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A ledger account consists of the financial transactions of a business. It is generally used by accountants to record summarized monetary transactions. It is also known as the principal book of accounts and books of final entry.
As per my understanding, the ‘Debit and Credit format’ refers to a ‘Ledger account format’.
Note
- The ledger account consists of two sides namely, debit and credit. The left-hand side represents the debit balance and the right-hand side represents the credit balance.
- The posting into a ledger account is done from the journal entries of the company or the various subsidiary books.
- Each Journal entry is moved into a separate ledger account.
Example
Considering the journal entries of ABC Ltd., post the same into ledger accounts.
Cash A/C
| DATE | PARTICULARS | J.F | AMOUNT | DATE | PARTICULARS | J.F | AMOUNT |
| Jan1 | To Capital a/c | 75,000 | Jan1 | By Purchases a/c | 40,000 | ||
| Jan3 | To Sales a/c | 60,000 | Jan2 | By Machinery a/c | 25,000 | ||
| Jan4 | To Commission a/c | 5,000 | Jan6 | By Wages a/c | 10,000 | ||
| Jan6 | By Balance c/d | 65,000 | |||||
| 1,40,000 | 1,40,000 |
(The cash a/c has a debit balance as it is an asset.)
Machinery A/C
| DATE | PARTICULARS | J.F | AMOUNT | DATE | PARTICULARS | J.F | AMOUNT |
| To cash a/c | 25,0000 | By Balance c/d | 25,000 | ||||
| 25,000 | 25,000 |
(The machinery a/c has a debit balance as it is an asset.)