Definition A ledger may be defined as a book that contains, in a summarized and classified form, a permanent record of all transactions. Or in other words, we can say a group of accounts with different characteristics. It is also called the Principal Book of accounts. For example:- salary account, aRead more
A ledger may be defined as a book that contains, in a summarized and classified form, a permanent record of all transactions.
Or in other words, we can say a group of accounts with different characteristics.
It is also called the Principal Book of accounts.
For example:– salary account, and debtor account.
Sub- ledger it is defined as a group of accounts with common characteristics. And is a part of ledger accounts.
For example:- customer account, vendor account, etc.
The difference between a ledger and a sub-ledger is that ledger accounts control sub-ledger accounts whereas a sub-ledger is a part of the ledger account.
Features Of Ledger
- Ledger is prepared from the journal.
- Ledger is a master record of all the accounts of the business.
- The Ledger account shows the current balances of all accounts.
- Ledger accounts summarize the effect of transactions upon assets, liabilities, capital, incomes, and expenditures.
Features Of Sub-Ledger
- Sub-ledger in accounting provides up-to-date information about the daily activities of the business.
- It keeps individual track of all balances.
- Help locate errors in individual accounts.
- A sub-ledger is a collection of different ledgers used in an account.
Utilities of ledger
The main utilities of a ledger are summarized as follows :
• Provides complete information about a particular account: Complete information relating to a particular account is available in one place in the ledger.
• Information on income and expenses: In the ledger, a separate account is maintained for each income and expense. The amount of total income and total expenses are known from the ledger accounts.
• Preparation of trial balance: Ledger helps in preparing trial balances which ensure arithmetical accuracy of the transaction recorded in the books of account.
• Helps in preparing final accounts: After preparing the trial balance, final accounts are prepared to know the profitability and financial position of the business.
Utilities of sub-ledger
The utilities of the sub-ledger are as follows :
• Track customer information: If a client has an outstanding credit debt or needs money refunded, a company can use a sub-ledger to verify the information quickly.
• Protect financial information: A sub-ledger allows a financial supervisor to isolate certain records so that employees can view only parts of the company’s financial information. This added level of security is important for large corporations.
• Create separate databases: Large companies usually process large amounts of financial data that may be too big for one database. Software programs organize this data into isolated files to calculate financial information in the general ledger of a business.
So here I conclude that a ledger is compulsory in the recording process whereas a sub-ledger is optional.
The ledger is used for preparing trial balance but the sub-ledger is not used for the same.
Sub ledger is controlled by the ledger.
The sub-ledger supports the transaction of each specific account indicated on the ledger.See less
Definition Debit balance may arise due to timing differences in which case income will be accrued at the year's end to offset the debit. The amount is shown in the record of a company s finances, by which its total debits are greater than its total credits. The account which has debit balances are aRead more
Debit balance may arise due to timing differences in which case income will be accrued at the year’s end to offset the debit.
The amount is shown in the record of a company s finances, by which its total debits are greater than its total credits.
The account which has debit balances are as follows:
• Assets accounts
Land, furniture, building machinery, etc
• Expenses accounts
Salary, rent, insurance, etc
Bad debts, loss by fire, etc
Personal drawings of cash or assets
• Cash and bank balances
Balances of these accounts
In class 11th, we learned about all these accounts that have debit balances.
Where the total of the debit side is more than the credit side therefore the difference is the debit balance and is placed credit side as “ by balance c/d “
Here are some examples showing the debit balances of the accounts :