• Thu. Mar 23rd, 2023

Explain about Ledger and Trail Balance in Accounting ?

ByRohit Sharma

Jun 3, 2020


Where the individual accounts are normally maintained in a book reffred to as “Ledger”.It is the most important book of accounts,because it includes all the summaries of transaction.Therefore it is called the Principal book.It is provides a permanent record of the fianancial transactions of a firm.

Meaning of Ledger,

Ledger is defined as a “book which contain,in a summarised and classified from a permanent record of all trasaction”.It is the most important book of account.Since final information pertaining to the financial position of a business emerges only from accounts.

Utility of Ledger

It is difficult to prepare final accounts in the absense of ledger.Ledger provides necessary information regarding various accounts.The financial position of the business concern can be ascertained easily at an time with the help of ledger.Ledger is subdivided into-

Sales Ledger-A Sales Ledger,Containing accounts with customer or debtors.This is also called Debtors:Ledger or Sold Ledger.

Purchased Ledger- A Purchased Ledger,recording the accounts of suppliers or creditors. Alternative names for this ledger are Bought Ledger or Creditors Ledger.

Private Ledger-A Private Ledger,in which accounts of capital, Drawings and any other accounts which are not to be divulged to the Ordinary Ledger clerks are kept.

Trail Balance

Meaning of Trail Balance

Under Double Entry System,for every debit entry there is a corresponding credit entry.Consequently,the total amount of debit entries should be equal to the total of all the credit entries. After posting the accounts in the ledger,a statement is perpared to show separately the debit and cerdit balances.Such a statement is known as trial balance.The basic necessity is that balances of debit and credit sides should always tally.An agreement indicates reasonable accuracy of the accounting work,if two sides do not agree there is definetly some error or errors.This statement is called the TRAIL BALANCE This flows from the fact that under the double entry system,the amounts written to the debit sides of various accounts will always be equal to the amounts entred on the credit sides of other accounts and vice versa.Hence totals of debit sides must be equal to the totals of credit sides.Once this agreement is established,one has confidence that the accouting work is presumably free from error.

Utility of Trail Balance

The trail balance enables one to establish whether the posting and other accounting processes have been carried out without committing arithmetical errors.In others words,the trail balance helps to establish arithmetical accuracy of the books.Why sometimes “SUSPENSE A/c” is required in perparing a Trail Balance? Sometimes suspense A/c.is required in perparing a trail Balance because- a)    If trail balance is not agreeing,the diffrence is put in the trail balance in the name of suspense A/c. b)    When there is not much scope for making delay in finding out the reasons of disagreement of Trail balance,and perparation of final accounts cannot be:delayed the difference is to be wiped of through Suspense A/c. c)    When exact identify of a party cannot be known clearly,it is to be passed through Suspense A/c.for the time being.

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