Ledger
A ledger[1] 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.
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Overview [edit]
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.[2]
Ledgers include:
- 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.
For every debit recorded in a ledger, there must be a corresponding credit so that the debits equal the credits in the grand totals.
Origin of the term ledger [edit]
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.
See also [edit]
References [edit]
Chisholm, Hugh, ed. (1911). "Ledger". Encyclopædia Britannica (11th ed.). Cambridge University Press.
- ^ From the English dialect forms liggen or leggen, to lie or lay; in sense adapted from the Dutch substantive legger)
- ^ Haber, Jeffry (2004). Accounting Demystified. New York: AMACOM. p. 15. ISBN 0-8144-0790-0.
Further reading [edit]
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Wikimedia Commons has media related to: Ledgers |
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Look up ledger in Wiktionary, the free dictionary. |
- 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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