The document provides information on ledgers, including defining ledgers as the principal book or computer file for recording economic transactions with debits and credits. It discusses the types of ledgers like general, sales, purchase, and distributed ledgers. It also explains the components of ledgers including assets, liabilities, owner's equity, revenue, and expenses. Finally, it provides learning objectives and instructions for setting up subsidiary and general ledgers, including dividing sheets into columns for date, journal entry, debit amount, credit amount, and balance and filling in the ledger with transactions.
1. INFORMATION SHEET 2.1.1
Introduction to Ledger
Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Determine the Types to Ledger;
2. Identify what composes Subsidiary and General Ledger;
Ledger is the principal book or computer file for recording and
totaling economic transactions measured in terms of a monetary
unit of account by account type, with debits and credits in
separate columns and a beginning monetary balance and
ending monetary balance for each account.
2. A. Common Types of Ledger
• Sales ledger records accounts receivable. This ledger consists
of the financial transactions made by customers to the
company.
• Purchase ledger records money spent for purchasing by the
company.
• General ledger representing the five main account types:
assets, liabilities, income, expenses, and Capital.
• Distributed ledger, sometimes called a shared ledger, is a
consensus of replicated, shared, and synchronized digital
data geographically spread across multiple sites, countries,
and/or institutions
3. • Assets - Assets are those things that add value to your company.
There are fixed assets, like property, and there are assets that
change in value like your bank account. Assets are your resources.
They can be used to purchase necessary goods.
• Liabilities - A liability is something you owe money on, a financial
obligation that has come about through past transactions. Liabilities
include loans and credit cards.
• Owner's Equity - Owner's equity is the amount that will appear on
your balance sheet that determines the value of your business.
Equity is equivalent to company assets less company liabilities.
• Revenue - Revenue is the income a company generates through its
various business activities. You may hear revenue referred to as "top
line" since on a company's income statement, it occurs on the first
line.
• Expense - Expenses are the outflows of money that come about
when you pay payroll, utilities, or purchase office supplies. They
differ from liabilities in that they are not the whole debt (but
payment on debts might go under expense).
4. INFORMATION SHEET 2.1.2
Subsidiary and General Ledger
Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Learn the concepts of Subsidiary and General Ledger;
2. Differentiate Subsidiary and General Ledger;
Posting transactions in the general ledger is part of the
accounting process. Journal entries are created first and then
they have to be posted to subsidiary or general ledger to affect
reports. If you don't post journal entries, transactions will not
affect any accounts and the information is basically non-
existent for standard financial reports. So, let’s first discuss
about the types of ledgers and their significance.
5. Type of Ledger
• Collect information from
• General Ledger
• The general ledger accumulates information from journals.
Each month all journals are totalled and posted to the
General Ledger.
• Subsidiary Ledger
• The subsidiary ledger is a group of similar accounts whose
combined balances equal the balance in a specific general
ledger account.
6. INFORMATION SHEET 2.1.3
Preparing a Subsidiary and General Ledger
Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Set-up a Subsidiary and General Ledger;
1. Divide a piece of paper into six columns. Make the second
column larger than the other columns.
7. • 2. Label the first column "Date." Label the second column
"Journal Entry." Label the third column “Ref” that stands for
reference. Label the fourth column "Debit Amount." Label the
fifth column "Credit Amount." Lastly, Label the sixth column
"Balance."
• 3. Fill out the ledger with each transaction. Enter the date
of the transaction under the "Date" column. Enter the journal
entry for the transaction under the "Journal Entry" column.
Start the journal entry with the debit entries. End the journal
entries with the credit journal entries. The credit journal
entries are indented. Enter the debit amounts under "Debit
Amount," lining up with the right account being debited, and
enter the credit amounts under "Credit Amount," lining up
with the right account being credited. Finally, run balance on
“Balance” column.
8. INFORMATION SHEET 2.1.4
Prepare Ledger using Technology
Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Create Subsidiary and General Ledger Accounts in Excel.
9. General Journal transaction data into six columns as follows:
• Merge A1 to F1 and write the Account Title
• Enter Entry Date in A2.
• Enter Account Name in B2.
• Enter Ref for References in C2.
• Enter Debit in D2.
• Enter Credit in E2.
• Enter Balance in F2.
10. Subsidiary Ledger transaction into six columns as follows:
• Merge A1 to F1 and write the transaction title
• Enter Entry Date in A2.
• Enter Account Name in B2.
• Enter Ref for References in C2.
• Enter Debit in D2.
• Enter Credit in E2.
• Enter Balance in F2.