Three division of ledger and their uses

Here we discussed the three divisions of ledger accounts. As well as their uses. In the previous article, we explain the importance of the Ledger book as well as its format. The types of these books include general, sales and purchases ledgers. The general ledger is used for all impersonal accounts and some personal accounts. While sales and purchases ledgers are for personal accounts.

1. General ledger

This is a division of the ledger for all accounts that cannot be posted in the sales and purchases ledgers. Another name for it is the nominal ledger. It contains the cash book, capital account, income, expenses, real and intangible accounts.

1.1 Uses of general ledger

Contains accounts of impersonal nature such as sales account, commission received, bad debts, provision for depreciation and so on. It also contains some personal accounts such as capital and bank accounts. Therefore, transactions relating to these ledgers are posted here.

2. Sales ledger

Another name for sales ledger is the debtors or account receivables ledger. It records transactions relating to debtors or trade receivables. Money owed to the business is posted here. It usually gets its information from the sales day book and return inwards journal.

2.1 Uses of the sales ledger

The main use of the account receivables ledger is that it post transactions relating to credit sales to customers. Therefore, it shows the total debt owed to the business. It is from this ledger the account receivables schedule is prepared. Also, most accounting software can generate this schedule in a single click. 

3. Purchases ledger

The purchases ledger is the ledger for suppliers and vendors of goods that the business resale. This division of ledger contains the total amount a business owes suppliers and vendors. It is also known as account payables ledger or creditors ledger. 

3.1 Uses of purchases ledger

The main use of the account payable ledger is that it is used to post transactions relating to the credit purchases. Return outwards if goods. It can serve as a source for creditors' schedules which shows the amount owed by the business to each vendor and the total trade debts owed.

4. Conclusion

In summary, the ledger is subdivided into sales, purchases and general ledger. Each ledger has their uses. While the account receivables and payables ledger are used to post transactions of personal nature, the general ledger posts transactions that are impersonal and a few personal accounts like bank and capital accounts.