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    Chapter 13

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    Chapter 13

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    Chapter 13_0f7da8c9-84f2-4946-8fb7-866b0875371e

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    Chapter 13

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    of 10

    Class 11 Accountancy

    Chapter - 13

    Ledger
     All entries recorded in Journal or Special Purpose
    Subsidiary Books are classified and in order to
    ascertain the position of a particular account, all
    transactions relating to that particular account are
    collected at one place in the Ledger.
     In short, a Ledger is a book which contains all
    accounts of the business enterprise whether
    Personal, Real or Nominal.

    According to L. C. Cropper, “The book which


    contains a classified and permanent record of
    all the transactions of a business is called the
    Ledger.”
    Need & Importance
    The basic objective of accounting is to ascertain as to :
    I. how much amount is due from each customer or how
    much amount the firm has to pay to each supplier;
    II. how much is the amount of purchase and sale during a
    particular period;
    III. how much amount has been spent on each head of
    expenditure and how much amount has been earned
    on account of each head or income.

    As such, the Ledger is a very useful book, and is of the utmost


    importance in any enterprise. Hence, the Ledger is called the
    „Principal Book‟. It is also called the book of final entry because
    the transactions which are first entered in Journal or Subsidiary
    Books are finally incorporated in the Ledger.
    Advantages of
    Ledger
    All accounts are opened on separate pages in this book.

    Any type of information relating to the business can be easily


    obtained from the Ledger.

    A trial balance can be prepared with the help of ledger


    balances which helps in ascertaining the arithmetical
    accuracy of the accounts.

    A trading and profit and loss account can only be prepared


    with the help of ledger balances.

    A balance sheet can also be prepared with the help of ledger


    balances which depicts the financial position of the business.
    Distinction between „Books of Original Entry‟ & „Ledger‟
    S. No. Journal or Books of Original Entry Ledger

    1. As the name indicates, all the transactions All the transactions entered in Journal or
    are first of all recorded in these books, i.e., Subsidiary Books are later transferred to the
    journal or subsidiary books. Ledger.

    2. In this book, transactions are recoded in


    In these books, transactions are entered in a
    analytical order, i.e., all the transactions
    chronological order, as and when they take
    pertaining to a particular account are contained
    place.
    at one place in the Ledger.

    3. Full details of a transaction (narrations) are Full details of a transaction are not recorded in
    recorded in these books. the Ledger.

    4. Final Accounts (trading, profit and loss


    account and balance sheet) cannot be Final accounts can be prepared with the help of
    prepared with the help of books of original Ledger balances.
    entry.

    5. The process of recording entries in the books The process of recording entries in the Ledger is
    of original entry is called „journalizing‟. called „posting‟.

    6. Page number of the Ledger, i.e., Ledger Page number of the Journal or subsidiary books,
    Folio (L.F.) is written in these books. i.e., Journal Folio (J.F.) is written in Ledger.

    7. Accuracy of the Ledger Accounts is tested by


    Accuracy of these books cannot be tested.
    preparing a Trial Balance.
    Proforma of Ledger
    Each Ledger account is dividend in to two equal arts. The left-hand side is known as the debit side and the
    right-hand side as the credit side. As an account is in „T‟ shape, therefore, sometimes it is called „T‟ account.
    The format of an account is as shown below :

    Dr. NAME OF ACCOUNT Cr.


    Date Particulars J.F. Amount Date Particulars J.F. Amount
    ₹ ₹
    As shown above, there are four columns on each side of an account :
     Date : The Date of the transaction is recorded in this column.
     Particulars : Each transaction affects two accounts. The name of the other
    account which is affected by the transaction is written in this column.
     Journal Folio or J.F. : In this column, the page number of the Journal or
    Subsidiary Book from which that particular entry is transferred, is entered.
     Amount : The amount pertaining to this account is entered in this column.
    Rules of Posting
    Posting is the process of transferring entries from Journal or
    Subsidiary Books to the Ledger.
     All transactions relating to an account should be entered
    at one place.
     The word „To‟ is used before the accounts which appear on
    the debit side of an account.
     If an account has been debited in the Journal entry, the posting in
    the Ledger should also be made on the debit side of such account.
     If an account has been credited in the Journal entry, the posting in
    the Ledger should also be made on the credit side of such account.
     Similar amount which has been posted on the debit side of an
    account should also be posted on the credit side of another account.
     It is not necessary to write the word „A/c‟ after the personal
    accounts.
    When in a Journal entry, two or
    more accounts are debited and
    only one account is credited or
    vice versa, the entry is termed as
    compound journal entry. In case
    of posting of a compound journal
    entry, posting has to be made in
    all the accounts whether debited
    or credited in the entry.
    When in a Journal entry, two or more accounts are debited and only
    one account is credited or vice versa, the entry is termed as
    compound journal entry. In case of posting of a compound journal
    entry, posting has to be made in all the accounts whether debited or
    credited in the entry.

     At the end of the accounting period or whenever needed, a businessman


    will be interested in knowing the position of various accounts. For this
    purpose the accounts are balanced.
     Balancing of an account means that the debit and credit sides are totalled
    and the difference between the two sides is inserted on the side which is
    shorter so as to make their totals equal.
     If the debit side exceeds the credit, the balance is called a debit balance and
    on the other hand, if the credit side exceeds the debit, the balance is called
    a credit balance.
     All the accounts are classified into three categories according to their
    nature, i.e.,
    1) Personal Accounts
    2) Real Accounts and
    3) Nominal Accounts
    When posting of all the
    transactions into the Ledger is
    completed and the accounts are
    balanced off, it becomes necessary
    to check the arithmetical accuracy
    of the accounting work. For this
    purpose, the balance of each and
    every account in the Ledger is put
    on a list. The list so prepared is
    called a Trial Balance.

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