Ledger – Posting & Balancing

If journal is a diary, ledger is an organized filing cabinet. Every account gets its own "file" (ledger page).

What is a Ledger?

Definition: A book containing all accounts where transactions from the journal are classified and summarized.

Purpose: Group all transactions of ONE account in ONE place.

Example: All cash transactions (receipts + payments) in Cash Account ledger.

Ledger vs Journal

Aspect	Journal	Ledger
Order	Date-wise (chronological)	Account-wise (classified)
Format	Narration included	No narration
Purpose	Original recording	Classification & summary
Also called	Book of Original Entry	Book of Final Entry
Example	Today's 10 transactions	Cash Account's all transactions

Format of Ledger (T-Format)

Cash Account

Dr. Side (Left)			Cr. Side (Right)
Date	Particulars	J.F.	Amount	Date	Particulars
2024 Apr 01	To Capital A/c	1	50,000	2024 Apr 05	By Rent A/c
Apr 10	To Sales A/c	2	30,000	Apr 15	By Purchases A/c
				Apr 20	By Salary A/c
				Apr 30	By Balance c/d
	Total		80,000		Total
May 01	To Balance b/d		45,000

Key Points:

• Left side = Debit (Dr.) side
• Right side = Credit (Cr.) side
• Debit entries use "To ____"
• Credit entries use "By ____"
• J.F. = Journal Folio (journal page number)

Posting Process

Posting = Transferring journal entries to respective ledger accounts

Step-by-Step Posting

Journal Entry:

Date	Particulars	Debit	Credit
Apr 01	Cash A/c ....Dr. To Capital A/c	50,000	50,000

Step 1: Post debit to Dr. side of Cash A/c
Step 2: Post credit to Cr. side of Capital A/c

Cash Account (After Posting)

Date	Particulars	J.F.	Amount
Apr 01	To Capital A/c	1	50,000

Capital Account (After Posting)

Date	Particulars	J.F.	Amount
Apr 01	By Cash A/c	1	50,000

Balancing a Ledger Account

Balancing = Finding the difference between debit and credit sides

Types of Balances

1. Debit Balance (Dr.):
When Total Debits > Total Credits

Example: Cash A/c usually has debit balance (asset)

2. Credit Balance (Cr.):
When Total Credits > Total Debits

Example: Capital A/c has credit balance (liability)

3. Nil Balance:
When Total Debits = Total Credits

Balancing Process

Let's balance Cash Account with these entries:

Dr. Side	Amount	Cr. Side	Amount
To Capital	50,000	By Rent	5,000
To Sales	30,000	By Purchases	20,000
		By Salary	10,000

Step 1: Add debit side = 50,000 + 30,000 = 80,000

Step 2: Add credit side = 5,000 + 20,000 + 10,000 = 35,000

Step 3: Find difference = 80,000 - 35,000 = 45,000 (Dr. balance)

Step 4: Write "By Balance c/d 45,000" on credit side

Step 5: Total both sides (should be equal) = 80,000

Step 6: Write "To Balance b/d 45,000" on next period's debit side

Complete Balanced Cash Account

Date	Particulars	Amount	Date	Particulars	Amount
Apr 01	To Capital A/c	50,000	Apr 05	By Rent A/c	5,000
Apr 10	To Sales A/c	30,000	Apr 15	By Purchases A/c	20,000
			Apr 20	By Salary A/c	10,000
			Apr 30	By Balance c/d	45,000
	Total	80,000		Total	80,000
May 01	To Balance b/d	45,000

Important Terms

Term	Full Form	Meaning
c/d	Carried down	Balance transferred to next period
b/d	Brought down	Balance brought from previous period
c/f	Carried forward	(Same as c/d)
b/f	Brought forward	(Same as b/d)

Complete Example: Multiple Accounts

Journal Entries

Date	Particulars	Debit	Credit
Apr 01	Cash A/c Dr. To Capital A/c	1,00,000	1,00,000
Apr 05	Purchases A/c Dr. To Cash A/c	20,000	20,000
Apr 10	Cash A/c Dr. To Sales A/c	30,000	30,000
Apr 15	Rent A/c Dr. To Cash A/c	5,000	5,000

Cash Account Ledger

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
Apr 01	To Capital A/c	1	1,00,000	Apr 05	By Purchases A/c	2	20,000
Apr 10	To Sales A/c	3	30,000	Apr 15	By Rent A/c	4	5,000
				Apr 30	By Balance c/d		1,05,000
	Total		1,30,000		Total		1,30,000
May 01	To Balance b/d		1,05,000

Capital Account Ledger

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
Apr 30	To Balance c/d		1,00,000	Apr 01	By Cash A/c	1	1,00,000
	Total		1,00,000		Total		1,00,000
				May 01	By Balance b/d		1,00,000

Purchases Account Ledger

Date	Particulars	JF	Amount
Apr 05	To Cash A/c	2	20,000

(Nominal account - closed at year-end, no balance carried forward mid-year)

Sales Account Ledger

Date	Particulars	JF	Amount
Apr 10	By Cash A/c	3	30,000

Rent Account Ledger

Date	Particulars	JF	Amount
Apr 15	To Cash A/c	4	5,000

Which Accounts Have Debit/Credit Balances?

Account Type	Normal Balance	Example
Assets	Debit	Cash, Furniture, Building
Expenses	Debit	Rent, Salary, Depreciation
Liabilities	Credit	Loan, Creditors
Income	Credit	Sales, Commission Received
Capital	Credit	Owner's Capital

Common Posting Mistakes

Mistake	Consequence	Fix
❌ Posted debit as credit	Account shows wrong balance	Reverse the entry
❌ Wrong amount	Totals don't match	Verify with journal
❌ Forgot J.F. number	Can't trace back to journal	Always note page number
❌ Didn't balance account	Can't prepare trial balance	Balance at period-end

Quiz

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💡 Final Wisdom: "Ledger is where the magic of accounting happens - scattered journal entries become organized account summaries. Master posting and balancing, and you can handle any accounting system!"