A ledger is a book or collection of accounts in which accounting transactions are recorded. Each account has: * an opening or brought-forward balance; *a list of transactions, each recorded as either a debit or credit in separate columns (usually with a counter-entry on another page) *and an ending or closing, or carry-forward, balance.

Overview

The ledger is a permanent summary of all amounts entered in supporting journals (day books) which list individual transactions by date. Usually every transaction, or a total of a series of transactions, flows from a journal to one or more ledgers. Depending on the company's bookkeeping procedures, all journals may be totaled and the totals posted to the relevant ledger each month. At the end of the accounting period, the company's

financial statement Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to un ...

s are generated from summary totals in the ledgers. Ledgers include: * Sales ledger (debtors ledger): records accounts receivable. This ledger records the financial transactions between the company and its customers. This shows which customers owe money to the business, and how much. * Purchase ledger (creditors ledger): records transactions between the company and its suppliers (i.e. usually purchases by the company). This shows to which suppliers the business owes money, and how much. *

General ledger In bookkeeping, a general ledger is a bookkeeping ledger in which accounting data are posted from General journal, journals and aggregated from subledgers, such as accounts payable, accounts receivable, cash management, fixed assets, purchasing ...

: consists of the five main account types:

assets In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

, liabilities,

income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. F ...

, expenses, and equity. For every

debit Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value ''to'' that account, and a cred ...

recorded in a ledger, there must be a corresponding credit, so that overall the total debits equal the total credits.

Etymology

The term ''ledger'' stems from the English dialect forms ''liggen'' or ''leggen'', meaning "to lie or lay" (Dutch: ''liggen'' or ''leggen'', German: ''liegen'' or ''legen''); in sense, it is adapted from the Dutch substantive ''legger'', properly "a book lying or remaining regularly in one place". Originally, a ledger was a large volume of scripture or service book kept in one place in church and openly accessible. According to Charles Wriothesley's ''

Chronicle A chronicle (, from Greek ''chroniká'', from , ''chrónos'' – "time") is a historical account of events arranged in chronological order, as in a timeline. Typically, equal weight is given for historically important events and local events ...

'' (1538), "The curates should provide a booke of the bible in Englishe, of the largest volume, to be a ledger in the same church for the parishioners to read on." In application of this original meaning the commercial usage of the term is for the "principal book of account" in a business house.

Overview

Etymology

See also

Notes

References

Further reading