If you have just stepped into entrepreneurship or engaged in a start-up, you are well aware of the relevance of ledger posting. Ledger posting is the first step to record business accounting. Our blog aims to find out the advantages of ledger accountsÂ homework answers.
Journal entries, cashbook entries or subsidiary books are first posted on ledger accounts from where they are transferred to P&L ac and Balance sheet. This process forms the core of accounting business.
Examples of general ledger
Why is ledger accounts a necessity?
Knowing the significance of general ledger will help you with advantages of ledger accountsÂ homework answers:
Types of ledger prepared
You will find more than one ways to prepare ledger accounts however the most popular among them is a T-shaped ledger. Advantages of ledger accountsÂ homework answers identify that T-shaped ledger posting is classified into debit and credit side. Left side goes to post debit part as dr. and the right side is dedicated exclusively for the credit part i.e. cr.
Below given are contents of a specimen ledger.
Thumb- rule for posting entries in general ledger
This is a universal rule followed across the world. Post advance of digitalization of economy various software and ERP system does the necessary posting. Junior accountants were assigned with the task of posting ledger accounts previously before software were put in place.
General ledger entry & other forms of accounting forms basis of various accounting software and ERP and an accountant needs to possess a sound knowledge of the system in order to work on them.
Cash account drâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦(amount in your currency)
To vendor Aâ€¦â€¦â€¦â€¦â€¦â€¦(amount in your currency)
Ledger account balancing act
You have to close ledger account post journal entries are made into the book to ascertain gains and losses of the business at the end of an accounting period. Say, for example, we close ledger postings for one-quarter only to start off afresh in next quarter. You take forward the balancing figure at the end of every quarter to prepare income statement and balance sheet at the end of financial year.
Based on company rule, ledger accounts can be closed monthly, quarterly or on a half-yearly basis.
Closing of ledger accounts is done after we tally the debit and credit side to identify profit and loss for the given period. Advantages of ledger accountsÂ homework answers go on to evaluate the findings
Lack of balancing in sides:
What happens if debit side is greater than the credit side in the ledger book of accounts?
Different treatment is meted out to excess debit and credit based on the rules of posting and closure.
Advantages of ledger accountsÂ homework answers the assessment process
Entire process of accounting and all the books starting from journal entries to final balance sheet is inter-linked. Ledger accounts serve as the links between all thereby influencing both assets as well as liabilities. You can assess expense and losses with the help of ledger postings much before preparing the final balance sheet or P&L accounts.
Time for you to seek help from such authentic sources!