The ledger

Objectives
The students will:
1. Know what is a ledger

2. Identify different types of ledgers, identify the different categories

of accounts.

3. Describe the different classes of accounts

4. Interpret the entreis and balances

What is a ledger
• The ledger is the prime book of accounting in which
the collection of all accounts maintained by a business
are kept.

• Recording transaction in the ledger is called posting

FORMAT OF THE LEDGER
The ledger is shape like a T.
Date Particular Folio Amount Date Particular Folio Amount
$ $
FORMAT OF THE LEDGER
• With the increasing use of computers the 'T' format of the ledger has
changed to a statement form, commonly referred to as running balance
style.
Date Particular Dr Cr
$ $
Types of Ledgers
• The ledger is subdivided into different books with special uses for
convenience and for easy retrieval of information.
Types of Ledgers
1. The general ledger also called the nominal ledger, contains all
nominal, real and capital accounts
2. Purchases ledger or creditors ledger or accounts payable ledger
contains the personal accounts of suppliers or persons who the
business owes.
3. Sales ledger or debtors ledger or accounting receivable ledger
contains the accounts of customers, firms and individuals who owe
the business.

PLEASE NOTE: Cash and Bank Accounts are normally recorded

seperately in a Cash Book.
 Classes of Accounts
• There are Three main classes of accounts

1. Real Account - all assets accounts EXCEPT

DEBTORS/ACCOUNTS RECEIVABLE

2. Personal Account - ALL liabilities, Accounts Representing

the Owner and DEBTORS/ACCOUNTS RECEIVABLE

3. Nominal Accounts - All Expenses and Revenue (incomes)

List of RealAccounts
• Machinery
• Cash
• Bank
• Motor Vehicle
• Equipment
• Furniture
• Fittings
• Fixture
• Land
List of Personal Accounts

• Creditor
• Loan
• Mortgage
• Debtor
• Capital
• Drawings
List of Nominal Accounts
Expenses Accounts Revenue Accounts
• Purchases • Sales
• Rent paid • Rent received
• Commission paid • Commission received
• Wages paid • Discount received
• Salaries paid
• Advertising paid
• carriage out/Transportation out
• Carriage inwards/Transportation in
• Discount allowed
 The effect of a transaction
• Each transaction of the business will affect at least two accounts. This
is because of the twofold nature of a transaction. For example, when
you make a purchase you receive something of value by giving
something of value, cash or the promise of cash.
 Debit and Credit
• To debit an account means that the date, and the amount in the
transaction along with the corresponding account are enter on the
debit side of the account.

• To credit an account means that the date, and the amount in the
transaction along with the corresponding account are enter on the
credit side of the account.
 Golden rule for posting in the
ledger
Debit what is receiving or who is receiving

Credit what is given or who is giving

You are required to post the following
transactions of Sandra Enterprises to the ledger
• 2018
• August 1 Sandra Enterprises started business with $18 500 cash and
$45 600 in the bank
• August 2 bought goods on credit from Sam Smith $4 000
• August 2 sold goods on credit to Span Enterprises $5 000
• August 4 Bought a van on credit from the Van Shop $40 000
• August 6 cash sales $3 000
• August 12 cash purchases $ 2 400
• August 29 paid rent with chaque $5 300
• August 29 paid wages with cash $4 300