The Ledger

What is a Ledger?

Ledger is the main book of accounts used for recording all accounting transactions. In the ledger, financial transactions are posted using the double-entry system.

Division of Ledger:

Ledger Classification:

Personal Ledger:

The personal ledger is used for recording accounts with names of individuals, firms, or organizations who may either be customers or suppliers. An example of a personal ledger is a capital account, which is an account where the entrepreneur’s investment in the business is recorded.

Impersonal ledgers: 

Impersonal ledgers are also called General Ledgers or Nominal Ledgers. They are of two types, Nominal Accounts and Real Accounts.

Real Ledger: The real ledger is kept for recording accounts relating to concrete or tangible things that can be touched or seen with our naked eyes and also liabilities. e.g Motor vehicle account and loan account.

Nominal Ledger: This ledger is for keeping accounts relating to expenses, income and income received, gains (profit) or losses of the business. e.g. Sales account and Salary account, rent, electricity, insurance etc.

Items on the Ledger:

Generally, the ledger has 4 columns on the left side (DR) and another 4 columns on the right side (CR)

The ledger is divided into two equal parts; the left-hand side is called the debit side or the receiving side (DR) while the right-hand side is called the credit side or the giving side (CR).

Some of the common abbreviations used in the ledger are:

Dr = Debit 

Cr = Credit 

c/d = Carried down 

b/d = Brought down 

b/f = Brought forward 

c/f = Carried forward 

Bal. b/f = Balance brought forward 

Bal. b/d = Balance brought down 

Bal. c/d = Balance carried down

Bal. c/f = Balance Carried forward

A/c = Account 

CB = Cash Book

SL = Sales Ledger 

PL = Purchase Ledger P & L = Profit and Loss