Ledger

Posting &
Subsidiary
Books of
Accounts
Introduction
 The transactions that are recorded in the journal are then posted in the principal
book called as ‘Ledger’
 The process of transferring the entries from journal to respective ledger
accounts is called ledger posting
 Balancing of ledgers is carried to find out differences at the end of the year
Introduction
 Ledger posting is entering information in the ledger, in respective accounts
from the journal for individual records
 The account debited is posted on the debit side and the account credited is
posted on the credit side of the same account
 At the end of the financial year the ledger accounts are closed and are totaled
and balanced - balancing of the ledger accounts.
Rules for posting of entries in the
ledger
 A separate account is opened for each account and entries from the journal are posted
in respective ledger account accordingly.
 The words like ‘To’ and ‘By’ are used while posting the entries in the ledger accounts.
‘To’ is used when accounts are posted in the debit side column of a particular account.
‘By’ is used when accounts are posted in the credit side column of a particular
account. These words may not have meaning but are used to represent the debit and
credit accounts.
 The account which is debited in the journal should also be debited in the ledger book
but the reference should be of respective credit account.
Balancing of Ledger
 At the end of every accounting year all the accounts which are operated in the
ledger book are closed, totaled and balanced
 Balancing of ledgers means finding the difference between the debit and credit
amounts of a particular account i.e. heavier total and lighter total difference
and recording that difference amount on the lighter total side
Steps for Balancing Ledger
 First of all, calculate the totals of debit and credit columns separately on a
rough sheet to avoid mistakes. Find out the difference between the heavier
total and lighter total by subtracting the lower from higher. The difference is
called a Balance amount.
 If the total of the debit side is heavier than that of the credit side, the balance is
called as “Debit Balance” and is written on the credit side (the side with lower
amount) of that particular account as “By Balance c/d” or “By Balance c/FD”.
Here, c/d means carried down and c/FD means carried forward.
Steps for Balancing Ledger
 Similarly, if the total of the credit side is more than that of debit side total, the
balance is called “Credit Balance”. The difference amount is written on the debit
side of the account as “To balance c/d” or “To balance c/fd”
 Once we get the heavier total it should be written in both the columns’ total. Draw
double lines across the total below the amounts which indicates the account is closed
and balanced.
 Last year’s closing balance is the opening balance of the current year. So, if there is
debit it should be shown on the debit side of a particular account as “To Balance
b/d” or “To Balance b/fd”. Here, b/d means brought down and b/fd means brought
forward.
Format
Subsidiary Books of Accounts
 Books that record the transactions which are similar in nature in an orderly manner
 Also known as special journals or Daybooks
 In big business institutions, it is not easy to record all the transactions in one
journal and post them into various accounts
 For the easy and accurate recording of all the transactions, the journal is
subdivided into many subsidiary books
 For every type of transaction, there is a separate book.
 Cash Book

Purchase Book

Sales Book

Purchase Return

Types
Book
Sales Return
Book
Bills Receivable
Book
Bills Payable
Book

Journal Proper
Excercise
State the appropriate subsidiary book to record the following transactions:
 Purchase of goods from Krishna
 Purchase of furniture in cash
 Depreciation on plant and machinery
 Sale of goods for cash
 Bad debts from Niharika