Ledger Questions and Answers [With PDF]
If the journal is where transactions are first written, the ledger is where they are sorted by account so you can see the balance of every item. Posting and balancing ledger accounts is a favourite exam question. Here are 30 important questions with clear answers and a fully worked example whose figures agree from the journal to the trial balance.
This is Chapter 7 of our Accounting course. Read Journal first, because the ledger is built from it.
Meaning and Importance
Q1. What is a ledger?
A ledger is the principal book of accounts in which journal entries are classified and posted, account by account. All transactions of one account, such as Cash or Sales, are brought together on one page so that the balance can be found.
Q2. What are the key features of a ledger?
- Each account has its own title and its own page.
- It can be kept in T format or running balance format.
- The balance of each account is found separately.
- It is prepared from the journal, and the folio column links the two.
- Ledger balances are used to prepare the trial balance.
Q3. What is the importance of a ledger?
- It shows the total position of every asset, liability, income and expense.
- Information on any account is easy to find.
- It is the source of the trial balance, which checks arithmetical accuracy.
- It helps in preparing the financial statements.
Q4. Why is the ledger called the king of all books of accounts?
- It brings together all transactions of each account in one place.
- It shows the final position of assets, liabilities, incomes and expenses.
- The trial balance, and through it the financial statements, are prepared from it.
- It is the book of final entry. Without it the double entry process is incomplete.
Q5. What is the difference between a journal and a ledger?
| Point | Journal | Ledger |
|---|---|---|
| Nature | Book of original (first) entry | Book of final entry |
| Based on | Source documents | The journal |
| Arrangement | Date order, transaction by transaction | Account by account |
| Narration | Written for every entry | Not written |
| Balance | Not found | Found for every account |
| Use | Records and analyses transactions | Gives the figures for the trial balance |
Terms Used in the Ledger
Q6. What is a closing balance?
The balance of an account at the end of an accounting period. If the debit total is larger it is a debit balance. If the credit total is larger it is a credit balance.
Q7. What is an opening balance?
The closing balance of the previous period, brought down as the first entry of the new period.
Q8. What is a debit balance?
The amount by which the debit side of an account exceeds its credit side. Assets and expenses normally have debit balances.
Q9. What is a credit balance?
The amount by which the credit side of an account exceeds its debit side. Liabilities, capital and incomes normally have credit balances.
Q10. What is an entry?
The act of recording a transaction in a book of account.
Q11. What is narration?
A short explanation written below a journal entry. The ledger itself does not carry narration.
Q12. What is posting?
The process of transferring entries from the journal to the proper ledger accounts.
Q13. What is casting?
Adding up (totalling) the amounts on each side of a ledger account.
Q14. What is the difference between entry and posting?
- An entry is recording a transaction in any book, such as the journal or the ledger.
- Posting is specifically the transfer of journal entries to the ledger, so it is the final stage of recording.
Q15. What is balancing of accounts?
Finding the difference between the debit and credit totals of an account, and writing it on the smaller side so that both sides are equal.
Formats and Abbreviations
Q16. What are the two formats of a ledger?
- T format (two-sided)
- Running (moving) balance format
Q17. What are the features of the T format?
- Debit side on the left and credit side on the right.
- The two sides must have equal totals, so the smaller side is made up with the balance.
- Totals are written level and closed with double lines.
- The balance written on the lower side is Balance c/d, and it is brought down on the opposite side as Balance b/d on the first day of the next period.
Q18. What are the features of the running balance format?
- Debit, credit and balance columns are side by side.
- The balance is worked out after every posting.
- Separate totals of debits and credits are not needed.
Q19. What is C/D?
Carried Down. The balance is written on the lower side of the account to make both sides equal, then carried down to start the next period.
Q20. What is B/D?
Brought Down. The same balance is written below the totals, on the opposite side, as the opening balance of the new period.
Q21. What are C/F and B/F?
Carried Forward and Brought Forward. When an account runs to more than one page, the page total is carried forward at the bottom of one page and brought forward at the top of the next.
Q22. What are C/O and B/O?
Carried Over and Brought Over. They are used in the same way as C/F and B/F, to carry totals from the end of one page to the start of the next.
Q23. What is the difference between C/D and C/F?
C/D carries the balance of an account to the next period after the account is closed. C/F carries a page total to the next page while the account is still running.
Kinds of Ledger and Rules
Q24. How is the ledger classified?
- General ledger
- Subsidiary ledger (debtors ledger and creditors ledger)
Q25. What is the general ledger?
The main ledger that holds the accounts for assets, liabilities, capital, incomes and expenses. Total debtors and total creditors appear in it as control accounts.
Q26. What is a subsidiary ledger?
A separate ledger with an account for each debtor or creditor, so that the amount owed by or to each person is known. The total of the subsidiary ledger should agree with the control account in the general ledger.
Q27. What are the benefits of dividing the ledger?
- Information is easier to find.
- Work can be divided among staff.
- Errors are reduced and easier to trace.
- Responsibility can be fixed on specific persons.
- Control accounts help check that the books agree.
Q28. What are the rules for preparing a ledger account?
- Draw the form: divide the page into a debit (left) and credit (right) side, each with date, particulars, folio and amount columns.
- Post: for the debited account, write the credited account in particulars on the debit side. For the credited account, write the debited account on the credit side.
- Folio: write the journal page number in the folio column of the ledger, and the ledger page number in the journal.
- Cast: total both sides.
- Balance: put the difference on the smaller side as Balance c/d, show equal totals, and bring the balance down on the opposite side as Balance b/d.
Q29. What is the format of a ledger account?
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| Jan 1 | To Capital A/c | J1 | 20,000 | Jan 2 | By Purchases A/c | J1 | 2,000 |
The word To is used on the debit side and By on the credit side in many textbooks.
Worked Example
Q30. How do you prepare ledger accounts from these transactions?
On 1 January 2026, Mr. David started a business with a capital of 20,000. His transactions were:
- Jan 2: Goods purchased for cash 2,000
- Jan 4: Goods sold for cash 3,000
- Jan 7: Opened a bank account by depositing cash 5,000
- Jan 15: Goods purchased on credit 6,000
- Jan 25: Paid salaries 4,000
- Jan 31: Paid office rent 1,500
Step 1: Journal entries
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| Jan 1 | Cash A/c Dr. / To Capital A/c | 20,000 | 20,000 |
| Jan 2 | Purchases A/c Dr. / To Cash A/c | 2,000 | 2,000 |
| Jan 4 | Cash A/c Dr. / To Sales A/c | 3,000 | 3,000 |
| Jan 7 | Bank A/c Dr. / To Cash A/c | 5,000 | 5,000 |
| Jan 15 | Purchases A/c Dr. / To Creditors A/c | 6,000 | 6,000 |
| Jan 25 | Salaries A/c Dr. / To Cash A/c | 4,000 | 4,000 |
| Jan 31 | Office Rent A/c Dr. / To Cash A/c | 1,500 | 1,500 |
| Total | 41,500 | 41,500 |
Step 2: Ledger accounts (T format)
| Dr. Cash A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 1 | To Capital A/c | 20,000 | Jan 2 | By Purchases A/c | 2,000 |
| Jan 4 | To Sales A/c | 3,000 | Jan 7 | By Bank A/c | 5,000 |
| Jan 25 | By Salaries A/c | 4,000 | |||
| Jan 31 | By Office Rent A/c | 1,500 | |||
| Jan 31 | By Balance c/d | 10,500 | |||
| 23,000 | 23,000 | ||||
| Feb 1 | To Balance b/d | 10,500 | |||
| Dr. Capital A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 31 | To Balance c/d | 20,000 | Jan 1 | By Cash A/c | 20,000 |
| 20,000 | 20,000 | ||||
| Feb 1 | By Balance b/d | 20,000 | |||
| Dr. Purchases A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 2 | To Cash A/c | 2,000 | Jan 31 | By Balance c/d | 8,000 |
| Jan 15 | To Creditors A/c | 6,000 | |||
| 8,000 | 8,000 | ||||
| Feb 1 | To Balance b/d | 8,000 | |||
| Dr. Sales A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 31 | To Balance c/d | 3,000 | Jan 4 | By Cash A/c | 3,000 |
| 3,000 | 3,000 | ||||
| Feb 1 | By Balance b/d | 3,000 | |||
| Dr. Bank A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 7 | To Cash A/c | 5,000 | Jan 31 | By Balance c/d | 5,000 |
| 5,000 | 5,000 | ||||
| Feb 1 | To Balance b/d | 5,000 | |||
| Dr. Creditors A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 31 | To Balance c/d | 6,000 | Jan 15 | By Purchases A/c | 6,000 |
| 6,000 | 6,000 | ||||
| Feb 1 | By Balance b/d | 6,000 | |||
| Dr. Salaries A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 25 | To Cash A/c | 4,000 | Jan 31 | By Balance c/d | 4,000 |
| 4,000 | 4,000 | ||||
| Feb 1 | To Balance b/d | 4,000 | |||
| Dr. Office Rent A/c | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | Amount | Date | Particulars | Amount |
| Jan 31 | To Cash A/c | 1,500 | Jan 31 | By Balance c/d | 1,500 |
| 1,500 | 1,500 | ||||
| Feb 1 | To Balance b/d | 1,500 | |||
Step 3: Check. The debit balances are Cash 10,500 + Purchases 8,000 + Bank 5,000 + Salaries 4,000 + Office Rent 1,500 = 29,000. The credit balances are Capital 20,000 + Sales 3,000 + Creditors 6,000 = 29,000. Both totals agree, so the ledger is arithmetically correct. This is the idea behind the Trial Balance.
Quick Revision Points
- The ledger is the book of final entry. The journal is the book of original entry.
- Posting moves entries from the journal to the ledger. Casting means totalling.
- Balance c/d goes on the smaller side, and Balance b/d on the opposite side below the totals.
- Assets and expenses have debit balances. Liabilities, capital and income have credit balances.
- Total debit balances equal total credit balances in the trial balance.
Test yourself with the chapter quiz below, then continue to Cash Book.
