Ledger
A ledger is the main book or computer file to record and totalize economic transactions measured in terms of one currency unit of account by account type, with debits and credits in separate columns and an initial monetary balance and final monetary balance for each account.
Objectives of general ledger accounts
The following are the main objectives of the general ledger accounts
1. Provide classified financial information
The general ledger is a permanent record book that contains a series of accounts of different topics. Its purpose is, therefore, to provide classified financial information on the subjects as a person, asset and an expense or income.
2. Provide Check Arithmetic Precision
The fundamental principle of double entry establishes that the debt is always equal to the credit or vice versa. Because the general ledger account is prepared under the double entry system, it helps to prepare a trial balance that checks the arithmetic accuracy of the transactions recorded in the ledgers.
3. To help determine the benefit or loss
The ledger is a book of accounts related to all financial transactions of the business. It contains the accounts of all expenses, losses, income and profits. It therefore helps to prepare the profit and loss account of the company in order to determine the profit or loss suffered during a given period.
4. To help reveal the financial situation
The general ledger also contains accounts of financial transactions related to capital, all liabilities and business assets. With the help of the balances of these accounts and the profit and loss of the company, a balance sheet can be prepared to show your financial position at any given time.