FINANCIAL ACC 101

LEDGER

Hey Guys, Happy New Week. This month is soon over, well 2015 has been a FAST year wouldn't you say? Well All to the Glory of God. How was your weekend, mine was splendid. Alright, straight to Business...

It is a book that contains a permanent record of all transactions of a business in a classified and summarised form. The Ledger Book is the Final Destination of all Transactions on the subsidiary books. All the transactions must be recorded using the principle of double entries.  The entries in the cash book and other original books of account are posted to the ledger.

Classification of Ledger:

1. Personal Ledger- These comprises of the supplier's personal account and customer's personal account. it can be divided into the following:

a. Sales Ledger- This is a record of the sales of books made by the organisation to various individuals and enterprises.

b. Purchases Ledger- It is a book for suppliers personal account. it contains account of creditors.

2. General Ledger- These are ledgers for real and nominal accounts. Example Expenses A/c, Income A/c, Sales A/c, etc as well as all other assets.

Nature of Ledger:

1. It is divided into two parts by a central line.

2. The right side is the credit side which is entitled CR.

3. The left side is the debit side which is entitled DR.

4. The Ledger has columns for Date, Particulars, Folio, Amount on the debit and credit sides.

5. The right side is the side that gives value.

6. The left side is the side that receives value.

Double Entry Principle

The Double Entry System of the Book Keeping will be used for recording Transaction in the Ledger. The Summary; Debit the Receiver & Credit the Giver.

Procedures:

* Every Transaction must affect 2 accounts.

* Give names to the 2 accounts by using the name of other account in the account you are posting.

* Credit all the giving account.

* Debit all the receiving account.

ILLUSTRATION 1:

Complete the Transactions by showing account to the credit and account to the debit.

1. Started Business with Money in Cash.

ANSWER: Cash a/c- Debit

Capital a/c- Credit

2. Paid Part of the Opening cash into the Bank.

ANSWER: Bank a/c- Debit

Cash a/c- Credit

3. Bought Goods on Credit from Ayo.

ANSWER: Ayo a/c- Credit

Purchases a/c- Debit

4. Sold Goods on Credit to Olotu.

ANSWER: Olotu's a/c- Debit

Sales a/c- Credit

5. Cash Purchases.

ANSWER: Cash a/c- Credit

Purchases a/c- Debit

6. Olotu returned goods to us.

ANSWER: Olotu's a/c- Credit

Returns Inward's a/c- Debit

7. We returned goods to Ayo.

ANSWER: Ayo's a/c- Debit

Returns Outward's a/c- Credit

8. Dapo lent us cash.

ANSWER: Dapo's a/c- Credit

Cash a/c- Debit

9. Received Commission in cash.

ANSWER: Cash a/c- Debit

Commission a/c- Credit

10. Sold goods for cash N6, 000.

ANSWER: Sales a/c- Credit

Cash a/c- Debit

11. Purchased Goods on credit from Mallam Abiodun N15, 000.

ANSWER: Abiodun's a/c- Credit

Purchases a/c- Debit

12. Purchased Stationery N3, 500 Cash.

ANSWER: Stationery a/c- Debit

Cash a/c- Credit

13. Purchased Furniture by cash N2, 400.

ANSWER: Furniture a/c- Debit

Cash a/c- Credit

14. Paid Mallam Abiodun N3, 500 Cash, being part of settlement of goods purchased.

ANSWER: Mallam Abiodun's a/c- Debit

Purchases a/c- Credit

15. Paid rent in cash N300.

ANSWER: Rent a/c- Debit

Cash a/c- Credit

16. Paid salaries and wages N600 Cash.

ANSWER: Payment a/c- Debit

Cash a/c- Credit

17. Paid Advertisement expenses N200 Cash.

ANSWER: Advertisement a/c- Debit

Cash a/c-Credit

18. Sold goods to Charles on credit N2, 400

ANSWER: Sales a/c- Credit

Charles a/c- Debit

This brings us to the end of Today's Session. Hope this was very helpful to you, leave a comment of what you think of this Tutorial and of your Questions below. Have a Blessed Day and Remember You are Amazing. God Bless You.