Sample Essay
A ledger is a business term used to define an account. Once an accountant has filed all the transactions, he has to complete the ledgers. In other words, he has to prepare and balance all the accounts. You need to understand that this is a very important step of the accounting cycle. This is because all the financial statements are prepared after the completion of this step. Hence, a mistake made in the ledgers would be reflected in all these statements. The process of making ledgers is systematic and simple.
Each journal entry has an equal effect on two ledgers. Thus, for every transaction, you will have to balance two books. Normally, amateur accountants make a common error. They either do not balance a ledger or balance it with the wrong figure. Thus, all the figures need to be checked before the financial statements are prepared. Making ledgers is not a very hard goal. Hence, accounting departments usually prefer fresh professionals to do the job. Ledger accounts are very helpful if there is a calculation error in any financial statement. By looking at the annual statements, it is hard to highlight a mistake. On the other hand, the mistakes can be easily checked by looking at the ledger accounts as each transaction is posted individually. A company can suffer major losses if a transaction is not posted or incorrectly posted in the ledger accounts.
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