It is a principal book of accounts where similar transactions relating to a particular account are recorded. Ledger book contains accounts and is one of the most important books of account.
It is defined as a book or register which contains a permanent record of all transactions in a summarized and classified form. Since final information subject to the financial position of a business emerges only from accounts, hence it is also called the Principal Book. The ledger book contains all the information regarding the business and becomes very difficult to prepare final accounts in the absence of a ledger.
The proprietor is not interested to know the effect of individual transactions on the financial statements rather he wants the accumulated effect on a particular account at the end of a particular period. It provides necessary information regarding various accounts such as:
-Personal accounts in the ledger show how much money the firm owes to its creditors
-Amount to be recovered from its debtors.
-Real accounts show the value of properties and also the value of the stock.
-Nominal accounts reflect the sources of income and also the amount spent on various items.
-Financial position of the business concern can be ascertained easily at any time with the help of a ledger only.
It provides the following necessary information:
- How much the firm owes to its creditors
- Amount to be received from its debtors.
- Real A/c shows the value of properties and also the
- value of the stock.
- Nominal accounts reflect the sources of income and also the amount spent on various items.
The Financial position of the business concern can be ascertained easily at any time with the help of a ledger only. Below is the specimen of a Ledger A/C
