At WiseGEEK, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.

Learn more...

What Is a Bookkeeping Ledger?

Misty Amber Brighton
Misty Amber Brighton

A bookkeeping ledger is a tool used to help businesses keep track of monetary transactions. It normally contains sections for invoice numbers, a description of the transaction, and amount. This ledger may be used in either a single or double entry accounting system and could sometimes be electronic. Paper ledgers are normally stored in a three-ring binder or file folder, while electronic varieties could be maintained in a database or on an external hard drive.

Keeping up with cash flow is an important part of any business. Most companies do this by maintaining a bookkeeping ledger. Many accounting journals follow a similar format, containing sections for the date, type of transaction, and amount. A ledger page often has separate columns for debits and credits. This can make it easy for items to be added or subtracted so that a running balance is always available.

A bookkeeper reviewing a ledger.
A bookkeeper reviewing a ledger.

There are two basic types of bookkeeping ledger: single or double entry. A single entry ledger may show only debits or credits while the double entry method allows these categories to be broken down into individual accounts. Ledgers that allow for single entries might be best for a small business with relatively few expenses. A double entry ledger could be a good idea whenever companies are asked to handle a client's finances or would like to designate a budget for various departments within the organization.

While many companies use a manual bookkeeping ledger, this document could also be maintained in electronic format. There are a number of software programs that allow businesses to create and maintain accounting journals. These could also be developed by using a spreadsheet database. Some accountants use both a manual and electronic ledger, but this can often be inaccurate if numbers are not transposed correctly. If accessing electronic accounting records is an issue, electronic ledgers could be printed out and then filed for later use in the event of a power failure or computer crash.

Paper ledgers may be kept in a 3-ring notebook or a file folder with prongs. Most of the time, a bookkeeping ledger is stored chronologically, with the latest journal sheet in front. Many software providers allow records to be saved electronically, and this is often done automatically whenever information is added to a program. The length of time a database might keep information varies, so many accountants like to save older records on a flash drive instead. Regardless of how records are stored, being able to access them easily can be very beneficial to business owners whenever they are filing income tax returns.

You might also Like

Discuss this Article

Post your comments
Forgot password?
    • A bookkeeper reviewing a ledger.
      By: Danny Hooks
      A bookkeeper reviewing a ledger.