Meaning of ledger: Ledger means, a book kept in a business in which different accounts are opened like – accounts related to individuals, accounts related to goods and assets and accounts related to various items of income and expense, based on journal entry or entries in subsidiary books. The term ‘Ledger’ is derived from the word ‘Legger’ which means ‘To keep’. Thus, the entry for a transaction will be recorded in ledger from journal. In short, a book in which different accounts are prepared is known as Ledger or Book of ledger.

Utility: Ledger is the book of accounts in which all types of accounts are kept. On the basis of journal entry, posting is to be made in these accounts. One of the main objects of accounting is to known the financial position of the business on a particular day. Whereas the main object of the ledger is to show, the position of each account in the business. Thus, the purpose of accounting is easily achieved by keeping a ledger.

Initially, transaction is recorded in the journal, therefore it is known as Primary book of accounts. Entries for various transactions are posted from the journal to the ledger. Therefore ledger is known as the Principal or Main book of accounts.

(1) Accounts related to individuals, goods, assets, incomes and expenses are maintained separately in the ledger.
(2) Information related to the transactions of all the accounts is easily available from the ledger.
(3) With the help of ledger, the businessman can easily obtain important business information in future.

Hence, purpose of accounting is not only limited to a recording of monetary receipts and payments. Based on various accounts, a trader can have an idea regarding the financial position, as well as profit-loss of a business. On the basis of summarised summary of accounts, proper decisions regarding business policy can be taken. Necessary and useful information to a trader can be easily and quickly obtained from the ledger. Ledger is an important book of accounts for getting information and making analysis. Therefore, ledger is also known as King of Books.