book in which all accounts of the business are kept. In effect, the ledger is a classification and summarization of financial transactions and the basis for the preparation of the balance sheet and income statement. The ledger also allows one to see the balance in a given account at a particular time. For example, the cash balance at the end of the month can be seen to determine whether the business has a cash problem. Also revealed in looking at the cash account are the cash receipts and cash disbursements for the period.
In a computerized environment, accounts may be stored on magnetic tape or disks instead of in a ledger binder. The accounting principles are, of course, still the same.
book; in accounting transactions, book of accounts. Contrast with journal in which the transactions are initially recorded.
