2.12.3. The ledger
A ledger is the book of accounts where in the entries
transactions recorded in the journal are summarized. The process of
transferring the entries in a journal to the appropriate accounts in the ledger
is called posting. The two kinds of ledger are; general ledger
and subsidiary ledger as it the case of the journal.
Classification of accounts in the ledger
All accounts are calcified either as personal accounts or as
impersonal accounts. Personal accounts are those of debtors and creditors.
Impersonal accounts are divided into real accounts and nominal accounts.
Real accounts: Refer to accounts in which
properties are recorded and they remain open. They include assets like building
and machinery, liabilities and owner's equity.
10 S.N Maheshwari, an introduction to accountancy,
fourth edition, 1996
Nominal accounts: Are concerned with revenues
and expenses and they are closed at the end of each accounting period, for
example salaries expenses and sales.
Mixed accounts: These are accounts containing
both real and nominal components, which are separated in adjusted entries at
the end of the accounting period, for example, office supplies, inventory and
stationeries.
After the ledger, the trial balance is prepared. A trial
balance is listing, in ledger accounts order, of the individual ledger accounts
and their respective balances and adding together the debit balance at the same
time adding all the credit balances.
A trial balance has two purposes in the accounting information
processing cycle. It provides a check on the equality of the debits and credits
as shown in the ledger accounts at the end of the period. It provides financial
data in a convenient form to help in preparing financial
statements.11
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