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. 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.

See also

• Bookkeeping
• Specialized journals
• Debits and credits

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):

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.

References

1. ^ From the English dialect forms liggen or leggen, to lie or lay; in sense adapted from the Dutch substantive legger)
2. ^ Haber, Jeffry (2004). Accounting Demystified. New York: AMACOM. p. 15. ISBN 0814407900. 

•  Chisholm, Hugh, ed (1911). "Ledger". Encyclopædia Britannica (11th ed.). Cambridge University Press. 
• 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