Meaning of Ledger
Journal of a business is very useful but it does not reply the different queries as how much amount is due from debtors, how much is to be paid to creditors and what is the balance of a particular account etc. For the reply of all these queries the ledger is prepared from the Journal entries. Ledger is the set of accounts in which all types of account (personal, real or nominal) are kept. There can be two forms of ledger:
(a) Bound Ledger
(b) Loose Leaf Ledger
A ledger in traditional way, is normally kept in the form of bound note books. Maintaining a vast and diverse set of transactions in a single book is difficult in larger company companies. To address this issue, loose leaf closures are used instead of bound volumes. Appropriate sheets are introduced under loose leaf ledger. Additional pages may be added to any degree, finished accounts can be eliminated to decrease bulk, and any account can be modified to meet the demands of the businesses. This mode of maintaining ledger in the form of loose sheets is called loose leaf ledger.
Ledger Posting
The process of transferring the entries from Journal to Ledger accounts is called posting. Posting is the process of selecting debit or credit items account by account and recording them on the appropriate side of the relevant account. The posting procedure is completed after a week, fortnight, or month. For example, if rent as an expense is shown in the debit in Journal, this will be posted in the debit side of the Rent (Expenses) A/c in the Journal.
Rules of Posting in Ledger Account
At the time of posting of transactions from Journal to ledger the following points/rules should be kept in mind:
1. In the debit side of a ledger account, the word ‘To’ is used while in the credit side word ‘By’ is used.
2. All those accounts are opened in the Ledger which are given in the Journal.
3. All the debit items of an account given in Journal are posted in the debit side of the respective account. And all the credit items of an account given in Journal are posted in the credit side of the respective account in ledger.
4. The name of the account, in which posting is being made, is not written. But the posting is done by the name of other account given in the opposite side of that entry in the Journal.
5. At the time of posting if the page is full and account is not complete, its total is carried to the next page and then remaining posting is done.
