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Gorika Mehta
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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:

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    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

    DATE PARTICULARS J.F AMOUNT DATE PARTICULARS J.F AMOUNT
     Jan1 To Capital a/c 75,000 Jan1 By Purchases a/c 40,000
     Jan3 To Sales a/c 60,000 Jan2 By Machinery a/c 25,000
     Jan4 To Commission a/c 5,000 Jan6 By Wages a/c 10,000
    Jan6 By Balance c/d 65,000
    1,40,000 1,40,000

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

    Machinery a/c

    DATE PARTICULARS J.F AMOUNT DATE PARTICULARS J.F AMOUNT
    To cash a/c 25,0000 By Balance c/d 25,000
    25,000 25,000

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

    Hope this helps.

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