Definition
A ledger is a book (or collection) of accounts in which account transactions are recorded.
- It keeps all changes (increases and decreases) to each account balance in one place.
- The changes come from the entries recorded in the General Journal.
- It gives management the balance of each account.
Forms of Ledger Account
- T-account form (MPP1020 uses only this form)
- Account (continuous balance) form
T-Account
Account Name
| Date | Details | Dr | Date | Details | Cr |
|---|---|---|---|---|---|
The left side is the debit side and the right side is the credit side. See Debit and Credit.
Posting
Posting is transferring the information from journal entries to the ledger accounts.
- Post in chronological (date) order: post all the debits and credits of one journal entry before moving to the next entry.
- For the account debited: on its debit side, record the date, the details (name of the account credited) and the debit amount.
- For the account credited: on its credit side, record the date, the details (name of the account debited) and the credit amount.
Balancing (Closing) Ledger Accounts
Accounts are balanced at the end of each financial reporting period:
- Total both sides of the account, and write the larger total on both sides.
- On the side with the smaller total, enter the difference as the closing balance.
- Carry the balancing figure down to the opposite side as the opening balance for the next period.