What is a ledger account?

A ledger account is a separate record within the general ledger that is assigned to a specific asset, liability, equity item, revenue type, or expense type. Examples of ledger accounts are:

• Cash
• Accounts receivable
• Inventory
• Fixed assets
• Accounts payable
• Accrued expenses
• Debt
• Stockholders' equity
• Revenue
• Cost of goods sold
• Salaries and wages
• Office expenses
• Depreciation
• Tax expense

Information is stored in a ledger account with beginning and ending balances, which are adjusted during an accounting period with debits and credits. Individual transactions are identified within a ledger account with a transaction number or other notation, so that one can research the reason why a business transaction was entered into a ledger account. Transactions may be caused by normal business activity, such as billing customers or recording supplier invoices, or they may involve adjusting entries, which call for the use of journal entries.

The information in a ledger account is summarized into the account-level totals shown in the trial balance report, which in turn is used to compile financial statements.

The ledger account may take the form of an electronic record, if an accounting software package is used, or a page in a written ledger, if the accounting records are kept by hand.

Related Topics

Accounting journal entries 
The accruals concept 
Adjusting entries 
Debits and credits 
How do I write an accounting journal entry?