The principles of bookkeeping and the ledgers

THE PRINCIPLES OF BOOKKEEPING AND THE LEDGERS 
Bookkeeping

It is the art of collecting and recording financial transactions. It is just a part of financial accounting.

The bookkeeping principles was introduce by FRA  LUCA  PACIOLI, an Italian

Ledgers

A ledger is a principal or main book of accounts. That is a book that contains several accounts which are related in a particular way. There are two main types of ledgers namely, personal ledgers and impersonal ledger.

1. Personal Ledgers

This contains the accounts of individuals and business. These are the sales ledger and the purchases ledger.

2. Impersonal Ledger

This one contains accounts that are not in the name of individuals or businesses. This is referred to as the

Sales Ledger

It contains accounts of all credit customers or receivable. All transactions relating to debtors are therefore recorded in this book.

Purchases Ledger

This contains accounts of all credit suppliers or payables. All transactions relating to creditors are therefore recorded in this book.

General Ledger

The general ledger contains all other accounts apart from those in the name of an individual or a business. In most large organizations, the general ledger can be subdivided into; 

1.      Nominal Ledger: This contains accounts in respect of income and expenses.

2.      Real Ledger: This contains accounts in respect of some assets and liabilities apart from those in the personal ledgers.

Private Ledger

This contains accounts in respect of transactions that are to be kept confidential. Such transactions are of private interest to the owner(s). Such accounts include capital account and drawings account.

THE TYPES OF LEDGERS THEREFORE ARE AS FOLLOWS

1.      Sales Ledger

2.      Purchases Ledger

3.      General Ledger or Impersonal Ledger

4.      Private Ledger

5.      Cash Book ( falls under real ledger)

<<Back to Home Page