Ledgers

Question 1

What is an Account?

Answer 1

• Any item on financial statement that affects the accounting equation
• Ex: Bank, A/R, supplies, Land, A/P, Capital, etc.
• Each item gets a separate account

Question 2

What is a Ledger?

Answer 2

• A group of accounts
• Different types: T-Accounts, Balance Column Accounts

Question 3

How to Create a Ledger

Answer 3

• Each account assigned a “T” with the name of the account written on top
• Records the $ amount from the balance sheet
• The side of the “T” where you will record the dollar amount is based on the accounting equation
• Assets: Left
• Liabilities: Right
• Owner’s Equity: Right
• Final amounts in T-Accounts used to create a new, updated balance sheet