USA: +1-585-535-1023

UK: +44-208-133-5697

AUS: +61-280-07-5697


Ledger is a register having a number of pages which are numbered consecutively. Simply, ledger means consolidation of similar types of transactions under one head. In other words, a ledger may be defined as a summary statement of all the transactions relating to a person, asset, expenses or income which have taken place during a given period of time and show their net effect.

The process of preparation of accounts from the journal into ledger is called posting in

the ledger. Examples of ledger accounts include sales account, purchase account, sales returns

account, cash account, and so on.  


Format of Ledger

Ledger can be divided into two parts (i) left hand side called debit side (Dr) and (ii) right hand side called credit side (Cr). Debit side starts with ‘To’ and credit side starts with ‘By’. Most of the authors allow these practices.

Posting of Journal Entry into Ledger

Problem 2. Given the following journal entry, how do you post in into relevant ledger accounts.

Capital Account

How to Balance an account

First we have to compute the total on each side separately. Next the side which has the highest value, should be put on both side. Then, we have to find the difference from the lower value side. This value is called Balance c/d. This is the closing balance for the end of the given period. This is called Balance Brought down.

Problem 3Journalize the following transaction in the books of Kumar and prepare necessary ledger accounts :

1. Kumar started a Business with the capital of $.60,000.

3. Amount Received from Bank $.10,000

4. Purchased goods from Ravi for $.5,000

5. Returned goods to Ravi $ .1,000

6. Sold goods for cash $ 5,000

9. Sold goods to Lakshman for$.3,500

10. Amount of $. 3,750 paid to Ravi as full settlement.

12. Lakshman returned the goods worth $.500. Complaint about damages

20. Paid Salaries$.2,500

21. Dividend Received $1,000

22. Amount paid to Mohan through a bank at $1,500

24. Withdraw money from business for private use$.1,000

30. Withdraw money from Bank for Business use$.3,000

Solution :                    Journalisation (In the books of Kumar)


Preparation of ledger Accounts

Cash Account



From the above ledger accounts it can be noticed that

(i) Ravi Account is settled.

(ii) Some Accounts showing debit balances

(iii) Some Accounts showing credit balance