What do we mean by Self-balancing ledgers.

November 22nd, 2010 Comments off
Share |

A self balancing ledger is one:

Whose balances when extracted form a complete trail balance. Under this system there are three ledgers namely:

(1)    Bought Ledger which contains the accounts of individual trade creditors

(2)    Sales Ledger which contains the accounts of individual trade debtors

(3)    General Ledger which contains all the remaining accounts besides  (1) & (2)

Note:

None of the above ledgers contains in itself all data for the preparation of the trial balance independently. To make each ledger self-balancing, an extra account called General Ledger Adjustment Account is opened in each of the Bought Ledger and Sales Ledgers and two accounts i.e. Bought Ledger Adjustment Account and Sales Ledger Adjustment Account are opened in the General Ledger. As such contra entries are posted in the respective Adjustment Accounts which will show the periodical totals.

Comments are closed now.

Financial Accounting

 
 

Advertise Here | Brain Teasers/Puzzles | Greeting Cards | Inspirational Quotes | Jokes/Humor | Useful Links | Motivational Stories | Resource | Shopping | Share/Express Your Views | Testimonials | Universities/Colleges | Words of Wisdom from Religions | FREE POSTING OF ACCOUNTING & FINANCE JOBS VACANCY|