If you have an account in any bank, you may be familiar with the term “ledger”. But if you are not familiar with this term, by reading this article you will be able to get enough knowledge about this term. What is a ledger and how it can be used are such questions that will be answered in remaining section of this article. So let’s start from what is a ledger?
Ledger is a principle book that is used to record transactions. Ledgers are widely used in businesses and book keeping. Actually, ledger is a large volume of scripture/service book that is kept in one place by making it accessible. When you are about to use ledgers in your business, you are required to determine how many ledgers are required for your business. Here some tips are going to be shared with you that will help you to understand how you can use a ledger?
Your ledger must contain every account of your business. You should record here seven important categories of your business, these are:
- Owner’s equity
- Gains of your business
- Losses of your business
You are required to enter each transaction in the ledger on daily basis. To enter each and every transaction it is necessary to enter debt and credit. Debit entry will take place on right side and credits will be recorded on left side. This is the rule of recording transactions in a ledger.
One more thing to remember is that with every recorded transaction, date must be entered for each entry you make. If you are going to record number of transactions for the same date, you still need to have a date for each transaction. Relevant descriptions should also be a part of each entry.
Now, post your data to subsidiary ledger. This is as same as making entries except when you post, you only put in a debt or credit. They do not balance as they do in the general ledger.
Posting of every transaction will be made on its own page or in its own ledger. Ancillary ledgers have extra column that is balance. Every month, you are required to update balances to have a clear picture of each account.
What is a ledger looks like and what are important columns of this document can be well understood by viewing Ledger Template.