Class 11 Accountancy TS Grewal Solutions Chapter 6 - Led

In accounting, a ledger is a book that contains many accounts and stores records of transactions relevant to each account. It's also known as the major book of accounts or the book of final entry. It's a book that keeps track of all debited and credited transactions.

A ledger account is a collection of all ledgers that provides information about all of an organization's accounting operations. It is considered the most significant book in accounting since it aids in the creation of a trial balance, which is used to prepare financial statements.

A ledger account's information includes both starting and ending balances, which are updated during the course of the accounting period via debits and credits.

The numerous transaction aspects, such as date, amount, particulars, and l.f., are all contained in a ledger (ledger folio). Individual transactions are recorded in a ledger account and are recognised by a transaction number or other notation.

Format for Ledgers: The ledger is divided into two T-formatted columns. Date, particulars, folio number, and amount columns appear on both sides of the debit and credit.

Example of a Ledger Account

Here are a few instances of ledger accounts.

• Receivables (accounts receivable)

• Accounts payable for cash depreciation

• Inventory

• Wages and salaries

• Revenue

• Debt 

• The value of a company's stockholders' equity

• Expenses for the office

• Posting of Ledgers

Ledger posting is the process of moving entries from a journal to the appropriate ledger accounts. The entries are initially entered in journals and then moved to their relevant ledger accounts in this process.

What is a Journal?

A journal is a sub-accounting book that keeps track of monetary transactions in accordance with accounting rules. These transactions are documented in chronological sequence and provide information on the accounts that each transaction affects. It's the initial stage in the accounting procedure.

What Is the Difference Between a Ledger and a Journal?

The following are the primary distinctions between Journal and Ledger:

• A journal is a separate book of accounts that keeps track of transactions. A ledger is a primary accounting book that categorises transactions recorded in a journal.

• On the day of their occurrence, the journal transactions are reported in chronological sequence. The ledger categorises the transactions in the journal by the accounts to which they are linked.

• Each transaction is described in full in each journal entry. Each transaction is not described in full in the ledger accounts.

• The whole outcomes of a transaction are not revealed in the journal. The ledger accounts assist in revealing the outcome of transactions for a certain account.

• The journal is unable to directly assist in the preparation of the Trial Balance. The ledger aids in the preparation of the Trial Balance.

• The journal plays no part in the creation of financial statements such as the Profit and Loss Account or the Balance Sheet. The balances in various ledger accounts aid in the preparation of financial statements such as the Profit and Loss Account and the Balance Sheet.

• A journal does not have an opening balance and is primarily concerned with day-to-day transactions. Some ledger accounts have an opening balance, which is the prior year's closing amount.