A ledger is a book that houses all the accounts of a business firm. At the end of every accounting period, the ledger is balanced to have the balances carried forward to other accounting period. These balances carried forward (C/F for short) become the opening balances in subsequent period. The entries in this ledger are made in line with the principles of double entry.
The double entry depicts that for every debit entry, the must be a corresponding credit entry in the account and vice versa. Irrespective of the processing system in use, be it manual or computerized system, the principle implies that every transaction must affect two accounts at the same time. This means that if one account is debited, another account must be credited for every transaction for the posting to be completed. The account that gives is credited while the account that receives is debited.
The ledger is usually divided into three main groups namely:
- The sales ledger,
- The purchases ledger and
- The general ledger.
The double entry depicts that for every debit entry, the must be a corresponding credit entry in the account and vice versa. Irrespective of the processing system in use, be it manual or computerized system, the principle implies that every transaction must affect two accounts at the same time. This means that if one account is debited, another account must be credited for every transaction for the posting to be completed. The account that gives is credited while the account that receives is debited.
The ledger is usually divided into three main groups namely:
- The sales ledger,
- The purchases ledger and
- The general ledger.
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