Page 30 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 2: Recording of Transactions

The journal entries that are recorded nothing but posting of the entries in the ledger book of Notes
accounts. Posting/entering the journal entries are routinely carried out immediately after the
transactions.
Prior to discussing the posting of journal entries into the ledger accounts, everybody should
know the contents of the ledger. The ledger is segmented into two different categories.
Pro forma of the Ledger Account
Name of the Account
Dr Cr
Date Particular Date Particular
To By

Journal entries are divided into two categories, viz:
1. Debit item of the transaction
2. Credit item of the transaction

Once the journal entries are identified for classification, the entries should be recorded in
accordance with the date order of the transactions in the respective pages.
While recording a transaction, normally a journal entry has got an impact on two or even three
different accounts.
Ledgering: It is a process of recording the transactions under one group from the early process of
journalizing. Without journalizing, ledgering is not meaningful. The process of ledgering
involves various steps. The process begins only at the completion of journalizing and ends at the
end of balancing of journal accounts.
The next step is to Balance the individual Ledger A/c:
How to balance the Ledger A/c?
The individual Ledger A/c may have more than two transactions during the specified period.

1. The first step is to find out the totals of debit and credit suide of the Ledger account.
2. The second step is to compare the totals of the two different sides.
3. The third step is to find out the total of which side is greater over the other.
4. The fourth step is to identify the difference among the two side’s balances i.e., debit and
credit side totals.
5. The fifth step is the most important step which balances the difference on the total of the
side which bears lesser total over the greater.
6. If the balance of the debit side of the ledger is more than the credit side it is called as Debit
balance ledger and vice-versa in the case of Credit balance ledger.

7. The closing balance of one ledger account will automatically become an opening balance
of the same ledger account for the next accounting period.

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