Glossary
What is Ledger?
A ledger is the record in which transactions are grouped by account, such as cash, sales or one particular supplier, showing running debits, credits and a closing balance. Party ledgers are what confirm who owes what at the end of a period.
A ledger is where you look to answer one question: what is the balance on this account? Every transaction that touches one account, whether cash, sales or a single supplier, is gathered in date order with a running balance.
How it works in practice
An illustrative example: one supplier’s ledger in a kirana shop’s books over a month.
| Date | Detail | Debit | Credit | Balance |
|---|---|---|---|---|
| 1 Shrawan | Opening balance owed | Rs 12,000 | Rs 12,000 Cr | |
| 8 Shrawan | Bill 3381, rice and oil | Rs 48,500 | Rs 60,500 Cr | |
| 15 Shrawan | Paid by bank transfer | Rs 30,000 | Rs 30,500 Cr | |
| 22 Shrawan | Debit note, damaged sacks | Rs 2,500 | Rs 28,000 Cr |
The closing figure, Rs 28,000, is what the shop owes that supplier. Each line came from a source document and, in double-entry books, from a journal entry posted to this account.
Party ledgers
Ledgers kept per customer and per supplier are called party ledgers. They are the working form of accounts receivable and accounts payable: add up every customer ledger and you have what you are owed; add up every supplier ledger and you have what you owe.
Confirming a party ledger with the other side is the check that matters most. Send each customer a statement of account before the year closes and ask them to agree it. A difference found in Jestha is a phone call; found after the Asar close, it is an argument. Party balances also feed the Annex 13 counterparty schedule filed with the VAT return, so a wrong balance becomes a filing problem as well.
How it differs from a journal
The journal records transactions in the order they happen. The ledger regroups the same transactions by account. A general ledger holds every account of the business and is what an accountant prepares the annual accounts from. Many small businesses keep party and cash ledgers day to day and leave the general ledger to their accountant.
In Kuver Books, receivables, payables and the cash ledger are generated from approved documents and recorded payments, so nobody keeps them by hand. The receivables, payables and cash page describes this. Kuver Books does not keep a general ledger.
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