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Ledger

Ledger
Introduction :
The journal alone will not serve all the purposes of accounting. In the journal the entries of the transactions are spread over an different dates. Therefore the other book, namely, the ledger comes into play where all the entries pertaining to different accounts are summarised and classified under the respect accounts. This makes it possible to know the position of each and every account maintained in the ledger on any given date. 
Meaning of Ledger :
"Ledger is usually a bound book containing the various accounts concerned with the business. It contains all the personal accounts of debtors and creditors with whom the business deals, the accounts of all the assets of the business and also the accounts of various expenses incurred and the incomes earned by the business".
Principal book or Chief book
A ledger is the "Principal book" or "Chief book" of accounts for a trader's business. It contains all his transactions and accounts in a classified and summarised form. This will enable the trader to know the results of his business and its financial position.
Book of final entry
When all of the transactions in the journal are finally transferred (or posted) to the ledger, the ledger is also known as the "Book of final entry." Ledger includes all the basic accounts required for the purpose of preparation of the financial statements of the business. 
Ledger Folio:
The term " Ledger folio" refers to a ledger page. The folios (or pages) are numbered in order. Such folio number is mentioned whenever it is required to facilitate reference. On a separate page of the ledger, each account is normally opened.

Features of Ledger :
The following are the important features or characteristics of a ledger:
 (1) A ledger is the main or the principal book of account.
(2) It contains all kinds of accounts of the business.
(3) It is generally a bound book having folio (page) numbers.
 (4) It is alphabetically indexed to enable easy reference.
(5) It gives classified information relating to assets, liabilities, capital, expenses and incomes of business in summarised form.
(6) It is a secondary record since the transactions are posted on the basis of journal entries.
(7) It provides the balance of accounts for preparing the trial balance and thereby the financial statements.
(8) It is a book of final entry since the accounting process ends in the ledger book.
Need and Importance of Ledger
The necessity of ledger and its significance can be explained as under:
(1)Ledger provides classified information:
 From the ledger we can easily find out the exact amount receivable from our debtors and amount due to our creditors on any given date. We can also ascertain the value of the assets of our business and can find out the number of expenses incurred on various items and income earned from different sources. 
(2) Easy and quick reference: 
In a ledger, the transactions relating to a particular person or thing are recorded together in single accounts. This helps in referring any information at one place in a summary form. By looking at the folio numbers, we may get a quick reference to the present position of any account at any time. 
(3) Verification of correctness of book-keeping: 
It is possible to prepare the trial balance from the ledger, showing debit and credit balances of all accounts. If the total of both debit and credit balances tally, the accounts are treated to be arithmetically correct.
(4) Basis for preparing final statements : 
The annual financial statements, namely, trading and profit & loss account and the balance sheet are prepared on the basis of ledger account balances

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