Characteristics of Ledger

Characteristics of Ledger

In this article we would explain some important characteristics of ledger or ledger account. These characteristics are books of secondary, books of accounts, classification of transaction, etc.

Important Characteristics of Ledger

Some important characteristics of Ledger has been explained below

1.   Books of Secondary Entry

Ledger is also known as books of secondary entry, because second step of processing of financial transaction is performed in ledger.

2.   Ledger Keep the Accounts

Ledger keeps the account of all heads. Therefore ledger is also described as ledger accounts. Thus we can say that ledger is a book which contains the accounts.

3.   Types of Ledger

Ledger can be broadly classified in to general ledger and subsidiary ledger. General ledger keep all the account and used by the small scale organization, while subsidiary ledger is kept in addition to general ledger by large scale organization, which is a memorandum record. Examples of subsidiary ledger are subsidiary ledger for customer and subsidiary ledger for supplier.

4.   Classification of Transaction

Ledger is used to classify the financial transactions. Thus we can say that ledger is used to process the raw financial information gathered in Journal. Journal is used to gather information, where ledger is used to process the information.

5.   Related & Relevant information.

Ledger account gathers all related information on a subject matter in one place. Thus ledger provides the detailed activity in a particular head of account. Accountant used ledger account to analyze the detailed activity in particular account.

6.   Closing balance information

Ledger provides closing balance information. This information is not only used for payment and receipt, but trial balance is also prepared from the closing balances of general ledger accounts.

7.   Facilitates Reporting

Ledger facilitates reporting. It is technically impossible to prepared financial reports directly from the journal. Thus ledger is an important book for preparing the financial statements.

8.   List of Characteristics of ledger

Some important characteristics of ledger are listed below

a.    Ledger is used to classify information.

b.    Ledger keeps all related information at one place.

c.    Ledger facilitates reporting.

d.    Ledger facilitates timely payment & receipt.