Ledger

A ledger[1] is the principal book or computer file for recording and

totaling economic transactions measured in terms of a monetary unit
of account by account type, with debits and credits in separate
columns and a beginning monetary balance and ending monetary
balance for each account.

Contents General ledger.

Overview
Types on the basis of purpose
Types on the basis of format
Physical ledger
Digital ledger
Etymology
See also
Notes
References
Further reading

Overview
The ledger is a permanent summary of all amounts entered in supporting journals which list individual
transactions by date. Every transaction flows from a journal to one or more ledgers. A company's financial
statements are generated from summary totals in the ledgers.[2]

Ledgers include:

Sales ledger, records accounts receivable. This ledger consists of the financial transactions
made by customers to the company.
Purchase ledger records money spent for purchasing by the company.
General ledger representing the five main[3] account types: assets, liabilities, income,
expenses, and capital.

For every debit recorded in a ledger, there must be a corresponding credit so that the debits equal the credits in
the grand totals.

Types on the basis of purpose

The three types of ledgers are the general, debtors, and creditors.[4] The general ledger accumulates
information from journals. Each month all journals are totaled and posted to the General Ledger. The purpose
of the General Ledger is therefore to organize and summarize the individual transactions listed in all the
journals. The Debtor Ledger accumulates information from the sales journal. The purpose of the Debtors
Ledger is to provide knowledge about which customers owe money to the business, and how much. The
Creditors Ledger accumulates information from the purchases journal. The purpose of the Creditors Ledger is
to provide knowledge about which suppliers the business owes money to, and how much.

Types on the basis of format

A ledger can have the following two formats.

Physical ledger

This type of ledger is made up of paper. It can be physically touched. Ledgers were invented several centuries
ago and this used to be the only available form until the widespread adoption of computers, in the mid to late
20th century.

Digital ledger

This type of ledger is a digital file, or collection of files, or a database. It can be manipulated only by means of
computer programs, since it does not have a physical form.

Etymology
The term ledger stems from the English dialect forms liggen or
leggen, meaning "to lie or lay" (Dutch: liggen or leggen, German:
liegen or legen); in sense it is adapted from the Dutch substantive
legger, properly "a book laying or remaining regularly in one place".
Originally, a ledger was a large volume of scripture or service book
kept in one place in church and openly accessible. According to
Charles Wriothesley's Chronicle (1538), "The curates should provide Ledger from 1828
a booke of the bible in Englishe, of the largest volume, to be a ledger
in the same church for the parishioners to read on."

In application of this original meaning the commercial usage of the term is for the "principal book of account"
in a business house.

See also
Bookkeeping
Debits and credits
Specialized journals
Final Accounts
Distributed ledger, sometimes called a shared ledger, is a consensus of replicated, shared, and
synchronized digital data geographically spread across multiple sites, countries, and/or
institutions.[5]

Notes
 1. From the English dialect norms liggen or leggen, to lie or lay; in sense adapted from the Dutch
substantive legger
2. Haber, Jeffry (2004). Accounting Demystified. New York: AMACOM. p. 15. ISBN 0-8144-0790-
0.
3. Whiteley, John. "Mr" (http://moncton-accountant-john-whiteley.abusiness.ca/main-sections-of-a-
general-ledger/). Moncton Accountant | John Whiteley CPA. John Whiteley CPA. Retrieved
1 July 2017.
4. "What is a Ledger?" (http://www.leoisaac.com/fin/fin006.htm). Online Learning for Sports
Management. Retrieved 27 September 2018.
5. Distributed Ledger Technology: beyond block chain (https://www.gov.uk/government/uploads/s
ystem/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf) (PDF)
(Report). UK Government, Office for Science. January 2016. Retrieved 29 August 2016.

References
This article incorporates text from a publication now in the public domain: Chisholm, Hugh,
ed. (1911). "Ledger". Encyclopædia Britannica (11th ed.). Cambridge University Press.

Further reading
Business Owner's Toolkit: General Ledger (http://www.toolkit.com/small_business_guide/sbg.a
spx?nid=P06_1450) from Wolters Kluwer
General Ledger Entries (http://www.netmba.com/accounting/fin/process/ledger/) from NetMBA
Business Knowledge Center

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