A book of secondary or final entry, containing individual accounts. The term "ledger account" refers to an individual account in the ledger. A ledger may be bound book, a loose-leaf-type book, or computer printout.
Chart of accounts - is the official list of the ledger accounts in which transactions of a business are to be recorded.
The accountants prepare the list of the chart of accounts, arrange according to the preparation of balance sheet accounts, statement of owners equity, followed by the income statements accounts.
Example below:
Balance Sheet Accounts
Assets (100-199)
100 Cash
101 Bank of America Checking
111 Accounts Receivable
113 Supplies
114 Prepaid Insurance
121 Equipment
Liabilities (200-299)
201 Accounts Payable
202 Notes Payable
Statement of Owner's Equity Accounts
Owner's Equity 300-399)
311 Shehla, Capital
312 Shehla, Withdrawal
Income Statement Accounts
Revenue (400-499)
411 Income from Services
Expenses (500-599)
500 Wages Expense
502 Rent Expense
503 Advertising Expense
504 Utilities Expense
Example:
The Journal Entry is
Date Description Debit Credit
2013
Jan. 1 Cash ................................$50,000
Shehgarlynn, Capital...............................$50,000
To record the original investment of Shehla.
Posting to the ledger accounts using T-Accounts
Cash
Debit Credit
$50,000
Total balance of $50,000 on debit side
Shehgarlynn, Capital
Debit Credit
$50,000
Total balance of $50,000 on credit side.
