Ledger Account Definition, Format, Types, and Example

Ledger Account Meaning

Ledger Account is a journal in which a company maintains the data of all the transactions and financial statement. Company’s general ledger account is organized under the general ledger with the balance sheet classified in multiple accounts like assets, Accounts receivable, account payable, stockholders, liabilities, equities, revenues, taxes, expenses, profit, loss, funds, loans, bonds, stocks, salaries, wages, etc. In this article, we will learn more about Ledger Account format and examples, types of the ledger, ledger posting, and we will also provide ledger account template in excel, google spreadsheet, and PDF format.

Browse more Topics under Books Of Prime Entry

• Journal – Functions and Advantages 
• Sub Division of Journal
• What are Subsidiary Books
• Cash Book
• Purchase Day Book
• Sales Day Book
• Ledger Accounts
• Sub Division of Ledger

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General Ledger Accounts Meaning and Definition

Ledger is a book that contains the accounts. Any financial statement related to the financial position of the company emerges only from the accounts. Thus, this ledger is known as the principal book. So, the result of all this is that it is necessary to relate all the information for any account available is from the ledger. This book of accounts is the most important book for any business and that is why it is known as the king of all books. Also, the ledger book is also known as the book of the final entry. The Ledger account is thought of the book that has all the accounting information of the company.

Usually, a ledger account contains many things. Some of the things include dates, particulars, amount, and j.f. This specimen is standardized across all the different places in India.

Anywhere you go, you will find this specimen only. Also, in ledger accounts, this specimen is used for writing the entries of the accounting. Furthermore, ledger accounts also include the ledger posting.

Learn more about Sub Division of Ledger in detail here.

Types of Ledger

There are 3 types of Ledgers –

• Sales Ledger
• Purchase Ledger
• General Ledger

1. Sales Ledger – Sales Ledger is a ledger in which the company maintains the transaction of selling the products, services or cost of goods sold to customers. This ledger gives the idea of sales revenue and income statement.

2. Purchase Ledger – Purchase Ledger is a ledger in which the company organizes the transaction of purchasing the services, products, or goods from other businesses. It gives the visibility of how much amount the company paid to other businesses.

3. General Ledger – General Ledger is divided into two types – Nominal Ledger and Private Ledger. Nominal ledger gives information on expenses, income, depreciation, insurance, etc. And Private ledger gives private information like salaries, wages, capitals, etc. Private ledger is not accessible to everyone.

Learn about Preparation of Trial Balance here in detail

Ledger Account Examples

Assets

• Cash
• Land
• Accounts receivable
• Equipment

Liabilities

• Debt
• Accounts Payable
• Loans
• Accrued expenses

Stock

• Stockholders Equity
• Common Stocks
• Retained Earnings

Operative Revenues

• Sales
• Services Fees

Operating Expenses

• Salaries and wages
• Office Expenses
• Depreciation Expense

Ledger Account Format and Template

Following image shows the format of General Ledger Account –

Following image shows a sample template of General Ledger Account –

Download Ledger Account in Excel, Google Spreadsheet and PDF Format 

Download  General Ledger Account Template in Excel (XLS) Format

General Ledger Account Google Spreadsheet Format – (Go to file and Make a Copy, do not Request for Access)

Download General Ledger Account Template in PDF format 

Ledger Posting

Whenever a transaction takes place it is denoted and recorded in the journal in the form of the journal entry. Furthermore, this entry is posted again in their respective journal accounts.

This is done from the journal under the double entry principle. This is known as the ledger posting. There are some rules which you have to adhere to while writing the journal entries for the following accounts.

Rules for writing Journal Entries in Ledger Account

Liabilities: This decreases on the side of debt and increases on the credit side.

Assets: In assets, the figure increases on the left side or you can say the debit side. While this decreases on the credit size or the right side.

Capitals: This follows the same rule as liabilities.

Gains or Income: In this, there is a decrease on the debit side. Also, there is an increase in the credit side.

Expenses: The expenses in the ledger decreases on the credit side while increases on the debit side.

There are some rules that students should understand according to the nature of debit and credit.

Debits and Credits

Credit

• For properties and goods, the credit represents that the value and stock of goods and properties have decreased. This is moreover related to real accounts.
• In the case of different accounts like dividend or interest or commission received, or the discount to be gained, it is reported that the firm has made again. This is moreover related to the nominal account.

Debit

• For goods or properties, the value and use of such goods have been increased. This is related to real accounts.
• Also, there is a case in which a person has received some benefit against some service given by him or will be rendered by him in the future. Thus, when a person is liable to do something for a firm, the fact is mentioned using that person’s account. This is moreover related to the personal account.
• For other accounts like expenses or losses, a certain expense has been incurred by the firm or has lost money. This can be related to the nominal account.

Ledger Account Questions

Q. In a ledger if the debit side is greater than the credit side then this represents

A. Bank loan

B. Cash at the bank

C. Overdraft for bank

D. None of the above

Answer: B. Cash at the bank