1.
Classification of General Ledgers
General ledgers are classified
according to their nature. This classification facilitates the preparation of
financial statements. The classification is as follows:
- Expense Ledgers: All expenses incurred will be posted in
this ledger. Purchase Account, Rent Account, Electricity account,
Maintenance Account and the like will all fall under this category.
- Income ledgers: All income accrued/earned will be posted in this
account. Sales, interest received, Discounts received accounts will
fall under this category.
- Capital ledger: All accounts pertaining to Capital
introduced/drawings will fall under this ledger.
- Asset
ledger: All accounts
pertaining to assets will be posted in this ledger. Cash, Bank,
Debtors, Machinery, Furniture accounts and the like will fall under this
category.
- Liability
ledger: All accounts
pertaining to debts or obligations of the organization will be posted
here. This will include Borrowings, Creditors, Accounts payable and
so on.
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