LEDGER

1. Ledger is the principal book /computer

file/data base, where all economic
transactions measured in terms of
money of a business enterprise are
RECORDED STORED AND
SUMMARIZED following the double
entry system.
2. It is the central repository of
information needed to construct the
financial statements of an
organization.

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DIVISIONS/CLASSIFICAT
ION/TYPES OF LEDGERS
If all the accounts of assets,
liabilities and capital are
kept in one book, it will be
very difficult to locate a
particular account and the
whole book will look clumsy.

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 DIVISIONS/CLASSIFICATION/
TYPES OF LEDGERS
This indicates that there is a
need to arrange all Ledger
accounts in a specific and
systematic manner.
In order to meet this need, the
Ledger is divided into the
following divisions.

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 TYPES/DIVISIONS OF
LEDGER
The divisions are:
1. Sales Ledger (OR )Debtors
Ledger
2. Purchases Ledger (OR)
Creditors Ledger
3. General Ledger
4. Cash Book (Book of original entry and
Ledger)

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 SALES LEDGER
This ledger is also called the
DEBTORS’ LEDGER.
It contains all the personal accounts
of debtors to whom the business has
sold goods on Credit viz. (TRADE
DEBTORS)
The debtors’ accounts in the Sales
ledger can be arranged in
alphabetical order, numerical or
geographical order
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 PURCHASES LEDGER
It is also known as CREDITORS’
LEDGER.
It contains all the personal accounts of
Creditors from whom the business has
bought goods on Credit. (TRADE
CREDITORS)
The creditors’ accounts in the
Purchases ledger can also be arranged
in alphabetical order (using names of the
suppliers), numerical order (using the
account numbers) or geographical order
(using either districts or provinces).

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 GENERAL LEDGER
It is also known as
NOMINAL LEDGER.
This contains all other
accounts, which are NOT
contained in the Sales and
Purchases Ledgers and
Cash and Bank accounts.

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 CASH BOOK
1. Cash Book is a Book of Original Entry in
which transactions relating to cash
receipts and payments are recorded in
detail.
2. The Cash Book is formatted like any other
Ledger Account (with columns for debit
and credit entries).
3. Being a Ledger, all cash receipts and
payments are recorded in the Cash Book
following the Double Entry rules.

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 DIVISIONS OF LEDGER :
QUESTION 7
DEBTORS’ LEDGER/SALES LEDGER

TOM
DICK
HARRY

CREDITOR’S LEDGER/PURCHASES LEDGER

SMALL
BIG
GIANT

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 DIVISIONS OF LEDGER :
QUESTION 7
GENERAL LEDGER

CAPITAL PURCHASES
SALES STATIONERY
MOTOR VAN
SUPRA MOTORS (Note: Supra Motors is a creditor, but not a trade creditor
as they supplied a motor van, which the business bought for use in the
business. They, therefore, are described as “Creditor for Motor Van” . This is
why Supra Motors account appears in General Ledger and not in Purchases/
Creditor’s Ledger).

RETURNS OUTWARDS RETURNS INWARDS

COMMISSION RECEIVED OFFICE EQUIPMENT
DRAWINGS

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 DIVISIONS OF LEDGER :
QUESTION 7
CASH BOOK

CASH
BANK

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 DOUBLE COLUMN
CASH BOOK
1. These days most of the
receipts and payments are
done through Bank and few
transactions are done in
cash.
2. The cashbook, therefore,
must be prepared in such a
way that it accommodates
both cash transactions and
bank transactions.

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 DOUBLE COLUMN
CASH BOOK
1. Such a cashbook is known as double
column cashbook or two-column
cashbook.
2. The double-column cash book will
have two amount columns on each
side;
3. the debit side will record cash
receipts and bank deposits and
4. the credit side will record all cash
payments and bank withdrawals

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 DOUBLE COLUMN
CASH BOOK
Date Details Ledger Cash Bank Date Details Ledger Cash Bank
Folio Folio

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 DOUBLE COLUMN
CASH BOOK
Date: The date of transaction is written
in this column in two lines—in the first
line, the year and in the second line, the
name of the month followed by the
actual date.
Details/Particulars: In this column the
name of the opposite account is written
(the second aspect of cash transaction).

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 DOUBLE COLUMN
CASH BOOK
L.F. (Ledger Folio):
1. In this column, the page
number of the Ledger where
the opposite account has
been opened is written.
2. This will help to locate the
other account from the
Ledger.

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 DOUBLE COLUMN
CASH BOOK
AMOUNT COLUMNS :
CASH : Cash received is recorded on
the debit side and the amount of
cash paid is recorded on the credit
side in the amount column.
BANK: Cheques deposited are
recorded on the debit side and
withdrawals by cheque are recorded
on the credit side.

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 ADVANTAGES
The division of the ledger has two
advantages:
1. It reduces the time spent looking for a
particular account
2. It enables two or more clerks to work
efficiently on the ledger.
For example, the Sales Ledger may be
maintained by one clerk, another clerk may
maintain the Purchases ledger and the third
clerk may maintain the general ledger.

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