The Ledger is the principal book of accounts where all journal entries are classified and posted account-wise. It is the permanent record of all financial transactions.
Format of a Ledger Account: Each account has a debit side (left) and credit side (right) with columns for Date, Particulars, J.F. (Journal Folio), and Amount.
Posting Rules: - From Journal: Debit entry is posted to the debit side of that account, credit entry to the credit side. - From Subsidiary Books: Individual entries go to personal accounts; totals go to nominal accounts.
Balancing Ledger Accounts: 1. Total both sides 2. Put the difference on the shorter side as "Balance c/d" (carried down) 3. Bring forward the balance on the opposite side as "Balance b/d" (brought down)
Types of Balances: - Debit balance = Asset or Expense (appears on debit side as b/d) - Credit balance = Liability, Capital, or Income (appears on credit side as b/d)
Personal accounts are balanced at the end of the period. Nominal accounts (expenses, incomes) are transferred to the Trading or P&L Account and not carried forward. Real accounts show debit balances representing assets.
Exam tip: ICAI may ask you to prepare ledger accounts from given journal entries. Always show the balancing clearly with c/d and b/d entries.