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A manual business
ledger plays an important role in operating a business efficiently. Accounting
is an essential fundamental factor that determines a business's progression and
it shows the amount of cash flow per month or year. An ideal ledger does not
have to be a well-trained person but having software or a spreadsheet can also
act as one. Various numbers of international businesses use multi-columns or
two-entry financial accounting system which contains debits and credits column
where transactions are recorded in journal entries and will then be transported
into a general accounting ledger later. Without an accounting ledger, ethical
problems might arise within a financial system. Without recording cash flows
and money transactions as well as activities, an accounting system might come
to what is called a 'failure'.
Reading an accounting
ledger
A general ledger is
somewhat similar to charts accounts. Accounting ledgers are important factors
in a business's financial system which, in fact, contains the records of all
transactions and activities that involve finance. The columns and data in an
accounting ledger are organized the same way as it is in a charts account. In a
manual financial system, every general ledger account has its own ledger or
page. However, in a computerized system, each account will have its own file
location or position. An accounting ledger will contain all records which will
generally be essential for a business owner or a financial manger to calculate
and evaluate monthly expenses and profits earned.
Reading a manual ledger
is not at all a difficult task. However, columns, charts, and rows might cause
a little confusion to new users or beginners. To read an accounting ledger
effectively, first look at the entire ledger sheet. Find the name, date, and be
able to spot a transaction section or types. Assets are usually listed first in
the list; from there, find 'cash' then look for an account number (for example:
'100'). Next, observe the entire ledger and make sure to spot out the date,
transaction type, and debit and credit columns. Lastly, glance at the total
amount in an account. Sometimes the sum might appear to be located in the top
right corner of a ledger or at the bottom of a ledger sheet. Many people appear
to have drawn a line underneath the final finance transaction of an accounting
period then write the amount of total balance under the line. However, the
writing formats depend on a company or personal preferences.