Financial Accounting

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  • Ledger is the second step in the accounting process. Transactions relating to particular assets, persons, expenses and income etc. are recorded in single place which is called ledger.
  • It is the summary of similar nature of transactions.

The complete posting process includes the following steps for each account titled in the journal,

  • A separate account is opened for each account and entries from the journal are posted in respective ledger account accordingly.
  • Enter the date of transaction in the date column.
  • The words like ‘To’ and ‘By’ are used while posting the entries in the ledger accounts. ‘To’ is used when accounts are posted in the debit side column of a particular account. ‘By’ is used when accounts are posted in the credit side column of a particular account. These words may not have meaning but are used to represent the debit and credit accounts.
  • The account which is debited in the journal should also be debited in the ledger book but the reference should be of respective credit account. 

There are two formats of preparing ledger account as shown below:

This type of ledger format contains all information as date, explanation, posting reference , debit amount and credit amount, A standard ledger can be prepared in two ways as given below:

a. Running/Continuous balance account:

In this type of ledger, the balance of individual account is automatically ascertained after each and every transaction. This is a widely used ledger.


b. T-form account:

Under this type of ledger , the transactions are posted on debit and credit sides, following the rules of debit and credit. The final balance is ascertained when the account is closed at the end of a certain period.


T-account is the simplified format modified from the ledger account. It is prepared instead of ledger account because they take little time consumption and simple to prepare but result at the end of the accounting period is same as ledger account.


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