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When the total of debit side of an account is greater than the total of credit side, the resultant balance of an account is called Debit balance.

Each page of the ledger is serially numbered and page number of the account in the ledger is called ledger folio.

Correct option is (a) Balance carried forward

On the basis of transactions two separate accounts for discount are to be prepared, viz. Discount allowed and Discount received. As both of these are totally different, therefore balance of discount column is not supposed to be found out.

Bound book type ledger is overall less expensive and easy from the view point of preservation, therefore most of the traders prefer this type of ledger.

Creditor is a giver of benefit and giver’s account is always credited, therefore creditor’s account has credit balance.

There are three different forms of a ledger, which are as follows:

1. Bound book ledger
2. Loose leaves ledger
3. Card ledger

Correct option is (d) Bound book ledger

From the ledger, information regarding financial position and profit-loss of a business can be obtained.

Out of total accounts of the business, except the accounts of debitors and creditors, accounts of all the remaining individuals and other accounts are maintained in one separate ledger, which is known as General ledger.

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.

Correct option is (a) Purchase ledger

Different forms (types) of ledger are as follows :

1. Bound book ledger,
2. Loose leaves ledger and
3. Card ledger.

1. Bound book ledger: This ledger is in the form of bound book. Most of the small traders follow such type of ledger to maintain their accounts. In the beginning of it, index is given and thereafter each page is serially numbered. As and when it is required, new pages can’t be added in this type of ledger because it is a book in bound form. This type of ledger is less expensive and easy from the view point of preservation.

2. Loose leaves ledger : This type of ledger is in filed form. In this system, in place of card, loose leaves or registers with necessary columns are kept. These loose leaves are kept in-between two thick papers or in-between two metal sheets. On the left-hand side of the page sufficient blank space is kept so that it can be systematically punched and can be kept in a binder. In this system, old pages can be removed and new pages can be added just like the card ledger. The structure is connected with a special type of lock. As it is with lock system, it ensures facility of safety. Of course, overall it is an expensive form. This system of ledger generally used by the banks, insurance companies, big companies, etc.

3. Card ledger: In this system, a separate card is maintained for each account. These cards are kept in a steel cabinet. They are arranged on a steel bar in order so that necessary card is easily available. In this system unnecessary or unwanted cards can be removed and new card can be placed in-between. This type of ledger is more safely because all the cards are preserved in a special steel or wooden cabinet and cabinet can be looked also. However, this is an expensive form.

A seperate ledger for business creditors of goods (suppliers of goods) is kept and it is known as Creditor’s ledger.

Correct option is (c) Sales ledger

Fulfilment of main objects of accounting is possible, with the help of ledger only. Therefore, ledger is known as King of Books.

Points of importance of a ledger are as under:

1. Necessary information : With the help of ledger, the necessary information of an account can be obtained at any particular date.

2. Transaction : Summary of transaction can be known with the help of ledger, e.g.,
(1) Information regarding the total purchase, total sales, total purchase return or sales return of the specific period can be obtained.
(2) Information regarding the amount receivable from which customers (debtors) and the amount payable to which traders (creditors), on a particular date, can be obtained.
(3) Accountwise information regarding the expenses and incomes can be obtained on any particular date.
(4) Accountwise information regarding the amount of capital invested and the value of different assets in a specific period can be obtained.

3. Mathematical checking : Mathematical checking of accounts is possible, by preparing a ‘Trial balance’ from the balance of each account of a particular date.

4. Policy related decision: For the policy related decision of the business, collection of necessary information and summary statements to be prepared, are on the basis of the ledger.

5. Clear position: Ledger is a reflection or an image of the transactions entered into. Only on the basis of this, a trader will have a clear picture of his position.

From journal or subsidiary books a process of recording as per the rules of accounting, either on debit or credit side of a concerned account, is known as Positing.

Classification of ledger means, “An arrangement of a ledger in which accounts are classified systematically and that classified accounts are recorded in the separate ledger.”

Three types of ledgers are popular :

1. Bound book ledger,
2. Loose leaves ledger and
3. Card ledger.

To get the information easily and to know the business result, are the main objects of the accounts. With this view point, ledger is known as a second important step in the process of accounts. Initially transaction is recorded in the journal, therefore journal is known as Primary books of accounts. While from the journal entries are posted in the ledger therefore ledger is known as the Principal or Main book of accounts. Out of all the books of accounts, ledger is known as the very important book, because from this book, transactions related to the business can be easily understood.

In short, ledger is a book in which systematic and separate summary of all the types of transactions is prepared. In this way, from the ledger, information related to the transactions of all the accounts is easily avialable. And from that, the financial position of the business and result of the business can be clearly known. Thus, with the view point of utilities and importance, ledger is the principal book of accounts or ledger is the King of Books.

The creditors ledger and debtors ledger can be classified as under:

1. Alphabetically and
2. Areawise.

Correct option is (b) Three or more than three

Correct option is (c) Ledger book

Correct option is (a) is said as settled

Correct option is (c) When the total amount of the debit side is more.

Correct option is (b) Primary book of accounts

There are two sides in an account. The left-hand side of an account is known as debit side and the right-hand side of an account is known as credit side.

Correct option is (c) Account

Correct option is (c) Ledger

Correct option is (b) Two

Correct option is (b) credit balance

(i) Debit balance : If in an account the total of debit side is more than the total of credit side then such an account is said to have a Debit balance.

(ii) Credit balance : If in an account the total of credit side is more than the total of debit side then such an account is said to have a Credit balance.

Correct option is (b) Debit balance

Correct option is (b) Debit side

Correct option is (b) Posting

Correct option is (b) Debit side

Normally, out of total accounts of the business, except the accounts of debtors and creditors, accounts of all remaning individuals and other accounts are prepared in General ledger.

Correct option is (c) Trial balance

Correct option is (a) Ledger

Correct option is (a) Ledger