A ledger is the principal book or computer file for recording and totaling monetary transactions by account, with debits and credits in separate columns and a beginning balance and ending balance for each account.
The ledger is a permanent summary of all amounts entered in supporting journals which list individual transactions by date. Every transaction flows from a journal to one or more ledgers. A company's financial statements are generated from summary totals in the ledgers.
- Sales ledger, records accounts receivable. This ledger consists of the financial transactions made by customers to the company.
- Purchase ledger records money spent for purchasing by the company.
- General ledger representing the 5 main account types: assets, liabilities, income, expenses, and equity.
Origin of the term ledger
Originally, a ledger was a large volume of scripture/service book kept in one place in church and accessible. According to Charles Wriothesley's Chronicle (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."
It is an application of this original meaning that is found in the commercial usage of the term for the principal book of account in a business house.
- This article incorporates text from a publication now in the public domain: Chisholm, Hugh, ed. (1911). "Ledger". Encyclopædia Britannica (11th ed.). Cambridge University Press
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- Business Owner's Toolkit: General Ledger. (n.d.). Business Owner's Toolkit. Retrieved March 29, 2011, from http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_1450
- General Ledger Entries. (n.d.). NetMBA Business Knowledge Center. Retrieved March 30, 2011, from http://www.netmba.com/accounting/fin/process/ledger/
- General Ledger: Small Business Accounting . (n.d.). Starting a Small Business - BusinessTown Small Business Assistance. Retrieved March 31, 2011, from http://www.businesstown.com/accounting/basic-general.asp
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