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Friday, October 30, 2009

The Sales Ledger and Purchase Ledger

The accounts in the general ledger relate to types of income, expense, asset, liability excreta rather than to the person whom the money is paid or from whom it received. They are called impersonal accounts.

There is also a need personal account most commonly for debtors and creditors. These are contained in the sales ledger and purchase ledger.

Personal accounts include details of transactions which have already been summarized in ledger accounts. The personal account do not therefore form part of the double entry system, as otherwise transaction would be recorded twice over. They are memorandum accounts.

The Sales Ledger

The sales ledger is a ledger for customer’s personal accounts. The sales day book provides a chronological record of invoices sent out by a business to credit customers. A business should also keep a record of how much money each individual credit customers owes, and what is this total debt consists of. The businesses need personal accounts for each customer and it helps,
  • Staff must be able to tell customer how much he currently owes.
  • To send out statements to customers at the each month.
  • The managers of the business will want to keep a check on the credit position of each customer.
  • Need to match payments received against debt owed.

The Purchase Ledger

The purchase ledger is a ledger for supplier’s personal accounts. There is separate account for each individual supplier.
After entries are made in the purchase day book, cash book of purchase retains day book they are posted to the supplier’s personal accounts in the purchase ledger.


Jon Sigurdsson said...

Thanks for this!
Your blog is a very useful resource on Small Business Accounting

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