Features of the Ledger Account: After recording the transactions in the journal, recorded entries are classified and grouped into by preparation of accounts. The book which contains all set of accounts (viz. personal, real and nominal accounts), is known as Ledger. It is known as principal books of account in which account-wise balance of each account is determined.

Features of the Ledger Account:

(i) The ledger account is divided into two sides – the left hand side is known as debit side while the right hand side is known as credit side. The abbreviations ‘Dr.’ and ‘Cr.’ are placed at the top left and right hand corners respectively as a custom.

(ii) The name of account is written in the top middle of the account.

(iii) J.F. denotes folio or page number on which its journal entry has been passed.

Specimen of Leger Accounts

A ledger account has two sides-debit (left part of the account) and credit (right part of the account). Each of the debit and credit side has four columns.

  • (i) Date
  • (ii) Particulars
  • (iii) Journal folio i.e. page from where the entries are taken for posting and
  • (iv) Amount.


The process of transferring the debit and credit items from journal to classif ed accounts in the ledger is known as posting.



  • 1. Separate account is opened in ledger book for each account and entries from ledger posted to respective account accordingly.
  • 2. It is a practice to use words ‘To’ and ‘By’ while posting transactions in the ledger. The word ‘To’ is used in the particular column with the accounts written on the debit side while ‘By’ is used with the accounts written in the particular column of the credit side. These ‘To’ and ‘By’ do not have any meanings but are used to the account debited and credited.
  • 3. The concerned account debited in the journal should also be debited in the ledger but reference should be of the respective credit account.

Typical Ledger Account Balances

We have seen how to balance various ledger accounts. It can be seen that while some accounts will show debit balance, while the other will show credit balance. Is there any relationship between the type of account (whether it is the account of asset, liability, capital, owner’s equity, incomes or gain, expenses or losses) and the kind of balance (debit or credit) it should show

The answer is generally ‘Yes’. You may test to find the following are typical relationships.

Let us test these possibilities for confirmation. How does one go about testing this? Consider ‘Cash A/c’. Whenever business receives cash we debit it, and whenever it is paid we credit it. Is it possible to see a situation that credits to cash are more than debits? In other words could we have negative cash in hand? No. Cash account will therefore always show a debit balance. So is true for all real asset accounts

Type of AccountType of balance
All asset accountsDebit balance
All liability accounts Credit balance
Capital & Owner’s equity accountCredit balance
Expenses or loss accountsDebit balance
Incomes or gain accountsCredit balance

After solving problems, if the contrary is observed, there is every chance that an error has been made while passing the accounting entries.

Balancing an Account

At the end of the each month or year or any particular day it may be necessary to ascertain the balance in an account. This is not a too difficult thing to do; suppose a person has bought goods worth Rs. 1,000 and has paid only Rs 850; he owes Rs 150 and that is balance in his account. To ascertain the balance in any account, what is done is to total the sides and ascertain the difference; the difference is the balance. If the credit side is bigger than the debit side, it is a credit balance. In the other case it is a debit balance. The credit balance is written on the debit side as, “To Balance c/d”; c/d means “carried down”. By doing this, two sides will be equal. The totals are written on the two sides opposite one another.

Then the credit balance is written on the credit side as “By balance b/d (i.e., brought down)”. This is the opening balance for the new period. The debit balance similarly is written on the credit side as “By Balance c/d”, the totals then are written on the two sides as shown above as then the debit balance written on the debit side as, “To Balance b/d”, as the opening balance of the new period.

It should be noted that nominal accounts are not balanced; the balance in the end are transferred to the prof t and loss account. Only personal and real accounts ultimately show balances. In the illustrations given, you will have notice that the capital account, the purchases account, sales account, the discount account, the rent account and the salary account have not been balanced. The capital account will have to be adjusted for prof t or loss and that is why it has not been balanced yet.


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