Ledger Account and Account Head
Meaning of Ledger Account and Account Head in Financial Accounting with example.
Ledger Account :
A ledger Account is a summarized statement of transactions related to a particular Person, Asset/Liability, or Income/Expense for a particular period showing opening and closing balance.
A Ledger Account is posted from the Journal Register or Journal Book,commonly in a date wise ascending order.
The transaction date of Ledger Account is same as the transaction date of Journal Register.
In practical,Accountants omit Recording of Journal Register and post Ledger Account directly from Primary documents like Credit Voucher,Debit Voucher,Purchase Invoice,Sales Invoice,Bank Payment Acknowledgement,Bank deposit slip or Pay-in-slip etc. to avoid more time consumption.
Name and Address of the Business Organization is mentioned on the top of the Ledger Account.
Below the Name and Address of Organization, Name and Address of other party Ledger Account is mentioned in case of Personal Accounts like Sundry Creditors,Sundry Debtors,Banks,Money Lenders etc.
In case of Nominal and Real Account,only Name of the Ledger Account is mentioned.
Period of Ledger Account is mentioned like
- for the period from date 01/04/2019 to 31/03/2020
- from dt.01/04/2019 to 31/03/2020
- for the F.Y - 2019-20
- or any particular period of Month,Quarter,from date to date etc.
A Ledger Account consists of five columns
Date Column : 'Date' is written in actual Ledger format
Particulars
Journal Folio i.e Journal Register Page No. : 'J.F' is written in actual Ledger format
Debit Column with Currency symbol : 'Dr.(₹)' is written in actual Ledger format
Credit Column with Currency symbol : 'Cr.(₹)' is written in actual Ledger format
Opening Balance is written by mentioning the first date of the Accounting period.
In a newly started business the Opening Balance is zero(0)
But for an existing business or particular period with transactions,Opening Balance is same as the Closing Balance of previous Period or Accounting Period.
Closing Balance is written by mentioning the last date of the Accounting period.
Closing Balance is the difference amount of Debit total amount and Credit total amount.
Ledger Account Sample Format with Example :
Let's see the different formats of Ledger Account for the below mentioned transactions of a Business Organization.
In the Books of 'M/s.Sachin Traders, Cuttack -753009, Odisha' prepare Ledger Account of Supplier 'Krishna Enterprises, Cuttack-753002, Odisha' for the below mentioned transactions.
Date : 02/04/2020
Goods purchased from M/s. Krishna Enterprises for ₹231438/- as per Invoice No-925.
Date : 31/05/2020
Amount paid to Krishna Enterprises through Indian Bank Current Account Cheque No.700105 for ₹231438/-.
Date : 02/06/2020
Goods purchased from Krishna Enterprises for ₹403721.88/- as per Invoice No-1047.
Date : 01/07/2020
Amount paid to Krishna Enterprises through RTGS from HDFC Bank Cash Credit Account for ₹401833.88/-.
Date : 02/09/2020
Goods purchased from Krishna Enterprises for ₹136703.80/- as per Invoice No-1098.
Date : 01/10/2020
Goods purchased from Krishna Enterprises for ₹571721.80/- as per Invoice No-1162.
Date : 02/10/2020
Amount paid to Krishna Enterprises through NEFT from Indian Bank Current Account for ₹136703.80/-.
Date : 31/10/2020
Amount paid to Krishna Enterprises through RTGS from Indian Bank Current Account for ₹571721.80/-.
FORMAT (In all the below mentioned ledger formats Date, Particulars and J.F column are common).
1. Ledger Account with Debit and Credit Column.
In the Books of M/s. Sachin Traders
Krishna Enterprises
Cuttack - 753002, Odisha
2. Ledger Account with Debit Column,Credit Column and Balance Column.
Krishna Enterprises
Cuttack - 753002, Odisha
3.'T' shape Ledger Account.
.png "T shape Ledger Account")
Account Head :
Account Head or Head of Account in Accounting is a primary head under which all the similar nature of Ledger Accounts are considered.
Example :
Account Head: Indirect Expenses
Some Ledger Accounts under Account Head Indirect Expenses are
- Salary A/c
- Bonus A/c
- Travelling & Conveyance A/c
- Telephone Expenses A/c
- Printing & Stationeries A/c
- Advertisement A/c
- Postage & Telegram A/c
- Repair & Maintenance A/c
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