1.0 INTRODUCTION
In Note one, we defined Book-Keeping as the Science of
recording and classifying all the transactions of the business which involve
the transfer of money or money's worth, so as to show, without undue delay, the
financial position of the business in relation to itself, the owners or
shareholders, and outside persons.
For proper accounting record, all the business transactions
are recorded in a special book of accounts known as Ledger.
The Ledger is the main or principal book of accounts having a
number of pages which are numbered consecutively. One account is usually
assigned on page in this book.
2.0 OBJECTIVES
At the end of this note, you should be able to:
• define a ledger
• explain the ledger as principal book of accounts
• explain the ruling of a ledger account
• explain the treatment of business transactions in the ledger
book
• understand the posting of transactions in the ledger and how
to balance the ledger accounts.
3.0 MAIN CONTENT
3.1 The Ledger
3.2 Definition
A Ledger account may be defined as a summary statement of all
the transactions relating to a person, assets, expenses, or incomes which have
taken place during a given period of time and show their net effect.
3.3 Ledger as a Principal Book of Accounts
The Principal Book of Accounts is known as the Ledger. Each of
the business transactions is recorded in the form of an account in the Ledger.
A Ledger has a number of pages which are numbered consecutively. One account is
usually assigned on page in the Ledger.
However, if the transactions, pertaining to a particular
account are more, it may be assigned more than one page in the Ledger. An index
of various accounts opened in the ledger is given at the beginning of the
ledger for the purpose of easy reference. You should note that ledger as the
principal book of accounts helps us in achieving the objectives of accounting.
Ledger also gives answers to the following questions:
1. What are the total sales to an individual customer?
2. What are the total purchase from an individual supplier?
3. How much amount is owed by others?
4. How much amount is owed to others?
5. What is the amount of profit or loss made during a
particular period?
6. What is the financial position of the firm on a particular
date?
3.4 Specimen of a Ledger Account 
The books required for a proper record of the transactions of
a business is called the Ledger, though it will be shown later how the
recording is assisted, in certain circumstances, by the use of other books.
The Ledger may be recognised by the ruling of its page, and a
specimen page, unused, is shown above for this purpose.
EXPLANATION
From this above ruled ledger account, you should be able to
see that it is divided into two equal sides by two vertical thin rules in the
middle. The left-hand side of the ledger account is known as the receiving side
and the right-hand side as the given side.
The technical terms for these are the Debit side (indicated by
the abbreviation Dr.) and the Credit side (indicated by the abbreviation Cr.)
respectively.
Each of the two sides is further divided into four columns for
date, particulars, folio and amount.
The first column is for the date of
the transaction i.e. the month and day of the month on which a particular
transaction occurred.
The second column is for the name of the corresponding account
i.e. name of the second account involved in the transaction.
The third column is for the folio i.e. page where the
subsidiary book corresponding ledger account in which one can find further
information about the transaction in the particular column.
The last column i.e. forth column is for the amount involved
in the transaction.
Formerly, debited entries were prefaced by the word .'To' and
credit entries by the word 'By'.
This is no longer considered to be necessary.
3.5 Treatment of Business Transactions in the Ledger
Account
Having made the above explanations, you are advised to have
before you a properly ruled ledger paper and make the entries as each
transaction is dealt with.
The following are a few simple transactions together with
explanations .28
as to their treatment in the
ledger accounts.
1st Jan. 2002. Started business with N10,000
(The cash Account is debited with 44 10,000 and Capital
Account is credited)
N K
2nd Jan. 2002. Paid into Bank…………………………….…. 2,000 : 00
(The Bank Account is debited and Cash Account Credited).
7th Jan. 2002. Sold goods on credit to Ade…………………… 800: 00
(Ade Account is debited and Sales Account is credited).
10th Jan.2002 Purchased goods from C.S.A. Ltd……………. 3,000 : 00
(Purchases Account is debited and C.S.A Ltd Account is
credited)
15th Jan. 2002. Paid C.S.A Ltd by cheque………………….. 3, 000 : 00
(C.S.A Ltd Account is debited and Bank Account is credited)
21st Jan.2002. Received Cash from Ade……………………….800 : 00
(Cash Account is debited and Ade Account is credited)
28th Jan. 2002. Cash Sales……………………………………..1,000 : 00
(Cash Account is debited and Sales Account s credited)
30th Jan 2002. Paid rent to Landlord cash……………………..25 0: 00
(Rent Account is debited and Cash Account is credited)
3.6 Postings into Ledger Accounts
Personal account 
Real Account
3.7 Balancing of Ledger Accounts
Various accounts in the ledger are balanced with a view to
preparing the Final Accounts. The procedure of balancing accounts is as
follows:
1. Take the totals of the two sides of the account concerned.
2. Ascertain the difference between the totals of two sides.
3. Enter the difference in the amount column of the side
showing less total writing against the difference in the particulars column
"To Balance c/d" (c/d means carried down) on the debit side of the
account and "By Balance c/d" on the credit side of the account. Note
that in this way, the totals of the two sides will agree.
4. The balance is brought forward at the beginning of the next
business period-if "To -Balance c/d" is written on the debit side
before balancing, it is brought forward on the credit side and "By balance
b/d" (b/d means brought down) is written against the balance in the
particular column and vice versa.
Note:
An account is said to have a debit balance if the total of its
debit side is more than the total of its credit side. On the other hand, an
account is considered to have a credit balance if the total of its credit side
is more than the total of its debit side.
The two accounts above are
examples of balancing of edger accounts. In 3.5, Ade and C.S.A Ltd. Accounts
are already balanced. The totals on both sides of the two accounts are equal.
No figure is to be carried down on any of the two accounts at the end of the
period.
4.0 CONCLUSION
The two aspects of each transaction have been entered in the
ledger accounts, you will have observed from this note that the recording of
the two aspects has involved a debit entry and a corresponding credit entry,
but not in the same account.
An essential point to bear in mind again in this note is that,
every transaction must be entered in its two-fold aspect, and that this results
in a debit entry and a corresponding credit entry in the ledger accounts.
The book-keeping record is made for reference purposes. The information
contains in the ledger is readily available at any time. Total sales or total
purchases, for example, for the period can be ascertained at once by making
reference to the sales account or purchases account.
Again, the cash accounts gives full particulars of the cash
received and the cash paid out and simple subtraction, it is possible to
ascertain the amount of cash that should be in hand.
5.0 SUMMARY
In this note, we have dealt with the definition of ledger and
its rules. We also discuss the identification of the two accounts involved in a
business transaction and their treatment in the ledger account.
Various ledger accounts are balanced at the end of the period
by taking the totals of the two sides of each account in the ledger book. The difference
between the totals of the two sides is entered in the amount column of the side
showing less total. In this way, the totals of the two sides will
agree/balance.
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