Learn something new every day More Info... by email
Keeping a ledger is essential to the proper maintenance of any type of accounting system. In order to make the most of this type of resource, setting up the ledger is set up properly is important. Many bookkeeping experts also recommend the use of a journal in conjunction with the ledger, making it possible to easily tap into greater detail about all debits and credits recorded within the financial records and providing support for all ledger entries.
One of the basic tips for keeping a ledger is to settle on the number of columns that will appear in the book and consistently make use of those columns. A simple approach is to go with a format that allows room for the date of the transaction, a brief description that may include the name of a vendor and an invoice number, a debit column, and a credit column. The inclusion of one additional column to show the ongoing balance after the posting of the new transaction is usually considered optional, but can prove helpful in a number of instances.
Another tip for keeping a ledger is to take the time to create accounts that can serve as the basis for posting transactions in some type of organized fashion. Unlike a journal, in which transactions are posted based on a chronological basis without any real regard to the nature of those transactions, the ledger is intended to group like transactions together. This makes it much easier to analyze the financial activity connected with certain types of income and expenditures, since the detail for each account is all kept in one place within the ledger. Most accounting software packages today come with tools that make the creation of accounts within a ledger very easy and provide the benefit of making sure those accounts are structured to follow generally accepted accounting principles.
Using a journal as a companion accounting book is also helpful in keeping a ledger. The basic practice is to use the journal to capture detail about transactions as or shortly after they occur, then post those transactions into the appropriate account within the ledger. Doing so helps to minimize the chances of accidentally omitting an important entry into the ledger, and also provides backup documentation that can be used in the event that the accounts in the ledger do not balance.
One crucial tip for keeping a ledger is to not make the process any more complicated than necessary. While there is often a desire to be detailed, keep in mind that the purpose of the ledger is not to create an exhaustive history of each transaction but to capture essential data that can easily be cross-referenced with supporting documentation without a lot of trouble. By consistently using the same format for all accounts maintained in the ledger book, setting aside time to post transactions documented in the journal, and making sure that the accounts are set up in compliance with generally accepted accounting principles, the task of keeping a ledger that is accurate and up to date will be much easier.