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    A ledger account consists of the financial transactions of a business. It is generally used by the accountants to record the summarized monetary transactions. It is also known as the principal book of accounts and books of final entry. As per my understanding, the 'Debit and Credit format' refers toRead more

    A ledger account consists of the financial transactions of a business. It is generally used by the accountants to record the summarized monetary transactions. It is also known as the principal book of accounts and books of final entry.

    As per my understanding, the ‘Debit and Credit format’ refers to a ‘Ledger account format’ which is as follows:

    (Image to be inserted here)

    Note:

    • The ledger account consists of two sides namely, debit and credit. The left-hand side represents the debit balance and the right-hand side represents the credit balance.
    • The posting into a ledger account is done from the journal entries of the company or the various subsidiary books.
    • Each Journal entry is moved into a separate ledger account.

    Example

    Considering the journal entries of ABC Ltd., post the same into ledger accounts.

    Cash a/c

    DATEPARTICULARSJ.FAMOUNTDATEPARTICULARSJ.FAMOUNT
     Jan1To Capital a/c75,000Jan1By Purchases a/c40,000
     Jan3To Sales a/c60,000Jan2By Machinery a/c25,000
     Jan4To Commission a/c5,000Jan6By Wages a/c10,000
    Jan6By Balance c/d65,000
    1,40,0001,40,000

    (The cash a/c has a debit balance as it is an asset.)

    Machinery a/c

    DATEPARTICULARSJ.FAMOUNTDATEPARTICULARSJ.FAMOUNT
    To cash a/c25,0000By Balance c/d25,000
    25,00025,000

    (The machinery a/c has a debit balance as it is an asset.)

    Hope this helps.

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