INSTITUTE OF CHEMICAL TECHNOLOGY (ICT) Compiled By:

IndianOil Odisha Campus (IOC), Bhubaneswar Mr. PRITISH PADHI

(Visiting Faculty)

Q1. What is Ledger?

Ans.(i) The Ledger is the principal book of every business enterprise which represents the balance or
the position of each and every account in details.
(ii) The Ledger is otherwise known as the Book of Secondary Entry because the transactions are
first of all recorded in the Journal; then after they are posted into the Ledger.
(iii) According to Prof. William Pickles, “The Ledger is the most important book of accounts and it is
the final destination of the entries made in the Subsidiary Books.”
(iv) First of all, the transactions are recorded in the Journal Entries and then these entries are
analyzed according to the accounts affected.
(v) Hence, the process of analyzing or classifying the Journal Entries according to the various
accounts done in another book is called as Ledger.
Q2. What are the objectives and features of a Ledger?
Ans.(i) Assets and Liabilities:-
The position of each asset and liability of the business can be separately known by preparing
different assets and liabilities accounts.
(ii) Debtors and Creditors:-
Similarly, the amount of the debtors and creditors can also be periodically known by preparing
different debtors and creditors account separately.
(iii) Purchases and Sales:-
The amount of purchase and sale of goods during a year can be determined by preparing the
purchases and sales ledger separately.
(iv) Expenses and Incomes:-
The position of the expenses and incomes viz. salary, rent, interest, commission etc. can also be
known by preparing different nominal accounts or ledger.
(v) Cash and Bank:-
The amount of the cash in hand and cash at bank and the bank balance can be determined
periodically by preparing cash and bank ledger separately.
Q3. What are the advantages of a Ledger?
Ans.(i) Preparation of Trial Balance:-
The Ledger helps in preparing the correct trial balance to check the arithmetical accuracy of the
different accounts.
(ii) Preparation of Trading and Profit and Loss Account(P/L A/c):-
The Ledger also helps in preparing the Trading A/c, Profit and Loss A/c in order to determine the
profit and loss of the business through a trial balance.
(iii) Preparation of Balance Sheet:-
The Ledger helps in preparing the balance sheet at the end of the financial year to determine the
position of the assets and liabilities.
 Q4.What is Posting?
Ans.(i) The transfer of the entries from the Journal Entries to the Ledger Accounts is known as Posting;
but the Posting is done after Journalizing the transactions is complete.
(ii) While Posting in the Ledger, the principle is that the accounts debited in the Journal are posted in
the debit side of the concerned Ledger, but in opposite account.
(iii) Similarly, the accounts credited in the Journal are also posted in the credit side of the Ledger; but
in opposite account.
(iv) So, the posting in the Ledger is complete when both the debit and credit aspects in the Journal
are transferred to the concerned accounts.
Q5. What is Balancing of a Ledger?
Ans.(i) The process of totaling both the sides of a Ledger are known as Balancing and the balancing of
the Ledger is done after the Posting of transactions is over.
(ii) But if the total of the debit side and credit side of a Ledger is not same, then there is a balance
in the Ledger.
(iii) While Balancing, the side with the higher amount is written in both sides of a Ledger and the
difference is written as Balance Carried Down (Bal. c/d) in the lesser side.
(iv) Similarly, this Balance Carried Down is written again in the opposite side of the Ledger as
Balance Brought Down (Bal. b/d).
(v) So, the Balancing of a Ledger determines the net position of an account prepared weekly,
monthly, quarterly or half yearly.
Q6. When does a Ledger shows the Debit Balance?
Ans.(i) When the total of the debit side of a Ledger is higher than the total of the credit side, then the
Ledger shows the Debit Balance.
(ii) So, the assets, expenses and losses and the customers’ account usually show the debit balance
always.
Q7. When does a Ledger shows the Credit Balance?
Ans.(i) When the total of the credit side of a Ledger exceeding the total of the debit side, then the Ledger
shows the Credit Balance.
(ii) So, the liabilities, incomes and capital accounts usually show the credit balance always.
Q8. Differentiate between Journal and Ledger.
JOURNAL LEDGER
1.Nature: 1.Nature:
Journal is the Book of Primary Entry Ledger is the Book of Secondary Entry
as the transactions are first of all recorded in the as the transactions are posted into the Ledger after
Journal. Journalizing.

2.Record: 2.Record:
Journal records the transactions one Ledger records all the transactions
after another according to date wise. according to account wise.

3.Permanency: 3.Permanency:
Journal is not a book of the Ledger is a permanent record of
permanent records as the position of the business various accounts and the position of the business
cannot be exactly determined. can be exactly known as it is a principal book of
the business.
4.Process: 4.Process:
The process of recording the The process of recording the
transactions in the Journal is known as transactions in the Ledger is known as Posting.
Journalizing.

5.Narration: 5.Narration:
The narration is given under each No narration is required and it is not
and every Journal Entry for getting the details of necessary while preparing the Ledger Accounts.
the transactions.

6.Balancig: 6.Balancig:
The Journal is not at all balanced The Ledger is balanced at the end of
rather it is totaled in both the sides. each period to know the position of each and every
account.