Ledger

For other uses, see Ledger (disambiguation).

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General ledger.

A ledger^[1] 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.

Overview

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.

Etymology

Ledger from 1828

The term ledger stems from the English dialect forms liggen or leggen, meaning "to lie or lay" (Dutch: liggen or leggen, German: liegen or 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.

Notes

↑ 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.

References

This article incorporates text from a publication now in the public domain: Chisholm, Hugh, ed. (1911). "Ledger". Encyclopædia Britannica (11th ed.). Cambridge University Press.

Ledger

Overview

Etymology

See also

Notes

References

Further reading