Ledger Accounts: NBSE Class 9 Book Keeping

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Get summaries, questions, answers, solutions, notes, extras, theories, practicles, PDF, and guide of Chapter 5 Ledger Accounts, NBSE Class 9 Book Keeping (BK) textbook, which is part of the syllabus of students studying under Nagaland Board. These solutions, however, should only be treated as references and can be modified/changed.

Summary

A ledger is a book where all business transactions are recorded in a systematic way. It contains different accounts like assets, liabilities, capital, revenue, and expenses. These accounts help to organize the information from journals. A journal records transactions in order but does not group similar transactions together. This makes it hard to find all entries related to one account. The ledger solves this by keeping all related transactions in one place.

Each account in the ledger has two sides. The left side is called debit and the right side is called credit. Transactions are posted from the journal to the ledger. This process is called posting. When posting, certain steps are followed to ensure accuracy. The date, account name, reference, and amount are written on the correct side of the account.

There are different types of ledgers. Debtors Ledger keeps track of customers who owe money. Creditors Ledger tracks suppliers or creditors. General Ledger holds all other accounts. Each type helps manage specific parts of a business’s finances.

Balancing is an important task in ledger management. It involves finding the difference between total debits and credits in each account. If debits exceed credits, there is a debit balance. If credits exceed debits, there is a credit balance. Balances are carried forward to the next period. This helps keep track of what is owed or owing.

Ledger accounts are classified into personal, real, and nominal accounts. Personal accounts relate to people or entities. Real accounts deal with tangible items like cash, furniture, and buildings. Nominal accounts cover incomes and expenses. Each type has a specific way of being closed or balanced at the end of a period.

The ledger serves as the main source of financial information. It helps prepare final accounts which show the financial position of a business. Without a ledger, preparing these statements would be difficult. The ledger is also known as the storehouse of information because it holds all necessary details about business transactions.

Transactions are first recorded in journals and then transferred to ledgers. This double entry system ensures accuracy. One account is debited while another is credited. This method prevents errors and fraud. Posting rules differ based on the type of transaction and the involved accounts.

Different books like cash books, purchases books, and sales books help record specific types of transactions. Each has its own posting rules. For example, cash transactions are posted differently compared to credit purchases or sales. Understanding these differences is key to maintaining accurate records.

The ledger is essential for businesses of all sizes. It organizes data, simplifies reporting, and supports decision-making. By following proper procedures, businesses can maintain clear and reliable financial records.

Textbook solutions

Multiple Choice Questions (MCQs)

1. In Ledger:

(a) Only personal accounts are maintained.
(b) Only real accounts are maintained.
(c) Only nominal accounts are maintained.
(d) All of these.

Answer : (d) All of these.

2. A Ledger is a book of._

(a) Original entry
(b) Subsidiary book
(c) Final entry
(d) Petty cash transactions

Answer : (c) Final entry

3. While posting in personal accounts from the purchases book, posting is done:

(a) On Debit side
(b) On Credit side
(c) On Debit or Credit side
(d) None of the above

Answer : (b) On Credit side

4. Which of these accounts has debit balance?

(a) Income received in advance
(b) Bank loan
(c) Prepaid insurance premium
(d) Creditors for goods

Answer : (c) Prepaid insurance premium

5. The total of Purchases Return book will be posted to the:

(a) Debit of Purchases A/c
(b) Credit of Purchases A/c
(c) Debit side of Purchases Return A/c
(d) Credit side of Purchases Return A/c

Answer : (b) Credit of Purchases A/c

6. Normally, the following accounts are balanced:

(a) Personal A/c& Nominal A/c
(b) Real A/c& Nominal A/c
(c) Only Nominal A/c
(d) Personal A/c& Real A/c

Answer : (d) Personal A/c& Real A/c

7. Which of the following is known as “Principal Book of Accounting”?

(a) Ledger
(b) Journal
(c) Trial balance
(d) Balance sheet

Answer : (a) Ledger

8. Cash taken by the proprietor should be credited to:

(a) Capital Account
(b) Bank loan
(c) His Personal Account
(d) Drawings Account

Answer : (d) Drawings Account

True/False

1. Ledger is a book of original entry.

Answer: False

2. Transactions are recorded first in Ledger.

Answer: False

3. Process of transferring entries from journal to ledger is known as Posting.

Answer: True

4. Ledger is the permanent storehouse of all the transactions.

Answer: True

Assertion Reason Based Questions

A. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of the Assertion (A).
B. Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A). 
C. Only Assertion (A) is correct. 
D. Only Reason (R) is correct.

1. Assertion: All the transactions are posted in a systematic manner in ledger accounts.
Reason: Ledger is the permanent store house of all the transactions. 

Answer: (A)

2. Assertion Ledger helps in classification of recorded transaction and thus lead to easy identification of accounts. 
Reason: Ledger helps in preparing ‘Trading and Profit and Loss Account’ to know the trading result.

Answer: (B)

Statement Based Questions

Choose the correct option from the options given below :

A. Statement I is true and II is false. 
B. Statement II is true and I is false. 
C. Both the statements are false. 
D. Both the statements are true.

1. Statement I: Balancing of an account is to determine the net effect of all transactions posted to an account. 
Statement II: The process of determining the difference between the total of debits and total of credits appearing in an account is termed as Balancing of an account. 

Answer:  (D)

2. Statement I: The transactions are classified under appropriate heads, called ledger accounts. 
Statement II: The account contain the condensed and summarised record of all the related transactions.

Answer:  (D)

Short Answer Type-l Questions

1. Define Ledger.

Answer : A Ledger is a principal book which contains all the accounts (i.e., Assets, Liabilities, Capital, Revenue, Expenses accounts) to which the transactions recorded in the books of original entry are transferred. Ledger contains most of the information that the businessman wants to get, which is why it is called the “store house of information.”

2. Write the classification of Ledger.

Answer : The classification of Ledger is as follows:

• Debtors Ledger: This ledger contains the accounts of all the customers to whom goods are sold on credit. It is also known as “Sales Ledger.”
• Creditors Ledger: This ledger contains the accounts of all the suppliers or creditors from whom goods are purchased on credit. It is also known as “Purchases Ledger.”
• General Ledger: All other accounts, except debtors and creditors accounts, are maintained in the General Ledger. It is also known as “Main Ledger.”

3. Give two advantages of Ledger.

Answer : Two advantages of Ledger are:

• Ledger is the storehouse of information because after Journal, all the entries are posted into the Ledger.
• Ledger helps in the classification of recorded transactions and thus leads to the easy identification of accounts, such as Personal, Real, Asset, Income, Capital, etc.

4. Give the format of Ledger.

5. Explain the meaning of balancing of Ledger.

Answer : Balancing of a ledger refers to the process of determining the difference between the total of debits and the total of credits appearing in an account. It signifies the net effect of all transactions posted to that account during a given period. For example, if the total of the credit side is ₹ 60,000 and that of the debit side is ₹ 50,000, the difference, i.e., ₹ 10,000, is written as ‘To Balance carried down’ or ‘To Balance c/d’ on the debit side, indicating a credit balance of ₹ 10,000. Conversely, if the total of the debit side exceeds the credit side, the difference is written as ‘By Balance carried down’ or ‘By Balance c/d’ on the credit side, indicating a debit balance.

6. Write two steps of posting the Journal entries into Ledger.

Answer : Two steps of posting the Journal entries into Ledger are:

• Identify the account to be debited in the Ledger and enter the date of the transaction in the ‘Date’ column on the debit side of the account. Record the name of the account credited in the Journal in the ‘Particulars’ column on the debit side as “To…(name of the account credited)…”.
• Identify the account to be credited in the Ledger and enter the date of the transaction in the ‘Date’ column on the credit side of the account. Record the name of the account debited in the Journal in the ‘Particulars’ column on the credit side as “By…(name of the account debited)…”.

Short Answer Type-Il Questions

1. Define Ledger. Explain its features.

Answer : A Ledger is a principal book which contains all the accounts (i.e., Assets, Liabilities, Capital, Revenue, Expenses accounts) to which the transactions recorded in the books of original entry are transferred. Ledger contains most of the information that the businessman wants to get, which is why it is called the “Store House of Information.”

The features of a Ledger are:

(i) It is the principal or primary book of accounts.
(ii) The accounts contain the condensed and summarised record of all the related transactions.
(iii) The information contained in the ledger account can be used to draw conclusions regarding the status of the account.
(iv) It is the basis of preparing the final accounts. Hence, it cannot be avoided.
(v) The transactions are classified under appropriate heads, called accounts.

2. Explain the classification of Ledger Accounts.

Answer : The classification of Ledger Accounts is as follows:

• Debtors Ledger : This ledger contains the accounts of all the customers to whom goods are sold on credit. It is also known as the “Sales Ledger.”
• Creditors Ledger : This ledger contains the accounts of all the suppliers or creditors from whom goods are purchased on credit. It is also known as the “Purchases Ledger.”
• General Ledger : All other accounts, except debtors and creditors accounts, are maintained in the General Ledger. It is also referred to as the “Main Ledger.”

3. What is the balancing of accounts in Ledger? Give example.

Answer : The balancing of accounts in Ledger refers to determining the net effect of all transactions posted to an account. It involves finding the difference between the total of debits and the total of credits appearing in an account, which is termed as Balancing of an account. For example, if the total of the credit side is ₹60,000 and that of the debit side is ₹50,000, the difference, i.e., ₹10,000, is written as ‘To Balance carried down’ or ‘To Balance c/d’ on the debit side, indicating the account has a credit balance of ₹10,000. Conversely, if the total of the debit side is ₹80,000 and that of the credit side is ₹60,000, the difference, i.e., ₹20,000, is written as ‘By Balance carried down’ or ‘To Balance c/d’ on the credit side, meaning the account has a debit balance of ₹20,000.

4. Difference between Journal and Ledger.

Answer : The differences between Journal and Ledger are as follows:

(i) Nature of Book : Journal is a book of primary entry, whereas Ledger is a book of final entry.
(ii) Narration : Narration is provided in Journal entries, but not in Ledger accounts.
(iii) Basis : Ledger is prepared on the basis of Journal entries. Trial balance is prepared on the basis of Ledger accounts.
(iv) Objective : Journal is prepared to record all transactions in chronological order, while Ledger is prepared to see the net effect of various transactions affecting a particular account.
(v) Balancing : Journal is not balanced, whereas all Ledger accounts (except Nominal Accounts) are balanced in the Ledger.
(vi) Process : The process of recording entries in Journal is called Journalising, whereas the process of recording entries in Ledger is called Posting.

Long Answer Type Questions

1. What do you mean by Balancing of an accounts in ledger? Give example.

Answer : Balancing of an account in the ledger refers to determining the net effect of all transactions posted to that account. The process involves finding the difference between the total of debits and the total of credits appearing in an account. For example, if the total of the credit side is ₹ 60,000 and that of the debit side is ₹ 50,000, the difference, i.e., ₹ 10,000, is written as ‘To Balance carried down’ or ‘To Balance c/d’ on the debit side, indicating that the account has a credit balance of ₹ 10,000. Conversely, if the total of the debit side is ₹ 80,000 and that of the credit side is ₹ 60,000, the difference, i.e., ₹ 20,000, is written as ‘By Balance carried down’ or ‘To Balance c/d’ on the credit side, meaning the account has a debit balance of ₹ 20,000. Debit balance is then written on the debit side as ‘To balance brought down’ or ‘To Balance b/d’, which becomes the opening balance for the new period, while the credit balance is written on the credit side as ‘By Balance brought down’ or ‘By Balance b/d’, serving as the opening balance for the new period.

2. Explain the meaning of Ledger and Journal. Write the difference between Journal and Ledger.

Answer : A Ledger is a principal book which contains all the accounts (i.e., Assets, Liabilities, Capital, Revenue, Expenses accounts) to which the transactions recorded in the books of original entry are transferred. It is called the storehouse of information because it contains most of the information that the businessman wants to get.

A Journal is a book of original entry where all transactions are recorded date-wise and in chronological order.

Points of Distinction	Journal	Ledger
Nature of Book	It is a book of primary entry.	It is a book of final entry.
Narration	Narration is provided in Journal entries.	Narration is not required in Ledger.
Basis	Ledger is prepared on the basis of Journal.	Trial balance is prepared on the basis of Ledger.
Objective	It is prepared to record all transactions in chronological order.	It is prepared to see the net effect of various transactions affecting a particular account.
Balancing	Journal is not balanced.	All Ledger accounts (except Nominal Accounts) are balanced in the Ledger.
Process	The process of recording entries in Journal is called Journalising.	The process of recording entries in Ledger is called Posting.

Practical Problems

Questions

1. Pass Journal Entries for the following transactions and post them into Ledger:

	April 2023
	1	Manu commenced business with cash 2,50,000
	3	Purchased office furniture for cash 25,000
	5	Purchased goods for cash 60,000
	8	Purchased goods – from Mukul Trading Co. 24,000
		– from Sohan Garments 15,000
	10	Returned goods to Mukul Trading Co. 4,000
	12	Paid cash to Mukul Trading Co. in full settlement of their account, after deducting 5% cash discount
	15	Sold goods for cash 50,000
	18	Sold goods to Honda Limited, less 10% Trade Discount 40,000
	20	Manu withdrew from business for his personal use- Cash 20,000
		Goods 8,000
	21	Paid to Sohan Garments 6,900
		Discount received 100
	22	Received from Honda Limited 11,750
		Discount allowed 250
	25	Sold goods to Ramchander Ltd. for cash 10,000
	28	Purchased goods from Pankaj Brothers 25,000
	30	Paid for Rent ₹ 3,000 and Salaries ₹ 5,000

Solution: Check below

2. The following balances appeared in the Ledger of M/s Stones Traders on 1st April 2015.

Cash in hand	7,000;	Cash at Bank	15,000;	Bills Receivable	7,500;
Mukesh (Cr.)	2,000;	Stock (Goods)	6,500;	Bills Payable	2,500;
Rajiv (Dr.)	8,500;	Hanish (Dr.)	14,000.

Transactions during the month were:

April
1	Goods sold to Mohan	2,000
2	Purchased goods from Mukesh	9,000
3	Received cash from Rajiv in full settlement	8,200
5	Cash received from Hanish on account	5,000
6	Paid to Mukesh by cheque	7,000
8	Rent paid by cheque	1,500
10	Cash received from Mohan	2,000
12	Cash sales	7,000
14	Goods returned to Mukesh	1,000
15	Cash paid to Mukesh in full settlement (Discount received ₹ 200)	2,800
18	Goods sold to Karan	12,000
20	Paid trade expenses	300
21	Drew for personal use	2,000
22	Goods returned from Karan	1,300
24	Cash received from Karan	8,000
26	Paid for stationery	150
27	Postage charges	50
28	Salary Paid	2,000
29	Goods purchased from Sita Traders	9,000
30	Sold goods to Kanika	5,000
30	Goods purchased from Sonu Traders	4,000

Solution: Check below

3. From the following particulars, prepare simple cash book, balance it and post it into ledger:

2020
Dec. 1	Cash in hand	9,500
Dec. 2	Bought goods	4,000
Dec. 3	Paid to Kartar	500
Dec. 4	Cash sales	2,000
Dec. 5	Cash sales	3,000
Dec. 6	Bought goods on credit from Surjeet	3,000
Dec. 6	Paid carriage	60
Dec. 8	Paid stationery	100
Dec. 10	Paid to Surjeet	3,000
Dec. 15	Paid travelling expenses	100
Dec. 16	Sold goods on credit to Sudhakar	1,600
Dec. 18	Purchased furniture	2,000
Dec. 20	Received from Sudhakar	1,600
Dec. 25	Purchased typewriter	5,000
Dec. 27	Paid to Kanwal	2,000
Dec. 29	Received from Hazrat	2,500
Dec. 31	Paid wages	500
Dec. 31	Withdrew for personal use	300

Hints: Credit transactions dated 6th and 16th are not to be recorded in cash book. These should be entered in respective subsidiary books.

Solution: Check below

4. Enter the following transactions in Purchases Book and post it into Ledger:

2023
January 5	Bought goods from Rahul Bajaj on credit for ₹20,000.
January 13	Purchased goods from Ganesh Industries on credit of the list price of ₹15,000 less 20% trade discount.
January 18	Purchased Furniture for ₹6,000 for office use.
January 28	Purchased goods from Vijay Modi for ₹12,000 at 12½% discount.

Solution: Check below

5. Enter the following transactions into a Sales Book and post it into Ledger:

2023
January 6	Sold goods to Shankar Lal on credit for ₹20,000 at 12% discount.
January 12	Arun Birla purchased goods from us for ₹8,000 on credit.
January 16	Sold goods for cash to Han Ram for ₹6,000.
January 27	Sold goods to Navdip of the list price of ₹30,000 at trade discount of 10%.

Solution: Check below

Solutions

Extras

Additional questions and answers

1. Define ledger?

Answer : A Ledger is a principal book which contains all the accounts (i.e., Assets, Liabilities, Capital, Revenue, Expenses accounts) to which the transactions recorded in the books of original entry are transferred.

Q. Why is ledger called the ‘store house of information’?

Answer : Ledger is called the ‘store house of information’ because it contains most of the information that the businessman wants to get.

Q. What is meant by posting?

Answer : Posting is the process of classifying the transactions account-wise and recording them in the ledger from the journal or subsidiary books.

Q. What is a single-column cash book?

Answer : A single-column cash book is a type of subsidiary book that records all cash transactions, both receipts and payments, in a single column format. It serves the purpose of maintaining a systematic record of cash inflows and outflows.

Q. Define ‘folio’ in ledger accounts?

Answer : Folio refers to the page number of the Journal or Subsidiary Book from which a particular entry is transferred, as recorded in the Folio (J.F.) column of the ledger account.

Q. What is the purpose of a sales book?

Answer : The purpose of a sales book is to record credit sales of goods made to parties or persons. These parties are the receivers of goods, and posting is done on the debit side of their accounts by writing “To Sales A/c.” It helps maintain a record of all credit sales transactions for the preparation of accounts.

Q. What is a purchases book?

Answer : A purchases book is a subsidiary book prepared to record credit purchases of goods made from persons or parties. These parties are the givers of goods, and posting is done on the credit side of their accounts by writing “By Purchases A/c.” It helps maintain a record of all credit purchases transactions for accounting purposes.

Q. Explain the features of a ledger.

Answer : The features of a ledger are:

(i) It is the principal or primary book of accounts.
(ii) The accounts contain the condensed and summarised record of all the related transactions.
(iii) The information contained in the ledger account can be used to draw conclusions regarding the status of the account.
(iv) It is the basis of preparing the final accounts and hence, it cannot be avoided.
(v) The transactions are classified under appropriate heads, called accounts.

Q. What are the advantages of maintaining a ledger?

Answer : The advantages of maintaining a ledger are:

• Ledger is the storehouse of information because after journal all the entries are posted into the ledger.
• The ledger helps in the classification of recorded transactions and leads to the easy identification of accounts such as Personal, Real, Asset, Income, Capital, etc.
• The ledger helps in preparing the “Trading and Profit and Loss Account” to know the trading result.
• It helps in preparing the “Trial Balance” in which arithmetical accuracy is checked.
• It provides information regarding purchases, sales, revenues, and expenses of the business.

Q. What are the different types of ledgers?

Answer : The types of ledger accounts are:

• Debtors Ledger: This ledger contains the accounts of all the customers to whom goods are sold on credit and is also known as the “Sales Ledger”.
• Creditors Ledger: This ledger contains the accounts of all the suppliers or creditors from whom goods are purchased on credit and is also known as the “Purchases Ledger”.
• General Ledger: All other accounts except debtors and creditors accounts are maintained in the General Ledger, which is also known as the “Main Ledger”.

Q. What are the steps of posting entries in a ledger?

Answer : The steps of posting entries in a ledger are as follows:

• Procedure of Posting for an Account which has been debited in a transaction:
  (i) Identify the account to be debited in the Ledger.
  (ii) Enter the date of the transaction in the ‘Date’ column on the debit side of the account.
  (iii) Record the name of the account credited in the Journal, in the ‘Particulars’ column on the debit side as “To…(name of the account credited)…”.
  (iv) Record the page number of the Journal where the entry exists in the ‘Journal Folio’ (J.F.) column.
  (v) Enter the relevant amount in the ‘Amount’ column on the debit side.
• Procedure of Posting for an Account which has been credited in a transaction:
  (i) Identify the account to be credited in the Ledger.
  (ii) Enter the date of the transaction in the ‘Date’ column on the credit side of the account.
  (iii) Record the name of the account debited in the Journal, in the ‘Particulars’ column on the credit side as “By…(name of the account debited)…”.
  (iv) Record the page number of the Journal where the entry exists in the ‘Journal Folio’ (J.F.) column.
  (v) Enter the relevant amount in the ‘Amount’ column on the credit side.

Q. Explain balancing of accounts.

Answer : Balancing of accounts is the process of determining the difference between the total of debits and total of credits appearing in an account. It signifies the net effect of all transactions posted to that account during a given period. For example, if the total of the credit side is ₹60,000 and that of the debit side is ₹50,000, the difference, i.e., ₹10,000, is written as ‘To Balance carried down’ or ‘To Balance c/d’ on the debit side, indicating the account has a credit balance of ₹10,000. On the other hand, if the total of the debit side is ₹80,000 and that of the credit side is ₹60,000, the difference, i.e., ₹20,000, is written as ‘By Balance carried down’ or ‘To Balance c/d’ on the credit side, indicating the account has a debit balance of ₹20,000. Debit balance is then written on the debit side as ‘To balance brought down’ or ‘To Balance b/d’, which is the opening balance for the new period. Credit balance is then written on the credit side as ‘By Balance brought down’ or ‘By Balance b/d’, which is the opening balance for the new period.

Q. State the rules of posting from subsidiary books.

Answer : The rules of posting from subsidiary books are:

• Posting from the debit side of the Cash Book: All accounts appearing at the debit side of the cash book should be posted on the credit side of the respective accounts by writing ‘By Cash A/c’.
• Posting from the credit side of the Cash Book: All accounts appearing at the credit side of the cash book should be posted on the debit side of the respective accounts by writing ‘To Cash A/c’.
• Posting from Purchases Book: Purchases book is prepared when goods have been purchased on credit. These parties are givers of goods to us. Posting will be made on the credit side of the party’s account by writing the words ‘By Purchases A/c’.
• Posting from Sales Book: Sales book is prepared when goods have been sold on credit. These parties are the receivers of goods from us. Posting will be made on the debit side of the party’s account by writing ‘To Sales A/c’.

Q. Describe the method of balancing personal accounts.

Answer : The method of balancing personal accounts involves ascertaining how much amount is owing from each individual customer and how much amount is owed to each individual creditor. If a personal account shows a debit balance, it indicates the amount owing from him. On the contrary, if a personal account shows a credit balance, it indicates the amount owing to him. In case the total of the debit side is in excess of the credit side, the difference between the two is inserted on the credit side of the account in order to make their totals equal. The words ‘By Balance c/d’, i.e., balance carried down, are written against the amount of the difference. In the next accounting period, the balance is brought down on the debit side by writing the words ‘To Balance b/d’. On the other hand, if the total of the credit side is in excess of the debit side, the difference between the two is inserted on the debit side of the account in order to make their totals equal. The words ‘To Balance c/d’ are written against the amount of the difference. In the next accounting period, the balance is brought down on the credit side by writing the words ‘By Balance b/d’.

Q. Describe the method of closing real accounts.

Answer : Real accounts include the account of cash in hand and the accounts of all other assets such as Land, Building, Furniture, Investments, etc. The method of closing the Cash A/c and the accounts of all other assets is the same as that of personal accounts. When balanced, these will always show debit balances.

Q. How are nominal accounts closed?

Answer : Nominal accounts include the accounts relating to the expenses and incomes of the firm. These accounts do not require balancing. As the main purpose of opening the nominal accounts is to ascertain the net profit or loss of the firm, all such accounts are transferred to the Trading and Profit and Loss Account of the firm at the end of the financial period. Accounts relating to ‘Goods’ such as Purchases A/c, Sales A/c, Purchases Return A/c, Sales Return A/c, and Stock A/c are not balanced. These accounts are closed by transferring them to the Trading Account at the end of the year.

Q. Discuss the features and advantages of ledger accounts.

Answer : The features of ledger accounts are: (i) It is the principal or primary book of accounts. (ii) The accounts contain the condensed and summarised record of all the related transactions. (iii) The information contained in the ledger account can be used to draw conclusions regarding the status of the account. (iv) It is the basis of preparing the final accounts, and hence, it cannot be avoided. (v) The transactions are classified under appropriate heads, called accounts.

The advantages of ledger accounts are:

• Ledger is the storehouse of information because after journalising, all the entries are posted into the ledger.
• The ledger helps in classifying recorded transactions, leading to easy identification of accounts such as Personal, Real, Asset, Income, and Capital accounts.
• The ledger helps in preparing the Trading and Profit and Loss Account to determine the trading result.
• It helps in preparing the Trial Balance, where arithmetical accuracy is checked.
• It provides information regarding purchases, sales, revenues, and expenses of the business.

19. Explain the differences between journal and ledger accounts.

Answer : The differences between journal and ledger accounts are:

• Nature of Book: A journal is a book of primary entry, while a ledger is a book of final entry.
• Narration: A journal includes narration for each transaction, whereas a ledger does not.
• Basis: A ledger is prepared on the basis of the journal.
• Objective: A journal is prepared to record all transactions in chronological order, while a ledger is prepared to see the net effect of various transactions affecting a particular account.
• Balancing: A journal is not balanced, but all ledger accounts (except Nominal Accounts) are balanced in the ledger.
• Process: The process of recording entries in the journal is called journalising, while the process of recording entries in the ledger is called posting.

Additional MCQs

1. What is a ledger?

A. Final entry book
B. Original entry book
C. Cash book
D. Subsidiary book

Answer: A. Final entry book

Q. Which accounts are contained in a ledger?

A. Assets only
B. Liabilities only
C. All accounts
D. Nominal accounts

Answer: C. All accounts

Q. Ledger is also known as what?

A. Book of Original Entry
B. Book of Final Entry
C. Cash Book
D. Journal Book

Answer: B. Book of Final Entry

Q. What is the main purpose of ledger accounts?

A. Record transactions
B. Summarise transactions
C. List customers
D. Compute taxes

Answer: B. Summarise transactions

Q. Which of the following is a feature of ledger accounts?

A. Chronological record
B. Summarised data
C. Random entries
D. Unsorted details

Answer: B. Summarised data

Q. Ledger accounts may be arranged in which manner?

A. Chronological only
B. Alphabetical only
C. Both alphabetical and by type
D. Random order

Answer: C. Both alphabetical and by type

Q. What is recorded in the Date column of a ledger account?

A. Transaction date
B. Account number
C. Page number
D. Balance

Answer: A. Transaction date

Q. In the ledger format, what does the Particulars column include?

A. Amount figures
B. Account names
C. Dates
D. Folio numbers

Answer: B. Account names

Q. What information is entered in the Folio column?

A. Transaction date
B. Journal page number
C. Account name
D. Ledger balance

Answer: B. Journal page number

Q. What is recorded in the Amount column of a ledger account?

A. Debit only
B. Credit only
C. Transaction amount
D. Closing balance

Answer: C. Transaction amount

Q. How many columns are there on each side of a ledger account?

A. Two
B. Three
C. Four
D. Five

Answer: C. Four

Q. What is the process of transferring journal entries to ledger accounts called?

A. Journalising
B. Posting
C. Balancing
D. Summarising

Answer: B. Posting

Q. In posting entries, what prefix is used on the debit side of the Particulars column?

A. By
B. To
C. From
D. For

Answer: B. To

Q. In posting entries, what prefix is used on the credit side of the Particulars column?

A. By
B. To
C. With
D. Of

Answer: A. By

Q. What does balancing of an account involve?

A. Adding totals
B. Subtracting entries
C. Determining net effect
D. Listing transactions

Answer: C. Determining net effect

Q. When the debit total exceeds the credit total, the balancing entry is recorded as:

A. To Balance c/d
B. By Balance c/d
C. To Balance b/d
D. By Balance b/d

Answer: B. By Balance c/d

Q. When the credit total exceeds the debit total, the balancing entry is recorded as:

A. To Balance c/d
B. By Balance c/d
C. To Balance b/d
D. By Balance b/d

Answer: A. To Balance c/d

Q. After balancing a ledger account, what is the subsequent step?

A. Journalising
B. Posting
C. Bringing balance forward
D. Closing books

Answer: C. Bringing balance forward

Q. In personal accounts, a debit balance indicates:

A. Amount owing by customer
B. Amount owing to creditor
C. No outstanding balance
D. Profit generated

Answer: A. Amount owing by customer

Q. In personal accounts, a credit balance indicates:

A. Amount owing by customer
B. Amount owing to creditor
C. No outstanding balance
D. Profit generated

Answer: B. Amount owing to creditor

Q. Which type of account always shows a debit balance?

A. Personal accounts
B. Nominal accounts
C. Real accounts
D. All accounts

Answer: C. Real accounts

Q. Which type of account does not require balancing?

A. Personal accounts
B. Nominal accounts
C. Real accounts
D. None

Answer: B. Nominal accounts

Q. What is the first step in posting journal entries for a debited account?

A. Identify the account credited
B. Identify the account debited
C. Enter the date
D. Record the amount

Answer: B. Identify the account debited

Q. When posting from the debit side of the Cash Book, the entry is recorded in Ledger as:

A. To Cash A/c
B. By Cash A/c
C. From Cash A/c
D. With Cash A/c

Answer: B. By Cash A/c

Q. When posting from the credit side of the Cash Book, the entry is recorded in Ledger as:

A. To Cash A/c
B. By Cash A/c
C. From Cash A/c
D. With Cash A/c

Answer: A. To Cash A/c

Q. While posting from the Purchases Book, what phrase is written in the party’s account?

A. To Purchases A/c
B. By Purchases A/c
C. To Sales A/c
D. By Sales A/c

Answer: B. By Purchases A/c

Q. While posting from the Sales Book, what phrase is written in the party’s account?

A. To Sales A/c
B. By Sales A/c
C. To Purchases A/c
D. By Purchases A/c

Answer: A. To Sales A/c

Q. Which feature distinguishes a journal from a ledger?

A. Narration
B. Finality
C. Balancing
D. Classification

Answer: A. Narration

Q. Which book is used to record transactions in chronological order?

A. Ledger
B. Journal
C. Cash Book
D. Sales Book

Answer: B. Journal

Q. In ledger posting, what does the abbreviation “J.F.” stand for?

A. Journal Folio
B. Just For
C. Journal File
D. Journal Format

Answer: A. Journal Folio

Q. Which of the following is not a column in the standard ledger account format?

A. Date
B. Particulars
C. Folio
D. Reference

Answer: D. Reference

Q. Ledger accounts are prepared to assist in the preparation of which final document?

A. Trial Balance
B. Balance Sheet
C. Profit and Loss Account
D. Final Accounts

Answer: D. Final Accounts

Q. What is the primary role of a ledger account in business?

A. Store information
B. Record narratives
C. Verify audits
D. Compute taxes

Answer: A. Store information

Q. What type of data does a ledger account primarily provide?

A. Detailed narration
B. Summarised data
C. Unsorted entries
D. Transaction motives

Answer: B. Summarised data

Q. Which document is used to initially record transactions?

A. Ledger
B. Journal
C. Cash Book
D. Trial Balance

Answer: B. Journal

Q. The posting process ensures that:

A. Entries are summarised
B. Transactions are random
C. Debits equal credits
D. Errors are hidden

Answer: C. Debits equal credits

Q. In a cash book, the opening balance is recorded:

A. In the ledger
B. In the cash book only
C. In the journal
D. In the trial balance

Answer: B. In the cash book only

Q. The cash book serves as which type of book?

A. Subsidiary book
B. Final book
C. Summary book
D. None

Answer: A. Subsidiary book

Q. When cash is withdrawn by the proprietor for personal use, which account is credited?

A. Cash account
B. Drawings account
C. Capital account
D. Sales account

Answer: B. Drawings account

Q. Which ledger account is used to record goods purchased on credit?

A. Debtors ledger
B. Creditors ledger
C. General ledger
D. Sales ledger

Answer: B. Creditors ledger

Q. Which ledger account is also known as the Sales Ledger?

A. Debtors ledger
B. Creditors ledger
C. General ledger
D. Nominal ledger

Answer: A. Debtors ledger

Q. Which ledger account is also known as the Purchases Ledger?

A. Creditors ledger
B. Debtors ledger
C. General ledger
D. Real ledger

Answer: A. Creditors ledger

Q. In ledger posting, which two words indicate the transfer from the journal?

A. To/By
B. From/With
C. With/For
D. In/Out

Answer: A. To/By

Q. Balancing a ledger account primarily checks for:

A. Accuracy
B. Speed
C. Volume
D. Detail

Answer: A. Accuracy

Q. The entry “To Balance c/d” signifies which type of balance?

A. Debit balance
B. Credit balance
C. No balance
D. Error

Answer: B. Credit balance

Q. The entry “By Balance c/d” signifies which type of balance?

A. Debit balance
B. Credit balance
C. Zero balance
D. No effect

Answer: A. Debit balance

Q. In ledger accounts, “b/d” stands for:

A. Brought down
B. Begun data
C. Balance due
D. Booked data

Answer: A. Brought down

Q. Posting in ledger accounts ensures that transactions are:

A. Verified
B. Classified
C. Narrated
D. Ignored

Answer: B. Classified

Q. Which of the following is not a typical feature of a ledger account?

A. Systematic posting
B. Classification of entries
C. Chronological narration
D. Summarisation of data

Answer: C. Chronological narration

50. In a ledger account, the term “Folio” specifically refers to:

A. Journal page
B. Account name
C. Transaction date
D. Ledger number

Answer: A. Journal page