Account 1 Marks Question

An account is a ‘T'shape format having two sides. Left hand side is known as Debit (Dr.) and right hand side is known as Credit (Cr.).

Transactions are first recorded in Journal because it is a book of original entry.

It indicates the amount which is owing to the firm by a person. In other words, he is the debtor of the firm.

Balancing of an account means ascertaining the closing balance of a particular account on a particular date.

When the total of debit side of an account is more than the total of its credit side.

It indicates loss or expense.

It indicates the value of an asset in the books of the firm.

Principal Books of Accounts.

Posting.

Journal Folio or J.F. is the page number of the journal from where the posting has been transferred in the ledger. This page number of the journal is recorded in the ledger in J.F. column.

Debit:

1. Purchases Account.
2. Cash.

4. Salary.

6. Sales Return.
7. Machinery.

8. Drawings.

Credit:

3. Capital.

5. Interest received.

Advantages of Ledger:

1. Provides Complete Information of a Particular Account: Complete information relating to a particular account is available at one place in the Ledger.
2. Information of Incomes and Expenses: In ledger, a separate account is maintained for each income and expense. The amount of total income and total expenses is known from the ledger account.
3. Preparation of Trial Balance: Ledger helps in preparing Trial Balance which ensures arithmetical accuracy of the transactions recorded in books of account.
4. Helpful in Preparing Final Accounts: After preparing Trial Balance, Final Accounts are prepared to know the profitability and financial position of the business.

The Ledger is called the book of final entry because it is the book in which all the business transactions would ultimately find their place.

The book which contains a classified and permanent record of all the transactions of a business is called the Ledger.

A trial balance can be prepared with the help of ledger balances which helps in ascertaining the arithmetical accuracy of the accounts.