Learning Materials For Accounting, Management , Finance And Economics.

Monday, June 21, 2010

Importance And Utility Of Ledger Accounts

The following are the important utilities of ledger accounts

1. Recording Of Transactions

Ledger account keeps a permanent record of all financial transactions in a classified manner.

2. Providing Information

Ledger account shows detailed financial information of a business regarding debtors and creditors, assets, and incomes and expenses.

3. Preparation Of Trial Balance

Ledger account helps to prepare a trial balance in order to check the arithmetical accuracy of the recording of the financial transactions of the business.

4. Preparation Of Profit And Loss Account

Ledger account helps to prepare profit and loss account so as to ascertain the profit or loss of the business.

5. Preparation Of Balance Sheet

Ledger account helps to prepare the balance sheet with a view to show the financial position of the business.