What Is a Ledger in Accounting?
Definition, how posting works, and a worked example.
Home › Accounting Glossary › Ledger
| Source | Posted from the journal |
|---|---|
| Next step | Trial balance |
| Topic | Financial accounting · Bookkeeping |
Ledger in plain English
The journal lists transactions in date order. The ledger re-sorts them by account, so you can see everything that happened to Cash, or to Rent, in one place and read its balance.
Worked example
The owner invests 10,000 and the business buys equipment for 2,000 in cash. The Cash account in the ledger looks like this:
| Cash account | |
|---|---|
| Debit | Credit |
| Capital 10,000 | Equipment 2,000 |
| Balance carried down 8,000 | |
| 10,000 | 10,000 |
The Cash account has a debit balance of 8,000.
- Posting to the wrong side of an account.
- Posting only one half of an entry, which makes the trial balance fail.
Frequently asked questions
What is the difference between a journal and a ledger?
The journal records transactions in date order. The ledger groups them by account and shows balances.
What is posting?
Copying journal entries into the correct ledger accounts.
What is a T-account?
A simple way to show a ledger account as a letter T, with debits on the left and credits on the right.
Keep learning
This page is for general learning. Accounting rules vary by country and standard.