A ledger is the principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary 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.
The term ledger stems from the English dialect forms liggen or leggen, meaning to lie or lay (Dutch: liggen of leggen, German: liegen oder legen); in sense it is adapted from the Dutch substantive legger, properly a book laying or remaining regularly in one place. Originally, a ledger was a large volume of scripture or service book kept in one place in church and openly 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."
In application of this original meaning the commercial usage of the term is 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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