Ledger

For other uses, seeLedger (disambiguation).

Macon-Knoxville, GAStore Ledger, 1825–1831.

Aledgeris a book or collection of accounts in which accountingtransactionsare recorded. Each account has:

• an opening or brought-forwardbalance;
• a list of transactions, each recorded as either adebit or creditin 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 supportingjournals(day books) which list individualtransactionsby 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'sfinancial statementsare generated from summary totals in the ledgers.

Ledgers include:

• Sales ledger(debtors ledger): recordsaccounts 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:consists of the five mainaccount types:assets,liabilities,income,expenses,and equity.

For everydebitrecorded in a ledger, there must be a correspondingcredit,so that overall the total debits equal the total credits.

Etymology

Ledger from 1828

The termledgerstems from the English dialect formsliggenorleggen,meaning "to lie or lay" (Dutch:liggenorleggen,German:liegenorlegen); in sense, it is adapted from the Dutch substantivelegger,properly "a book lying or remaining regularly in one place". Originally, a ledger was a large volume ofscriptureor service book kept in one place in church and openly accessible. According toCharles Wriothesley'sChronicle(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.

See also

• Bookkeeping
• Debits and credits
• Specialized journals
• Final accounts
• Distributed ledger,sometimes called a shared ledger, is a consensus of replicated, shared, and synchronizeddigital datageographically spread across multiple sites, countries, and/or institutions.

References

• This article incorporates text from a publication now in thepublic domain:Chisholm, Hugh,ed. (1911). "Ledger".Encyclopædia Britannica(11th ed.). Cambridge University Press.

Further reading

• Business Owner's Toolkit: General LedgerArchived2012-03-15 at theWayback Machinefrom Wolters Kluwer
• General Ledger Entriesfrom NetMBA Business Knowledge Center
• Ledger to Ledger