Ledger

A ledger is a crucial record-keeping book or digital system used in accounting and financial management to document all financial transactions. It provides a permanent summary of all debits and credits that occur within an organization. Typically, it consists of various accounts such as assets, liabilities, equity, income, and expenses. Entries made in the ledger come from the journal, which records transactions in chronological order. The ledger organizes them by account, allowing for easier financial analysis and the creation of financial statements like the balance sheet and income statement.

Key features of a ledger include:

• Double-entry bookkeeping: Each transaction is recorded with both a debit and a credit.
• Account categorization: Helps in tracking the financial position of different accounts.
• Trial balance: A check to ensure that total debits equal total credits.
• Audit trail: Provides a clear trail of financial activity for auditing and accountability purposes.

Maintaining an accurate ledger is essential for ensuring financial transparency, accountability, and compliance with accounting standards.