Ledger
Purpose and posting
The ledger is the principal book containing all accounts. Each journal entry is posted to the relevant ledger accounts: the debit entry goes to the debit side of one account and the credit entry to the credit side of another. Ledger accounts are balanced periodically. Write the smaller total on the side with the smaller amount as “Balance c/d”; bring it down on the opposite side as “Balance b/d”. A debit balance usually represents an asset or expense; a credit balance usually represents a liability, capital or income.
Worked example
Journal entry: Cash A/c Dr ₹50,000; To Capital A/c ₹50,000. Post ₹50,000 to the debit side of Cash A/c and the credit side of Capital A/c. If Cash later pays ₹8,000 for rent, Cash is credited ₹8,000 and Rent is debited ₹8,000. Cash account now has debit ₹50,000 and credit ₹8,000; balance c/d is ₹42,000 on the credit side, brought down as ₹42,000 debit. Capital shows ₹50,000 credit, which is a credit balance. The ledger therefore summarises effects that the journal recorded.
Traps that cost marks
Do not post the same entry twice. Balance c/d is not a transaction; it is a balancing figure, so do not include it in totals as a real payment. Do not write a debit balance on the credit side. Debtors normally show debit balances; creditors normally show credit balances. A bank account can show a credit balance when there is an overdraft. Keep the date and particulars consistent with the journal.