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LEDGER POSTING



CHAPTER 8



Introduction: journal records all business transaction separately and date-wise. The transactions relating to a particular person, asset, expense or income are recorded at different places in the journal as they occur on different dates. Hence, it fails to bring the similar transactions together at one place. Thus, to have a consolidated view of the similar transactions different accounts are prepared in the ledger.


A ledger account may be defined as a summary statement of all the transactions relating to a person, asset, expense, or income, which have taken place during a given period of time and show their net effect. So every entry record in the journal must be posted into the ledger. It is a register having a number of pages, which are serially numbered. One account is usually assigned one page in the ledger. It is the principal book of accounts.


Performa of an account

DR.                                                                                                                                           CR.
DATE
PARTICULAR
J.F
AMOUNT
DATE
PARTICULAR
J.F
AMOUNT










·         Debit on the left hand side and credit on the right hand side.

·         The left side of the account describes the benefit received by the firm and the right side describes the information about the benefit received by the firm and right side describes the information about the benefit given by the firm.

·         The debit aspect of business transaction should be recorded on the debit side, this is known as debiting the account.

·         The credit aspect of the transaction is recorded on the credited side of the account, which is known as crediting the account.


CLASSIFICATION OF LEDGER

The number of transactions depends on the size of the business firm. When the firm is smaller in size, its transactions are usually limited , hence, only one ledger account maybe enough but with the expansion of business, the number of transactions will also increase, so there is a possibility of have more number accounts like:

 Debtor’s ledger:  when the customer purchases goods on credit basis, they become the debtor’s pf the firm and all their transactions are recorded in one book as known as debtor ledger.

Creditor’s ledger: when the firm purchases goods on credit basis the suppliers become creditor and these transactions are recorded in the book known as creditor ledger.

General ledger: when the company record all the accounts related to assets, income and expenditure in one book, which is known as general ledger. In this account this accounts related to real account and the balance of all types of account related to nominal accounts always show only debit balance. On the other hand all the accounts related to nominal accounts always show only debit balance. On the other hand all the accounts related to incomes show only credit balances.
Self-ledger: when accounts related to the proprietor of the business are recorded in one book which is known as self-ledger.


BALANCING THE ACCOUNT:
Generally, the balances of various accounts in the ledger are tallied either at the end of the accounting year or whenever the business needs information.

The following is the procedure to balance the account:
·         Take the totals of both sides and find out the difference between debit and credit.
·         The total of lesser sides should deducted from the total amount of the higher side, the difference is called as balance carried down
·         Date of balance c/d should be show as balance b/d on the next day, on the opposite side
·         Sometimes the totals of both the sides of an account are equal. In such case balance c/d or balance b/d does not occur.

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