
Dr Cr
. Bank A/c
.
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Dr Cr
Bad Debts A/c .
.
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Dr Cr
Mathur A/c
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
BALANCING LEDGER
ACCOUNT
oBalancing of an account means the process of equalizing the two sides of an account by putting the
difference on the side where amount is short.
oWhere the debit side of an account exceeds the credit side then the difference is put on the credit side,
and the account is said to have a debit balance. This balance is brought down on the debit side while
opening the account.
oSimilarly, where the credit side of an account exceeds the debit side, the difference is put on the debit
side, and the account is said to have a credit balance. This is also brought down on credit side while
opening the account.
oThe following steps are followed for balancing the accounts:
1. Total the amounts of debit and credit entries in the account.
2. If the debit and credit sides are equal then there is no balance. The account stands automatically
balanced or closed.
3. If the debit side total is more, put the difference on the credit side amount column, by writing the
words in particulars column “By Balance c/d”. If the credit total is more, put the difference on the
debit side amount column by writing the words in the particulars column “To balance c/d”.
4. After putting the difference in the appropriate side of account, add both sides of the account
and draw a thin line above and below the total.
5. Bring down the debit balance on the debit side by writing the words in particulars column “To
balance b/d”. Similarly bring down the credit balance on the credit side by writing the words in
the particulars column “By Balance b/d”.

Date Particulars J.F. Amount Date Particulars J.F. Amount

15,000 15,000
2019
May’ 1 To Balance b/d 15,000
Illustration:
2019 Transactions Rs.
Jan, 1 Started business with cash 2,00,000
Jan, 3 Purchased goods for cash 60,000
Jan, 5 Sold goods to Shyam 60,000
Jan, 6 Sold goods for cash 20,000
Jan, 9 Received cash from Shyam 40,000
Jan, 13 Goods purchased from Ram 40,000
Jan, 20 Cash paid to Ram 20,000
Jan, 25 Paid office Rent 4,000
Jan, 31 Paid Salaries to staff 20,000
Jan, 31 Returned goods by Shyam 10,000
 Date Particulars L.F. Debit Amount Credit Amount
(Rs.) (Rs.)

2019
Jan, 1

Jan, 3

Jan, 5

Jan, 6

Jan, 9

Jan, 13
 Date Particulars L.F. Debit Amount Credit Amount
(Rs.) (Rs.)

2019
Jan, 20

Jan, 25

Jan, 31

Jan, 31
Dr Capital A/c Cr
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
2020

Dr Sales A/c Cr
. .
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
 Cash A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Shyam A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
 Ram A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Date Particulars J.F. AmountRent A/cDate Particulars J.F. Amount

Salaires A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)
 Sales Return A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

Purchases A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)