The ledger

The ledger is the entire group of accounts maintained by a company. The ledger keeps in one place all the information about changes in specific account balances. The ledger provides the balance in each of the accounts. For example, the Cash account shows the amount of cash available to meet current obligations. The Accounts Receivable account shows amounts due from customers.

Companies may use various kinds of ledgers, but every company has a general ledger. A general ledger contains all the asset, liability, and owner’s equity accounts.

Companies arrange the ledger in the sequence in which they present the accounts in the financial statements, beginning with the balance sheet accounts. First in order are the asset accounts, followed by liability accounts, owner’s capital, owner’s drawing, revenues, and expenses. Each account is numbered for easier identification.