Ledgers are terms that we must know when studying accounting. On this page, we will specifically discuss the Definitions of ledgers, their functions, along with the types of ledgers we need to know.
The Big Book Definition
In the world of financial or accounting records, ledgers are interpreted as a place to transfer accounting records from daily journals, to group similar financial transactions into accounts or estimates.
Broadly speaking, the accounts are divided into 3 groups, namely assets (assets), liabilities, and capital (equity). Following is a brief explanation of each of these accounts.
- Assets (assets)
Accounts that fall into the asset class are accounts that are able to generate profits in the future. These assets can be further divided into current assets and fixed assets.
Current assets can be in the form of cash, cash, short-term deposits, as well as other assets that can be easily disbursed in cash.
While fixed assets are assets that take a long time to be disbursed. For example, buildings, vehicles, machinery, heavy equipment, etc.
- The obligation
Obligations can be interpreted as debt that must be paid by a line of business. Accounts included in the liability group are business and sales transaction advances.
- Equity (capital)
Equity is the capital deposited by the owner to run his business or business. Thus, equity can also be called owner’s capital.
From the explanation above, then we can take a formula like below:
Assets = Liabilities + Equity
So, assets owned by a company can be obtained from loans which later will incur liabilities or owner’s capital.
Flow of Accounting Records
Recording of transactions carried out must be based on valid expenditure and receipt evidence, in this case each company has their respective policies.
The items contained in the daily journal are:
- The date of the transaction that matches the evidence of expenditure or receipt
- Transaction description that contains the type of account that is debited and also credited
- Reference number
- Account number to group transactions
- Debit and credit column
From the daily journal, financial transactions are transferred to the ledger. This step is called by the term book-entry.
Transactions are moved to the ledger based on the account number recorded in the daily journal. In the ledger there will be many accounts that are given different names and numbers depending on the type of business, transaction, number of assets, etc.
This ledger records various changes in each additional transaction that occurs within the company.
For this reason, in the ledger we can see the balance and changes in credit debit transactions that occur in each account.
Furthermore, the accounts contained in the ledger at the end of each period will be summarized in trial balance as the basis for making an income statement balance sheet.
General Ledger Function
The function of a general ledger in a company is very important, because in this ledger there is a summary of transaction data that has been written in a daily journal.
In addition, ledgers can also be used as a tool that classifies financial data, ranging from small to large. So you can find out the differences in incoming financial data.
All data written in a journal will then be included again in the general ledger as material for later financial statements.
Types of Ledgers
There are several types or formats of ledgers that are commonly used, including:
- T shape
As the name implies, ledgers in the form of T are made to resemble the letter T. At the top of the letter T will be written name and account number. While the left side of the line perpendicular to the letter T will be filled with debit. While the right side is filled with credit.
- Skontro shape
General ledger with skontro form is still fairly simple, if the general ledger T only contains debit and credit, then there are two additional columns for information on debit and credit transactions.
- Form of a single-columned staffel
The form of a single-columned staff member in an accounting ledger is the form of a book that is used for the purpose of explaining the transaction quite a lot.
- Form of staff in a double balance column
In the accounting ledger the form of a staffel book in a double balance column is almost the same as a staffel book in a single balance column. The difference lies in the balance column divided by two columns, namely the debit column and the credit column.
- The Big Book of Helpers
For some accounts a subsidiary ledger or subsidiary ledger is needed which functions to record the account in more detail.
The types of subsidiary ledgers include:
- The accounts receivable subsidiary ledger contains a detailed list of the company’s accounts receivable from each of its customers.
- The accounts payable subsidiary ledger contains a detailed list of the company’s debt to each supplier.
- Inventory subsidiary ledgers. If the general ledger records all purchase and expenditure transactions, the subsidiary ledger records changes in inventory transactions for each type of item.
General ledgers and subsidiary ledgers have 2 functions, namely:
- As a supervisory account
- As a helper account
The move step from the journal to the ledger
How to post transactions from a journal to the ledger is quite easy. Here are the steps that you can work on:
- Copy the transaction date in the journal to the date in the appropriate ledger account
- Move the debit or credit nominal in the journal to the general ledger account
- Fill in the information column with the name of the transaction carried out
- Record the journal page number in the ref column in the ledger account