IMPORTANCE OF A SALES LEDGER

Hello, we will cover the importance of having a sales ledger in this article, so that you arm yourself with the necessary knowledge that an entrepreneur needs to know.

 This is a type of ledger which records the sales made on credit to the customers. This is very important because as the business expands, it will require that some goods be sold on credit terms.

1. When there are many sales transactions on credit basis, then it will be very difficult to master all sales transactions hence the need for a sales ledger in accounts which is used to record the details of various customers who have been given credit on goods. For example; If you are dealing with the sales of women's shoes and you buy them in large quantities, then you go ahead and sell the large quantities to your customers on credit basis. E.g. Customer x purchases women's shoes worth 200,000$ on credit. You will need to open for customer x an account under the sales ledger account and record the amount on the debit side of customer X's account. When customer X pays partially for the women's shoes, then you will post that amount on the credit side of X's account thus reducing what that customer owes you.
2. Figures that are posted on the debit side of various customers are used to determine sales on credit for a given period of time. This is used to determine the total sales of that financial period when you combine it or add it to the cash sales of the same financial period.
3. This account is also used to reconcile debtor’s control account, which produces the total debtors account receivable for a given period of time.
4. A sales ledger can also be used by the accounts auditors to detect teaming and lading.

 

I hope the information was of help to you and your business. I wish you all the best in your endeavors. In case of any queries, email me at cashincomes3@gmail.com.