Characteristics of Ledger

Characteristics of Ledger

In this article, we would explain some important characteristics of Ledger or ledger account. Ledger is a book used for classification of accounting transactions. Characteristics of ledger includes classification, relevant information, speedy tracking of transaction & information, trial balance preparation.

Important Characteristics of Ledger

Some important characteristics of ledger have been explained below. 

1.   Classification

First important characteristic of Ledger is classification of financial transactions. Ledger account primarily used to classify the transaction into accounts. Ledger contains different accounts . All financial transactions are classified into these accounts.

2.   All Accounts

Ledger contains all accounts i.e. sales account, purchases account etc, in simple word ledger is a book or register, which contains all accounts. Accounts are opened in ledger both at the time of start of business (expectation bases) and during the year (need bases).

3.   Relevant Information

Another important characteristic of Ledger is holding relevant information in one place. For example the transaction with a customer A can be found in General ledger account of Mr. A. This account would reflect all the transactions of Mr. A.

4.   Mistake  Tracking

Another important characteristic of Ledger is fast tracking of information. This is really helpful for error correction. For example a purchase is overstated, then ideally accountant would review the purchase accounts for tracking the mistake.

5.   Trial balance preparation.

Trial balance is extracted from the closing balances of General Ledger. Thus ledger plays an important role in the preparation of financial statements. Trial balance extraction is first step toward preparation of financial statements.

6.   General Ledger & Subsidiary Ledger

General ledger is used by small scale organization and contains all account of financial items, while subsidiary ledgers are kept in large organization as memorandum record which contains the individual account of customer and creditors. General ledger also contains a total account for these items.

List of important Characteristics of Ledger

List of important characteristics of ledger is as under

1.    Ledger is used to classify information.

2.    Ledger contains all account.

3.    Ledger provides summary of closing balance.

4.    Ledger facilitates speedy tracking of mistakes.

5.    Ledger facilitates payment & collection.