What is General Ledger In Accounting - Definition - Meaning - Format

How To Do Ledger Posting / How To Make Ledger Accounts / Ledger Meaning / Ledger Entry Format / How To Make Ledger From Journal / T Accounts Format / What is General Ledger / Ledger Account Format

King of Accounts

Ledger is the third step of the Steps in the Accounting Cycle. Ledger tells us more than Journal. The Journal only tells you about what types of Accounts you record in it and what are changing taken place in it but does not tell you about the results of specific accounts separately. You do not know how much we have balances for our Assets, Liabilities and Owner’s Equity. What are the total Expenses incurred in the business and the Revenues generated by those expenses?

This problem is solved by the ledger called main books of accounts, because all the Transactions recorded in the journal are finally posted to ledger according to its classification. With the help of ledger you know how many cash the business has for running and operating the business.

Firstly, You must know about what is Ledger and its Meaning in order to better understand this step of accounting cycle. It means maintaining separate books of accounts according to classification so that we get separate totals of each Types or Kinds of Accounts.

So, Ledger can be defined as:

“It is the main book of accounts where all the business transactions are transferred from the journal”

Why is The Ledger Called The Book of Final Entry

Ledger is also called king of accounts or Books of Final Entry because all the accounts must be finally posted to ledger and only ledger tells us classified information of accounts. Also, with help of ledger we make our financial statements correctly. Any Error that takes place in journal and other accounting cycle stages can be easily detected and corrected through this main book of accounts if proper books of accounts are maintained.

General Ledger is called the Control Ledger because all the Closing Balances of Different Types / Kinds of Accounts are collectively recorded in this Primary or Control Ledger at the end of accounting. For Example, Accounts Receivable Control Ledger or Account or simply Accounts Receivable Ledger or Book, Accounts Payable Control Ledger or Account, Trial Balance in which  accounts are classified in accordance with the order of appearance in Financial Statements i.e., in the order of Liquidity, and other ledger accounts. Since, there are numerous customers, so each customers' related Journal Entries are recorded in their respective Subsidiary Ledgers or Sub-ledgers and then totaled are transferred to Control or Main or Primary account at the end of Accounting.

You May Also Be Interested In, "Difference Between Subsidiary Ledger / Subledger And General Ledger / Control Ledger"

Posting

The process of transferring business transactions from the journal to ledger is called posting.

Forms of Ledger

Practically, there is only form of ledger that is Self-Balancing Form, because ledger is prepared to show the classified results of accounts in a finalized form. But, for working purposes, the standard form is used for solving numerical problems.

There are two forms of ledger:

(i)  Standard Form

(ii)Self-Balancing Form

(i)  Standard Form

This form is also called T-Form because it is prepared in this shape. It is used only for solving working problems but practically it has not existence.

Format of Standard Form / T Accounts Format

Date	Particulars	J.R	Amount Rs.	Date	Particulars	J.R	Amount Rs.

Explanation of the Format

1.  Date

The date on which particular transaction takes place is written in this column under the two lines. In the first line, year is written, like 2014 and in the second line, first we write the name of month and then the date on which particular transaction takes place, in our case it is 1st date of the month of June.

2.  Particulars / References / Details

Under this column, the names of the accounts are written which are the reasons of a particular account and due which a particular account becomes debit or credit. For Example, when cash is received from our customer then if we prepare the ledger of our debtor then we write the amount in credit side of the ledger and record the name of cash account in the particulars column.

3.  Journal Reference (J.R)

It is simply tells us the page number of the journal from where concerned accounts are posted to the ledger.

4.  Amount

There are two columns of amount. First one is for Debit accounts and second one is for credit accounts. In the first column, the amount of debit accounts are written and in the second column, the amount of credit accounts are written.

    (ii)    Self-Balancing Form

It is the modern form of ledger. In this form, after recording a transaction we know how much balance of a particular account has, because we get the net results of our debit and credit amounts or we get the sum of debit and debit amounts or the sum of credit and credit amounts.

Format of Self-Balancing Form / Balance-Ruled Account Form

Cash Account

Date	Particulars	J.R	Debit Rs.	Credit Rs.	Balance
2014 June 1 June 6	Capital A/C Purchases		150,000	50,000	Debit Rs. 150,000 100,000	Credit Rs.

Explanation of the Format

Same as the standard form of ledger, but for the last column we see the balance of the net results of debit and credit or the sum of debit and debit amounts or the sum of credit and credit amounts. Thus we tell how balance we have for the particular account (in this case cash account) after recording every transaction. From the above table, it is clear that on  June 1, 2014 the cash account balance is 150,000 but on June 6, the cash account is 100,0000, so after recording every truncation we get the information about our accounts how much balance they have.

So, Ledger is called the King of books of accounts.