project on ledger and trial balance

4. WHAT IS A LEDGER?
 A ledger is an accounting book that
facilitates the transfer of all journal entries
in a chronological sequence to individual
accounts.
 The process of recording journal entries
into the ledger is called posting.

5. SALES
TYPES OF LEDGER
PURCHASE
LEDGER
GENERAL LEDGER
LEDGER

6. 1. The purchase ledger is a sub ledger in which you record
all purchases made by a business.
2. The purchase ledger contains the individual accounts of
suppliers from whom the business has made purchases
on credit.
3. The purchase ledger shows which purchases have been
paid for and which purchases remain outstanding.
4. The purchase ledger will ordinarily hold a credit
balance, unless credit notes or over-payments exceed
the credit balance.

7. SALES LEDGER
1. The sale ledger is a sub ledger in which you record
all sales made by a business.
2. The sale ledger contains the individual accounts of
customers to whom the business has made sales on
credit.
3. The purchase ledger will ordinarily hold a credit
balance.

8. GENERAL LEDGER
§ The general ledger accumulates information from
journals.
§ Each month all journals are totalled and posted to
the General Ledger.
§ The purpose of the General Ledger is therefore to
organise and summarise the individual
transactions listed in all the journals.

9. Format of a ledger sheet
Dr. _____A/C Cr.
Date Particular JF Amount Date Particular JF Amount

10. EXPLANATION OF LEDGER
• The ledger page is actually a T-account in
a more detailed format. It has the account
title and its corresponding account number
on top. It also has two sides, namely, the
debit side and the credit side. Each T-account
or ledger account has the following
columns namely:
a. Date
b. Particulars
c. Journal Folio
d. Amount
ACCOUNTS

11. DEBIT SIDE
o Date (debit side) - the date of the debit entry
is entered in this column.
o Explanation (debit side) - A brief explanation
of the debit entry is entered in this column.
o “F” or folio (debit side) - The journal page
number from where the debit entry was
taken is entered in this column.
o Debit - The amount of the debit entry is
entered in this column.

12. CREDIT SIDE
Date (credit side) - the date of the credit entry is
entered in this column.
Explanation (credit side) - A brief explanation of
the credit entry is entered in this column.
“F” or folio (credit side)- The journal page
number from where the credit entry was taken is
entered in this column.
Credit - The amount of the credit entry is
entered in this column

13. EXERCISE 1
We will journalise the following transactions in the
books of ABC Company and ledger accounts will be balanced on
15th August, 2008.
2008
Aug. 1 Purchase goods for Rs. 1,000.
Aug. 10 Goods sold for Rs. 5,000
DATE PARTICULARS L.F DEBIT(Rs) CREDIT(Rs)
2008
Aug. 1
Purchase A/C Dr.
To Cash A/C
(Being goods sold)
1000
1000
Aug. 10
Cash A/C Dr.
To Sales A/c
(Being goods sold)
5000
5000
In the books of
ABC Company

14. LEDGER ACCOUNTS
Dr. Purchase A/C Cr.
Date Particulars JF. Amount
(Rs)
Date Particulars JF. Amount
(Rs)
Aug.1
Aug.16
To Cash A/C
To Balance b/d
1000
1000
1000
Aug.15 By Balance c/d 1000
1000

15. Dr. Cash Account Cr.
Date Particulars JF. Amount
(Rs)
Date Particulars JF. Amount
(Rs)
Aug.1
Aug.16
To Sales A/C
To Balance b/d
5000
5000
4000
Aug.15
Aug.15
By Purchase c/d
By Balance c/d
1000
4000
5000

16. LIMITATIONS
 Purchase as well as Sales are considered as a
single account i.e. goods account.
 It is easy when the number of transaction are
less.
 But if the organization is big and number of
transactions are large, goods account Is opened
with different names such as Purchase
Account, Purchase Return Account, Sales
Account, and Sales Return Account.

18. Definition of 'Trial Balance'
A bookkeeping worksheet in which the balances of
all ledgers are compiled into debit and credit
columns.
A company prepares a trial balance periodically,
usually at the end of every reporting
period.
The general purpose of producing a trial balance is
to ensure the entries in a company's bookkeeping
system are mathematically correct.

19. Types Of Trial
Balance

20. Balanced Trial Balance
If all of your journal entries were posted properly in the
general ledger, your debit grand total and credit grand
total should balance, and you can move on in the
accounting cycle.
If the debit and credit grand totals do not balance, then
you have an error to find somewhere in your transaction
posting process. . Examples of problems that would not
show up in the trial balance include:
Putting the credit amount in the debit column and the
debit amount in the credit column for a particular
transaction;
Recording a transaction in an incorrect account;
Forgetting to record a journal entry as a general ledger
transaction;
Neglecting to make a journal entry at all.

21. Unbalanced Trial Balance
If you have an unbalanced trial balance, then you have an error
somewhere in the accounting process. Examples of problems
that can unbalance a trial balance include:
 Adding the debits and credits for the trial balance incorrectly;
 Putting the ledger account balances in the wrong debit/credit
column in the trial balance;
 Writing the wrong ledger account balances in the trial balance
columns;
 Miscalculating the ledger account totals;
 Posting a journal entry incorrectly to the general
ledger, whether using the wrong number or getting
your debits/credits mixed up

22. Example:
Following is an example of what a simple Trial Balance looks like:
ABC LTD
Trial Balance as at 31 December 2011
Account Title
Debit Credit
$ $
Share Capital 15,000
Furniture & Fixture 5,000
Building 10,000
Creditor 5,000
Debtors 3,000
Cash 2,000
Sales 10,000
Cost of sales 8,000
General and Administration
2,000
Expense
Total 30,000 30,000

23. LIMITATIONS OF A TRIAL BALANCE
A trial balance does not prove that all transactions have
been recorded or that the ledger is correct.
Numerous errors may exist even though the trial
balance columns agree.
The trial balance may balance even when:
A. a transaction is not journalized,
B. a correct journal entry is not posted,
C. a journal entry is posted twice,
D. incorrect accounts are used in journalizing or posting,
E. offsetting errors are made in recording the amount of
the transaction.