Ledgers are books of accounts used for reporting economic transactions measured in monetary terms. Each financial transaction is noted inside a ledger. It depends on the size and structure of the organisation that the number of journal entries vary from hundreds to millions.
General ledger accounts are basically nothing but chart of accounts.
It helps in consolidating journal entries at a single place which are of same nature. Transfer of several journal entries in a single ledger account is termed as posting. For example, 100 entries of journal passed can be posted into a single sales account created. Post that, several sales transactions can be noted in that account date-wise.
Boundless helps you in doing this and maintaining ledgers all the while for your business.
Some important points that relate to ledger are:
1. Each side of a journal entry is made on the same side of the ledger i.e. debit entry is made on the debit side while credit entry is made on the credit side.
2. Expenses and assets represent debit balance while income and liabilities represent credit balance including capital balance.
3. Debit balance in the statement represents amounts receivable while credit balance in the statement represents amounts payable. While amount receivables are noted in assets, amount payables are represented in liabilities.
4. While credit side represents income earned, debit side represents an organisation's expenses.
5. A cash book's debit balance means cash in hand.
6. Bank book's debit side is balance at bank and bank book's credit balance is bank overdraft.
7. However, real and personal account balances are represented in balance sheet and are carried onto next financial years.
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