The book that contains a classified and permanent record of all the transactions of a business is called the Ledger.
Features of ledger are: it is a principal book of accounts, classified under appropriate heads called accounts, contains condensed and summarised record of transactions, provides information for drawing conclusion, etc.
Ledgers are necessary as they provide information about: debtors and creditors, purchase, sales, returns, etc, types of assets and their values, expenses and incomes and cash and bank balances.
Journal and ledger are interrelated as transactions are first recorded in the journal and then in the ledger. Order of occurrence is followed in the journal and analytical order is followed in the ledger.
Ledger accounts are classified as debtors, creditors and general ledger.Folioing is the process of entering the page number of concerned transaction.
Advantages of ledger are that all the transactions related to an account are collected at one place; any type of information relating to the business can be easily obtained, etc.
Posting refers to the process of transferring all entries from journal or subsidiary books to the ledger. When in a journal entry, two or more accounts are debited and only one account is credited or vice versa, the entry is known as Compound Journal Entry.
Balancing a Ledger Account is the process of equalising two sides of an account. Steps to balance are determining the difference between the two sides, put the difference as the last item on the shorter side of the account, if the difference amount is written on the debit side, then write as ‘To balance c/d’ and if the difference amount is written on the credit side, then write as ‘By balance c/d’.
There are rules for posting from the subsidiary books like cash book, purchase book, sales book, purchase return book, etc.