The Most Important All Time Document for Accounting
After some years of excellence in market, an organization wishes to have a look to understand their overall growth in the market. For this, they typically require a book that covers the entire transactions history that happened so far right from the advent of the company. Hence they should have a book that is generally maintained for years together marking all the transaction of the company. Typically, this cannot be done in one single book and it requires updating with new book every time one will be finished. This will typically be maintained by mentioning the period on the cover page of the book. This is generally called as Ledgers. The purpose of a ledger is to maintain the business transaction and it is required that each and every detail about the business transaction is recorded at any given point of time. It should be ensured that no single transaction has missed out.
This document is the core base of the accounting activity since it contains even the minute details about each and every transaction happened in the past and hence this will be used also as a reference document. This document serves as an input to derive both income statements and balance sheets. Typically every information generally contains the data, balance and description of the transaction. The activity of entering any information into the ledger is called as posting and each and every record is called as a post. Usually sub ledger will also be maintained under the main ledger. Sub ledger usually will be receivable sub ledger and payable sub ledger. Any transaction will generally be recorded directly in main ledger or both in sub ledger and main ledger.
New transactions should be often updated into the general ledger of a business in order to prevent the process from becoming complicated. There are instances where one particular sub ledger needs to be updated more often when compared to the other. This totally depends on the type of requirement at that particular period of time. Ledger needs to be maintained properly and if it is properly maintained, it will serve as a great source for finding, or verifying transactions even if they were completed very long time ago. Ledger is the book of final entry where the transaction will be entered from the journals. There is no narration required in the journal about the type of expenses incurred.