What is a Ledger? Meaning, Features, and Examples for Commerce Students
A ledger is an essential tool in accounting, often called the “principal book of accounts.” It records all transactions related to assets, liabilities, income, and expenses. For students and professionals, understanding MCQs on ledger is important for exams, competitive tests, and real business scenarios.
| Basis | Journal | Ledger |
|---|---|---|
| Meaning | Book of original entry – records transactions chronologically | Book of final entry – classifies transactions under specific accounts |
| Main Purpose | Initial recording of all financial transactions | Summarises and groups transactions for each account |
| Format | Simple list of entries | T-account format (debit and credit sides) |
| Preparation | First in accounting process | After journal entries |
| Columns | Date, Particulars, L.F., Debit, Credit | Date, Particulars, J.F., Debit, Credit |
What is a Ledger?
A ledger is the primary accounting book where transactions are grouped and posted under individual accounts. Unlike the journal, which records events as they happen, the ledger helps track each account’s balance by accumulating entries from the journal. It is a book of final entry.
Components of a Ledger Account
Every ledger account uses a T-account structure, split into the debit and credit sides. This format ensures clear accounting and supports accurate financial reporting.
- Date column: When the transaction occurred.
- Particulars: Description of the transaction.
- J.F. (Journal Folio): Page number showing the link to the original journal entry.
- Debit column: Amount recorded on the left side.
- Credit column: Amount recorded on the right side.
| Sample T-Account: Cash Account | ||||
|---|---|---|---|---|
| Date | Particulars | J.F. | Debit | Credit |
| 01-Apr | To Capital | 1 | ₹10,000 | |
| 15-Apr | By Purchase | 5 | ₹2,000 | |
Ledger Posting Process
Posting in a ledger refers to transferring entries from the journal to their respective accounts in the ledger. This step sorts data so that each account reflects its total movements and current balance efficiently.
- Identify the account affected by a journal entry.
- Enter the date and particulars in the relevant ledger account.
- Record the amount on the correct side (debit or credit).
- Enter the J.F. (Journal Folio) for cross-reference.
- Repeat for each transaction and account.
MCQs on Ledger
Practice MCQs are key to mastering ledger concepts. Below are high-frequency questions with their answers to reinforce your understanding.
- A ledger is known as the book of:
(a) Original entry (b) Final entry (c) Temporary entry (d) None of these
Answer: (b) Final entry - Which book is used for the initial recording of business transactions?
(a) Ledger (b) Journal (c) Cash Book (d) Trial Balance
Answer: (b) Journal - The process of transferring entries from journal to ledger is:
(a) Recording (b) Posting (c) Balancing (d) Summarising
Answer: (b) Posting - The left side of a ledger account is called:
(a) Credit (b) Debit (c) Balance (d) J.F. Column
Answer: (b) Debit - Which column in ledger accounts links it to the journal?
(a) J.F. column (b) Particulars (c) Date (d) Amount
Answer: (a) J.F. column - Which of the following contains all personal, real, and nominal accounts?
(a) Ledger (b) Journal (c) Trial Balance (d) Cash Book
Answer: (a) Ledger - “By balance c/d” is found on which side while closing an account with debit balance?
(a) Debit (b) Credit (c) Both sides (d) None
Answer: (b) Credit - When the total of debit side exceeds credit side, the account shows:
(a) Credit balance (b) Equal balance (c) Debit balance (d) No balance
Answer: (c) Debit balance - Which of these appears on the credit side of a ledger account?
(a) Sales
(b) Purchases
(c) Cash received
(d) Rent paid
Answer: (a) Sales - Trial balance is prepared from the balances of:
(a) Cash Book
(b) Journal
(c) Ledger Accounts
(d) Subsidiary Books
Answer: (c) Ledger Accounts
T-Account Examples and Ledger Balancing
The T-account visually summarizes each account’s debit and credit movements. Balancing a ledger means equating both sides and carrying the balance forward to the next period. For more details, see Ledger Accounts.
Real-World Significance of Ledger
Ledgers are vital for daily business. They help organizations track due payments, outstanding receivables, and prepare accurate trial balances. In exams, questions on ledgers check your grip on posting, balancing, and classifying transactions. Competitive tests and commerce interviews often include MCQs on ledger.
Useful Internal Links for Ledger Study
- Difference Between Journal and Ledger
- Ledger Accounts
- Ledger Posting
- Trial Balance
- Types of Accounts
Download MCQ on Ledger PDF
For quick revision and practice, download a free worksheet with MCQs and answers: mcq on ledger pdf.
At Vedantu, we make Commerce concepts like ledger easy to grasp for board exams, CA Foundation, and general business use. MCQs on ledger help reinforce topics for students and aspirants.
In summary, a ledger is the principal book of accounts, used for posting, classifying, and balancing transactions. Mastery of ledger concepts via MCQs is crucial for exams and business understanding. Practice and review are essential for confidence in this key accounting concept.
FAQs on MCQs on Ledger: Concept, Structure, and Exam Practice
1. What is a ledger in accounting, and why is it called the principal book of accounts?
A ledger is a primary book in accounting that groups all financial transactions by account type. It is called the principal book of accounts because it is the final destination for all entries recorded in the journal, and it provides the consolidated balances needed to prepare financial statements like the trial balance, as per the CBSE 2025-26 syllabus.
2. What is the main difference between a journal and a ledger?
The primary difference lies in their function and format. The journal is the book of original entry where transactions are recorded chronologically as they happen. The ledger, on the other hand, is the book of final entry where these transactions are classified and summarised into individual accounts (e.g., Cash A/c, Sales A/c).
3. What are the essential components or columns of a standard ledger account format?
A standard ledger account is presented in a 'T' format with two sides: debit (Dr.) and credit (Cr.). Each side typically includes the following columns:
- Date: The date of the transaction.
- Particulars: The name of the corresponding account that is debited or credited.
- J.F. (Journal Folio): The page number of the journal where the original entry is recorded.
- Amount: The monetary value of the transaction.
4. What is the process of 'posting' from a journal to a ledger?
Posting is the act of transferring entries from the journal to their respective accounts in the ledger. For each journal entry, the amount recorded on the debit side is transferred to the debit side of the relevant ledger account, and the amount on the credit side is transferred to the credit side of its corresponding ledger account.
5. What is the significance of the Journal Folio (J.F.) column in a ledger?
The Journal Folio (J.F.) column serves as a crucial cross-reference. It contains the page number of the journal from which an entry has been posted. This allows for easy auditing and tracing of any transaction back to its original source entry in the journal, ensuring transparency and accuracy.
6. How does the 'T-account' format help in understanding a ledger account?
The T-account format provides a simple visual representation of a ledger account. It clearly separates the two sides of an account—debit on the left and credit on the right. This visual split makes it easier to track the flow of transactions, calculate the net balance, and understand the overall effect of transactions on an account at a glance.
7. Why is the careful balancing of a ledger account crucial before preparing a trial balance?
Balancing a ledger is essential because the trial balance is a statement prepared with the final balances of all ledger accounts. If a ledger account is not balanced correctly, the total of debits in the trial balance will not equal the total of credits. This inequality immediately signals an arithmetical error in the posting or balancing process, preventing the preparation of accurate financial statements.
8. What are some common mistakes students make during ledger posting?
Common mistakes during ledger posting include:
- Posting an entry to the wrong side of an account (e.g., debiting instead of crediting).
- Entering the incorrect amount.
- Omitting a transaction entirely.
- Posting an entry to the wrong account.
- Errors in calculating the final account balance.
9. Can you provide a simple example of how a transaction is recorded in a ledger account?
Certainly. Suppose a business pays ₹5,000 for rent. The journal entry would be "Rent A/c Dr. 5,000; To Cash A/c 5,000". In the ledger, two accounts are affected:
- In the Rent Account, ₹5,000 would be posted on the debit side with the particular "To Cash A/c".
- In the Cash Account, ₹5,000 would be posted on the credit side with the particular "By Rent A/c".
10. In which real-world business situations does maintaining a ledger prove most important?
Maintaining a ledger is vital in almost all business situations. For instance, it helps a business track how much money is owed by individual customers (Debtors Ledger), how much the business owes to its suppliers (Creditors Ledger), and monitor the balance of key assets like cash and inventory. It is indispensable for tax compliance, loan applications, and internal financial analysis.
11. How does a ledger help in determining the financial position of a business?
The ledger is the foundation for determining a company's financial health. By consolidating all transactions, it provides the closing balances for every asset, liability, equity, income, and expense account. These balances are the direct inputs for creating the Trial Balance, which then leads to the preparation of the Profit & Loss Account and the Balance Sheet, the two key statements that depict a business's profitability and financial position.
