Accountancy [Class 11 Semester II] Chapter 1: Ledger
Q.1. What is a Ledger?
Answer: A book in which all the transactions of an organization are permanently recorded in a summarized form under various classified accounts is called a Ledger.
Q.2. Write two characteristics of a Ledger.
Answer: The two characteristics of a Ledger are:
(a) Transactions are posted into the Ledger from the Journal as the second stage of recording.
(b) At the end of the accounting period, the difference between the debit and credit sides of each Ledger account is calculated to find the balance.
Q.3. Discuss the usefulness or advantages of a Ledger.
Answer: The usefulness or advantages of a Ledger are as follows:
(a) The Ledger makes the effective implementation of the double-entry system possible.
(b) At the end of each accounting period, by using the balances of the Ledger accounts, a Trial Balance can be prepared to verify the mathematical accuracy of the accounts.
(c) As transactions are first recorded in the Journal and then permanently in the Ledger, the chances of error or fraud are very low.
(d) Since various information can be obtained from the Ledger, the owner or managers of the organization can make prompt decisions.
Q.4. Write two advantages of sub-division of the Ledger.
Answer: The two advantages of sub-division of the Ledger are:
(a) As there are separate Ledgers for different types of accounts, any information can be easily found.
(b) The work of the Ledger can be distributed among several accountants, allowing completion of work within a specific time.
Q.5. Write the difference between Journal and Ledger.
Answer: The differences between the Journal and the Ledger are as follows:
(a) The Journal is the primary or original book of entry.
The Ledger is the permanent or principal book of accounts.
(b) Transactions are recorded in the Journal immediately as they occur (first stage).
Transactions are recorded in the Ledger after being entered in the Journal (second stage).
(c) The page number of the Ledger (L.F.) is written in the Journal.
The page number of the Journal (J.F.) is written in the Ledger.
(d) There is no provision for finding out balances in this book.
At the end of the accounting period, the balance of each Ledger account is ascertained.
Q.6. Write the difference between “entry” and “posting.”
Answer: The differences between entry and posting are as follows:
(a) Recording of transactions in the Journal by analyzing debit and credit is called an entry. | Recording transactions from the Journal into the respective Ledger accounts is called posting.
(b) Entry is the first stage of recording a transaction.
Posting is the final stage of recording a transaction.
(c) Each transaction is entered only once in the Journal.
Each transaction is posted into two or more Ledger accounts.
Q.7. What is meant by “balancing an account”?
Answer: The difference between the debit and credit sides of an account is called the balance of that account. Writing the balance on the side which has the lesser total to make both sides equal is called balancing the account.
Q.8. How many types of balances are there, and what are they?
Answer: Generally, balances of accounts can be classified into three types:
(a) Debit Balance
(b) Credit Balance
(c) Zero Balance
Again, based on time, balances are divided into two types:
(a) Opening Balance
(b) Closing Balance
Q.9. What is a Debit Balance?
Answer: If the amount on the debit side of an account is greater than the amount on the credit side, that difference is called a Debit Balance.
Q.10. What is a Credit Balance?
Answer: If the amount on the credit side of an account is greater than the amount on the debit side, that difference is called a Credit Balance.
Q.11. What is a Zero Balance?
Answer: If the debit and credit sides of an account are equal, that account is said to have a Zero Balance.
Q.12. What is an Opening Balance?
Answer: The balance with which an account begins at the start of an accounting period, and which is written before recording any transactions, is called the Opening Balance of that account.
Q.13. What is a Closing Balance?
Answer: The balance with which an account closes at the end of an accounting period or at any other time, and which is written after all transactions have been recorded, is called the Closing Balance of that account.
Q.14. Discuss the necessity of balancing accounts.
Answer: The necessity of balancing accounts is as follows:
(a) The true financial position of the accounts can be known.
(b) The amounts payable to or receivable from different persons or organizations can be determined.
(c) The mathematical accuracy of the accounts can be verified by preparing a Trial Balance.
(d) The financial results of the organization can be ascertained.
Q.15. What is a Personal Ledger? How many types are there, and what are they?
Answer: When goods are bought or sold on credit, the Ledger in which the accounts of debtors and creditors are recorded is called a Personal Ledger.
Personal Ledgers are of two types:
(a) Debtors’ Ledger or Sales Ledger:
The Ledger in which the accounts of persons to whom goods are sold on credit are recorded is called the Debtors’ Ledger or Sales Ledger.
(b) Creditors’ Ledger or Purchase Ledger:
The Ledger in which the accounts of persons from whom goods are purchased on credit are recorded is called the Creditors’ Ledger or Purchase Ledger.
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