Define a ledger. Why is it known as the principle book of account ?

Meaning of Ledger: 

Journal is a memorandum book to record transactions date wise. On a particular date what are total purchases, total sales, debtors, creditors, incomes, expenses may not be known as journal.

To get information about the above lets entries passed in journal are classified on the basis of their nature in another book which is known as ledger. An account represents a detailed record of changes that have occurred in a particular asset, liability, expense, loss, gain or capital during the accounting period.

All these separate accounts are kept in a loose leaf binder, and the entire group of accounts is called a ledger. Utility of ledger. The ledger is a master record of all the accounts of a business unit. It is a principal book of double entry system of accounting which provides all important information.

Separate accounts are maintained on the basis of their nature, so all information relating to transactions may be obtained through ledgers, such as to whom what is payable’, from whom what is receivable, what are the position of asset and liabilities of the business.

Ledger helps us preparing the trial balance to ensure the arithmetical accuracy of the account. Moreover, ledger assist us in preparing trading, profit & loss account and the Balance Sheet.

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