What Is an Income Ledger?
An income ledger is a record kept by business bookkeepers of all revenue that has come into a business over a specific period of time. Also known as a sales ledger or a revenue ledger, this ledger represents all of the money coming into a business from its customers. It should include a record of all invoices sent to its customers and any payments received on those invoices. The income ledger is crucial because it can be compared to the expenses incurred by a company to see if any profits have been made.
Keeping ledgers has always been a part of doing responsible business, since these ledgers keep track of all of the business transactions that take place. These ledgers used to be kept by hand but have now been replaced for the most part by computer software that makes the process much easier. Since one of the most important aspects of business success is the amount of money being brought in to the business, it makes sense that there should be a ledger devoted to it. That specific ledger is called the income ledger.
The process of keeping an income ledger requires regular upkeep of records pertaining to sales. Any invoices sent out to customers showing a required payment or a credit should be updated on a regular basis. In addition, cash payments received should also be included in the ledger. Most ledgers are composed on a customer-by-customer basis, with each different customer getting their own page in the ledger devoted to their account.
Another useful feature of the income ledger is that it shows the amount of money that is owed to the company by specific customers. The customers that owe money to a business are known as debtors. By having a record of the invoices sent and comparing that to payments received, a business bookkeeper can identify those customers who may be overdue on their payment. Bookkeeping software makes it much easier to identify overdue debtors.
When all accounts are totaled up, the income ledger should provide an accurate representation of the money being made by the company. This is important because the ledger will provide all of the information for the income totals found on a company's profit-and-loss statement, which compares revenues and expenses. The statement is one of the most important documents used to determine the financial strength of a company. It is used by company management and potential investors as a gauge of the company's finances.
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