Types of Ledgers

The double entry transactions are recorded in the ledger accounts. Please remember that the Books of Original Entries & ledgers are different things. Every financial transaction is recorded on the double entry system in at least two ledger accounts.

Types of Ledgers

There are three different kinds of ledgers that businesses keep:
=> Sales Ledger
=> Purchase Ledger
=> General Ledger

Sales Ledger

The Sales ledger are customer accounts that are maintained separately for every customer.

Firstly a credit sales transaction is recorded in the Sales Day book which is the book of original entry.

Next it is posted as double entry in the customer account (sales ledger) and the Sales Account.

Dr. Customer Account(Sales Ledger) $xxx
Cr. Sales Account (General Ledger)       $xxx
In T-Accounts Ledger format the above double entry can be seen as follows:

Types of Ledger - Sales Ledger

Types of Ledger – Sales Ledger

In the above example of ledger accounts, the entry relates to a transaction in which $5,000 Sales is made to a customer named ABC. The Customer Account is titled ABC A/c above as you can see the debit entry that suggests receivables and a credit in Sales account (a revenue account).

Purchase Ledger

Purchase Ledger is the Account of Suppliers that is a concern maintain in its books of accounts.

First the Credit Purchase transaction is recorded in detail in the Purchase Day book that is the book of Original Entry.

Next it is recorded as double entry transaction in the Purchase Ledger (Supplier Account) and the Purchase Account (General Ledger).

The Double Entry Transaction will look like this:
Dr. Customer Account (Purchase Ledger) $xxx
Cr. Purchases    (General Ledger)                  $xxx

Types of Ledgers - Purchase Ledger

Types of Ledgers – Purchase Ledger

General Ledger

The General Ledger contains all the accounts other than the supplier & customer accounts (Purchase ledger & Sales Ledger). Revenue & Expenditure accounts, fixed assets, retained earnings accounts are the examples relating to the General Ledger or often referred simply as ‘Ledger’.

To see how things work you can view the Purchase account & Sales account in the above explanation of Sales & Purchase Ledgers.

Remember with Sales & Purchase ledger it means Customer & Supplier personal accounts respectively & when we talk about Sales Account & Purchase account we are referring to the Revenue & Expenditure accounts.

Note: Cash Book serves the purpose of both a ledger as well as the book of original entry.