CHAPTER II 

 THE LEDGER 



The Importance of the Ledger in Accounting. After it 

 is decided how many details are wanted in the financial 

 statements at the close of the year, or how much special 

 information might be wanted during the year, there might 

 be one of several methods chosen by which to record the 

 transactions that affect the year's results. 



They might be recorded: 



1. In narrative or diary form without the use of techni- 

 cal bookkeeping abbreviations. 



2. Directly in the ledger accounts involved. 



3. In a journal, cash book or some other book of original 

 entry, from which they would be posted to the ledger ac- 

 counts. 



The third method is the one used in practice. It is dis- 

 cussed in the chapter dealing with books of original entry. 



The second method is taken up later in this chapter, 

 not because of its practical nature (although it might be 

 used where transactions are involved), but because of the 

 opportunity it affords for an explanation of debits and 

 credits, capital and income, and a general discussion of 

 accounts which are the basic elements in bookkeeping or 

 accounting. With the use of the journal and cash book, 

 as mentioned under method 3, the ledger accounts are 

 the final resting places of all data collected. All data for 

 subsequent use in finding the condition or progress of the 

 business are taken from the ledger. In other words, all 

 essential information goes into the ledger, and all auxiliary 



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