BALANCE-COLUMN FORM OF THE LEDGER

Before: T-Account Ledger The T-account ledger was introduced as a simple way to record transactions It was an ideal form for learning the rules of debit and credit However, it is not very practical for use in business Does not keep a running balance Difficult to track (and find) errors in specific transactions

Going Forward: Balance-Column Form of the Ledger The most widely used form of ledger account is the Balance-Column Form Sometimes called a Three-Column Account Compare the T-Account and the Balance-Column Form Account What similarities do you notice? What differences can you see?

Chart of Accounts Each account has a title and a number for reference The accounts in the ledger are numbered in the order they appear on the Balance Sheet and the Income Statement Numbering accounts is important for electronic accounting systems would you rather type in ‘Accounts Receivable/L. Carter’ or ‘102’?

Balance-Column Form Specifics Each account is given a number for quick reference The DR/CR column indicates whether the balance in the account is a debit or credit Each account has a separate section in the ledger The date is recorded (note the year and month only have to be rewritten when they change or at the top of a new page) P.R. (posting reference) indicates the Journal page the transaction was recorded on The Particulars column is only used in special circumstances (opening and forwarding entries) A running balance is kept in each account after a transaction is posted

BALANCE-COLUMN LEDGER