Types of Ledgers with Examples
In accounting there are three types of ledger accounts, i.e. Personal, Real and Nominal. But as far as Financial and Accounting Systems are concerned, ledgers may be classified in two types only, those are;
Types of Ledgers
Why Accounting software does not recognize any ledger as personal, real or nominal, instead it recognizes it as an Asset, Liability, Income or Expense Ledger?
Grouping of Ledgers
There are four basic groups in Accounting, i.e. .
There may be any number of sub groups under these four basic groups. Grouping is important as this is way to tell software what is the nature of the ledger and where it is to be shown at the time of reporting.
Example: Cash ledger is an asset ledger and should be shown under current assets in Balance Sheet. If we group cash ledger under indirect expenses, it shall be displayed in profit and loss account as expenditure. Software cannot prevent incorrect grouping of ledger.
Originally published at http://waytopinnacle1.wordpress.com on May 24, 2021.
