LEDGER

Hello friend, today we shall tackle what a ledger is. So what is a ledger? Well a ledger is a book that is required for proper recording of transactions that affect the business e.g. If you want to start selling women’s shoes boots and you have saved up 50,000$ for the online business venture. When you eventually start the online business, you will have to make entries in your books of accounts and hence the book in which you record the capital (money or cash you want to start the business with) is recorded in the ledger account.

So what kinds of ledger are there? There are 2 main types of ledger available out there.

1. General or Nominal ledger; this ledger records information relating to the proprietor, purchases, sales and expenses. Who is a proprietor? A proprietor is you or the owner of the women’s shoes boots business. The money or cash which you shall have saved for a planned business venture, in this case, a women’s shoes boots business, or you would have borrowed from the bank, is recorded in the general ledger as Capital.

What is a purchase? Well, if you want to deal with women’s boots, you will purchase or buy women’s boots from the manufacturer. Therefore the women’s shoes boots bought are known as purchases and it is recorded in the general ledger; For example if you buy women’s boots worth 200,000$ , the figure will be posted to the purchases account. This will help you in determining which profit you have made after selling the women’s boots.

The sales part is when after purchasing or buying the women’s shoes, you will sell them to your customer. These sales you make will be posted to the sales account which is under the general ledger.

Expenses are amounts of cash or money spent in the course of doing the business. For example if you are dealing with women’s shoes or even women’s handbags, you will have to bring in the shoes or handbags from the factory to where you want to sell them. This is factoring in transport. The transport cost you incur is an expense which should be recorded in the transport expenses account.

2. Purchases ledger or Creditors ledger; this is the second type of ledger

There exists. This type of ledger account is used to record details of various creditors. For example; when you are dealing with women’s shoes or women’s handbags from different suppliers on credit, then the suppliers are referred to as your creditors. You may not be able to master or remember all this information when the numbers of your creditors increase. This will prompt you to record the details under the ledger known as the creditor’s ledger. Therefore when they supply you on credit, then you should enter such information in their respective accounts. For example; if x y z supplies you with women’s shoes or women’s handbags worth 200,000$ on credit, then you will be owing them 200,000$. In this event, you have to keep track of this credit from x y z under the purchase ledger account.

I hope that did help you, for more information you can email me at cashincomes3@gmail.com. Have a nice day!