II. Very Short Answer Questions
Question 1. What is a ledger?
Answer: Ledger account is a summary statement of all the
transactions relating to a person, asset, liability, expense or income which
has taken place during a given period of time and it shows their net effect.
From the transactions recorded in the journal, the ledger account is prepared.
Ledger is known as principal book of accounts.
Answer: When the total of the debit side is more than the
total of credit side the difference is debit balance and is placed on the
credit side as 'By Balance c/d'.
Question 4. What is credit balance?
Answer. If the credit side total is more than the total of
debit side, the difference is credit balance and is placed on the debit side as
'To Balance c/d.
Question 5. What is balancing of an account?
Answer. Balancing means that the debit side and credit side
amounts are totalled and the difference between the total of the two sides is
placed in the amount column as 'Balance c/d' on the side having lesser total,
so that the total of both debit and credit columns are equal.
Ill. Short Answer Questions
Question 1. Distinguish between journal and ledger.
Answer: Following are the differences between journal and
ledger:
Question 2. What is ledger? Explain its utilities.
Answer: 1. Quick information about a particular account:
Ledger account helps to get all information about a particular account like
sales, purchases, machinery. etc., at a glance. For example, where there are
several transactions with a debtor, the net amount due from a debtor can be
known from the ledger account.
2. Control over business transactions: From the ledger
balances extracted, a thorough analysis of account balances can be made which
helps to have control over the business transactions.
3. Trial balance can be prepared: With the balances of
ledger accounts, trial balance can be prepared to check the arithmetical
accuracy of entries made in the journal and ledger.
4. Helps to prepare financial statements: From the ledger
balances extracted, financial statements can be prepared for ascertaining net
profit or loss and the financial position.
Question 4. Explain the procedure for balancing a ledger
account.
Answer: Following is the procedure for balancing an account:
1. The debit and credit columns of an account are to be
totalled separately.
2. The difference between the two totals is to be
ascertained.
3. The difference is to be placed in the amount column of
the side having lesser total. 'Balance c/d' is to be entered in the particulars
column against the difference and in the date column the last day of the
accounting period is entered.
4. Now both the debit and credit columns are to be totaled
and the totals will be equal. The totals of both sides are to be recorded in
the same line horizontally. The total is to be distinguished from other figures
by drawing lines above and below the amount.
5. The difference has to be brought down to the opposite
side below the total. 'Balance b/d' is to be entered in the particulars column
against the difference brought down and in the date column, the first day of
the next accounting period is entered.
6. If the total on the debit side of an account is higher,
the balancing figure is debit balance and if the credit side of an account has
higher total, the balancing figure is credit balance. If the two sides are
equal, that account will show nil balance.
IV EXERCISES
QUESTION: 1
QUESTION: 2
