Banking Category Banking: the easy, simple banking guide

How to Do an Account Ledger

An account ledger is an individual account within an organisation's general ledger. A general ledger is a complete listing of all accounts a company has, each with its own ledger.

Each account is used to record only the transactions that occur within that account. The ledger tracks all debits and credits made to the accounts and the balances of each.

To create and use an account ledger, a separate page is made within the general ledger. Transactions to this account are posted as they incur.

Consider the type of account being created. When an account ledger is created, you must first determine what type of account it is. Accounts are categorised as assets, liabilities, equities, revenues and expenses. If the account being created is for Supplies, it would be an asset account. Asset accounts reflect things an organisation owns that have value.

Choose an account number. Accounts within the general ledger are all numbered. Asset accounts generally are in the 1000s with the Cash account being the first. Most companies leave available numbers in between accounts for future expansion. If the account number 1005 is available, choose that number for the Supplies account.

Create the account ledger. The general ledger is a book made up of many pages. Each page generally represents one individual account. Open the general ledger and insert a blank page in the spot where account number 1005 should appear.

Label the ledger. Write the name of the account on the blank ledger and the account number.

Post the first transaction. If your company purchased an order of Supplies for £130 and paid cash for it, the entry would appear as a debit to Supplies for £130 and a credit to the Cash account for this amount.

Adjust the account. At the end of a period, the supplies are counted. If the supplies on hand are worth £97, this means that £32 of them were used. An adjusting entry is required to update this account. The transaction is recorded by debiting Supplies Expense, to recognise the expense of them during the current period, and a credit to the Supplies account. This is posted in the Supplies account ledger and is subtracted from the balance to reflect a current balance of £97.