Ledger

The totaling and recording of the monetary transactions in the accounts Ledger is the principal book that is used. Ledger consists of credits and debits in separate columns and also the beginning and the ending balance for each of the accounts. It lists all the individual transaction with appropriate dates and it is considered to be the permanent summary of all the amounts which are entered in the supporting journals. Eventually every transaction will reach one or more number of ledgers from a journal. Mainly the financial statements of a company are created form the summary of the totals that are in the ledger.

Kinds of Ledger:

There are three main kinds of ledger namely the sales ledger, the purchase ledger and the general ledger. The sales ledger mainly concentrates on the accounts which are receivable. This ledger mainly focused on the financial transactions that are created by the customers to the company. On the other hand, the ledger which mainly concentrates on the money that are spent for any kind  of purchasing in the company is referred to as purchase ledger. The final type of ledger is the general ledger.

General ledger is mainly separated into income, expenses, assets, liabilities and equity. Assets are the economic resources in financial accounting. Assets are mainly separated as tangible assets and intangible assets. There by it refers to a tangible or intangible thing that has the capability of being owned and then controlled by someone in order produce a possible outcome of value.

Balance Sheet:

The balance sheet is the tool that is used by the firm in order to value the assets which are owned by the firm. The two assets are classified into tangible and intangible assets. The tangible assets consist or various sub classes like the current assets and the fixed assets. The current assets consist of the inventory while the fixed assets consist of the items like the equipment and the buildings. On the other hand, the intangible assets are the firm’s resources that are nonphysical resources which add value to the firm by giving the firm some sort of advantage to the firm in the market place. The trademarks, patents, copyrights, and the computer programs are some kinds of the intangible assets whereas; the obligations of an entity which arises from the past events and the transactions are referred to as liabilities. The settlement of liabilities may end in the transfer or proper usage of the assets.

Questions:

• What is an asset?
• What is a Ledger and explain the types of Ledger?