A ledger is the principal book of account where all business transactions are recorded in a classified and permanent form.
It is called the book of final entry because all entries from the journal (book of original entry) are posted into it.

Each page in the ledger contains one account — for example, Cash Account, Rent Expense Account, or Capital Account — and all the debits and credits related to that account are entered there.

A ledger helps you to:

1. Keep all accounts of a business in an orderly form.


2. Provide a summary of all transactions affecting each account.


3. Show the balance of each account at any time.


4. Provide information for preparing the trial balance and final accounts (for example, profit and loss account and balance sheet).


5. Detect and correct errors through comparison of debit and credit balances.

Accounts are classified into three major types:

Real Accounts – These are accounts of tangible and intangible assets that belong to the business.
Examples: Building, Furniture, Equipment, Cash, Goodwill, Land.
Rule: Debit what comes in, Credit what goes out.

Nominal Accounts – These are accounts of expenses, losses, incomes, and gains.
Examples: Rent, Salary, Commission, Discount Allowed, Interest Received.
Rule: Debit all expenses and losses, Credit all incomes and gains.

Personal Accounts – These are accounts relating to persons or organizations with whom the business has dealings.
Examples: Debtors, Creditors, Customers, Banks, Capital Account, Drawings Account.
Rule: Debit the receiver, Credit the giver.

Impersonal Accounts – These are all accounts other than personal accounts.
They are made up of both real and nominal accounts.

Because there are many accounts, ledgers are grouped into classes for convenience and control.

Personal Ledger:
Contains accounts of individuals or firms (for example, debtors and creditors).
It is divided into:

1. Sales Ledger – records accounts of debtors (customers who owe the business).


2. Purchases Ledger – records accounts of creditors (suppliers to whom the business owes money).

General Ledger:
Contains all the real and nominal accounts, such as assets, expenses, incomes, and capital.
Examples: Furniture Account, Cash Account, Rent Account, Capital Account.

Private Ledger:
Used to record confidential accounts that are not open to everyone in the business.
Examples: Capital Account, Drawings Account, Profit and Loss Account.

Ledger accounts are usually drawn in a T-shape, with two sides:

Debit Side (Dr)	Credit Side (Cr)
Records increases in assets and expenses Left-hand side	Records increases in liabilities, income, and capital Right-hand side

Typical column headings:
Date | Particulars | Folio | Amount | Date | Particulars | Folio | Amount

The steps involved are:

1. Identify the accounts to be debited and credited from the journal.


2. Enter the amount in the correct side of each ledger account.


3. Write the opposite account in the particulars column (for cross-reference).


4. Enter the folio or page number of the journal as a reference.


5. Repeat for all transactions.

To balance:

1. Add both sides (debit and credit).


2. Find the difference between them.


3. Write the difference on the smaller side as “Balance c/d” (carried down).


4. Bring it down to the next period as “Balance b/d” (brought down).

Example

Transaction:
On 1st March 2025, Mr. Ade started a business with ₦200,000 cash.

Ledger Accounts:

Cash Account (Asset)

Date	Particulars	Folio	Amount (₦)
01/03/2025	Capital	J1	200,000

Capital Account

Date	Particulars	Folio	Amount (₦)
01/03/2025	Cash	J1	200,000

1. It provides a complete record of all transactions.


2. It helps to determine the financial position of the business.


3. It assists in preparing the trial balance and financial statements.


4. It helps to detect errors and frauds.


5. It aids analysis and control of accounts.

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Conclusion

In conclusion, the ledger is one of the most important books in accounting. It serves as the book of final entry where all transactions from the journal are properly classified into different accounts. By maintaining an accurate ledger, a business can easily determine how much it owns, how much it owes, and whether it is making profit or loss. It also provides the necessary information for preparing the trial balance and final accounts. Therefore, every business must ensure that all transactions are correctly posted, balanced, and kept neatly for future reference and decision-making.