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.