A ledger is the record that holds accounts and their running balances. Where a journal lists transactions in date order, the ledger organises them by account, so each account shows its current position.
What it means
Every transaction recorded in a journal is posted to the ledger, updating the balances of the accounts it touches. The general ledger is the master ledger that all accounts roll up into; subledgers hold the detail behind summary accounts. The ledger is what the financial statements are ultimately drawn from.
Where it fits in
Payroll feeds the ledger through the payroll journal: each pay run produces journal entries for wages, the statutory liabilities and the bank payment, which post to the relevant ledger accounts. The liability accounts in the ledger carry the amounts owed to SARS and funds until they are paid.
Key rules
- Organises transactions by account and holds each account's running balance.
- Journal entries are posted into it to update those balances.
- The general ledger is the master; subledgers hold supporting detail.
- The financial statements are produced from ledger balances.
