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How do you use an accounting ledger?

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Quick Answer

To use an accounting ledger, set up a list of all accounts associated with a business or entity, and then document all associated transactions, explains the Houston Chronicle. Most accounting ledgers contain information related to transaction date, amount, debit balance and credit balance.

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How do you use an accounting ledger?
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Full Answer

The list of transactions on an accounting ledger can provide useful information related to research, audit techniques and budget preparation, according to the Houston Chronicle. From a research perspective, the accounting ledger displays all transactions associated with a specific account, and these transactions can be compared over different periods. For instance, a comparison of the cash transactions in two different months can provide information on how a company allocates its available capital.

In addition, the accounting ledger offers information for both internal and external auditors, notes the Houston Chronicle. The ledger provides detailed explanation of income and expenses, which is important when looking to reconcile account balances. For instance, if an auditor wants to find out what items make up the revenue account, he can simply refer to the accounting ledger to view the associated activity. The accounting ledger also assists with budget preparation, as financial planners can use the data within the accounting ledger to make future projections for particular account balances.

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