How to make a ledger account?
The ledger is the official record of a company’s accounts, and sometimes we refer to the general ledger, purchase ledger, sales ledger, and cashbook. A catalog provides all accounting transaction entries and the balance for a specified period. At the end of the period, registers serve as an authoritative source of data building for financial statements of a period. Therefore, accounting means a master record of a company’s financial affairs.
It contains a record of business transactions. A separate file within the general ledger assigned to a specific asset, liability, equity item, revenue type, or expense type.
Examples are:
- Cash
- Accounts receivable
- Accounts payable
- Accrued expenses
- Debt
- Salaries & wages
- Office expenses
- Depreciation
- Office Administration
- Cost of goods sold
- Revenue
Information is stored in a ledger account with the ending and starting balances for a period and adjusted with debits and credits. Individual transactions are identified within a ledger account with a transaction number or other representation so that one can research why a deal was entered into a ledger account. Transactions caused by regular business activity, such as billing customers or recording supplier invoices, may involve adjusting entries, which call for journal entries.
The information in a ledger account is summarized into the account-level totals shown in the trial balance report, which is used to compile financial statements.
The ledger account may be an electronic record if an accounting software package is used or a page in a written ledger if the accounting records are kept by hand. The general ledger, also called a nominal ledger
For example, I am posting from the sales daybook to the sales ledger, debiting the personal account in the sales ledger, and crediting the sales account in the nominal ledger.
Then the other postings from the purchase day ledger are done the same way mentioned in the sales day book.