A ledger is a book or digital record that stores bookkeeping entries. The ledger shows the account’s opening balance, all debits and credits to the account for the period, and the ending balance. Ledgers may contain detailed transaction information for one account, one type of transaction, or—in the case of a general ledger—summarized information for all of a company’s financial transactions over a period^. Ledgers are also known as the second book of entry.

Ledgers are essential for accounting because they help organize and track all the financial activities of a business. They also provide the basis for preparing other financial statements, such as the income statement, balance sheet, and cash flow statement. There are different types of ledgers, such as:

• General ledger: The main ledger that contains all the accounts and transactions of a business. It is divided into five categories: assets, liabilities, equity, revenue, and expenses.
• Subsidiary ledger: A ledger that contains detailed information for a specific account in the general ledger, such as accounts receivable, inventory, fixed assets, etc. It helps reduce the clutter and complexity of the general ledger.
• Sales ledger: A ledger that records all the sales transactions of a business, such as invoices, receipts, discounts, etc. It helps track the amount and timing of revenue.
• Purchase ledger: A ledger that records all the purchase transactions of a business, such as bills, payments, returns, etc. It helps track the amount and timing of expenses.

If you want to learn more about ledgers, you can check out these sources:

2 https://www.freshbooks.com/hub/accounting/what-is-a-ledger 3 https://en.wikipedia.org/wiki/Ledger 4 https://corporatefinanceinstitute.com/resources/knowledge/accounting/ledger/