There is no denying the fact that a Ledger is a Book which contains accounts known as T-Accounts. There are 3 types of Ledger. In each type we have three different types accounts.
Sales Ledger
This Contains Accounts of Credit Customers indicating people to whom we sell goods on credit known as Account Receivable.
At the end of the year, All Account Balances in the sales ledger are listed in a schedule which is called list of Account Receivable. This shows the individual account, Balances and also the Total Debtors which are recorded in the trail balance
Purchase Ledger
This Contains Accounts of Credit suppliers indicating people from whom we buy goods on credit known as Account Payable
At the end of the year, All the Account Balances in the purchase ledger are listed in a schedule which is called list of trade payables or account payables. This indicates the individual account balances after closing and also the total creditors which are recorded in the trail balance.
General Ledger
This contains all other accounts like all expenses , income , provision and all other accounts are recorded in General Ledger. In this context, we should note sales and purchases account are in the general ledger because they do not have customer of supplier
Once all the transactions are posted, the accounts are balanced through inserting a balance c/d in all accounts
Trial Balance
All the closing balances in the General Ledger Along with the figure of total account receivable and accounts payable are listed in a trail balance. The Debit Balances and Credit Balances are listed separately side by side.
The sum of all The Debit should be equal to sum of all credit balances, the trail balance is used to check the completion of the double entry system.
A Trail Balance will balance because
- For each Debit Entry there is a Credit Entry and Vise-Versa
- The sum of all Debit Entries is equal of the sum of credit entries
Trial balance is an extract of individual accounts indicating the correctness of all accounts. In Trial Balance total of debit side equals to total of credit side.