Transactions as They Come: Q1

Q1: What is a firm’s ledger?

A:

A firm’s ledger is where all the transactions of a firm that are recorded reside. It is where they lie or are laid down. The ledger is made up of several accounts, comprising various assets, liabilities, equity, revenue and expenses. A firm can have as many, or as few, accounts in its ledger as it likes. It all depends on what information the managers of a firm want to capture and know about. There are also various reporting requirements firms must follow in their reporting to external parties that may also affect which accounts in its ledger a firm wants to include and know something about. 

The ledger is often called the general ledger with each account showing the overall total for various types of assets, liabilities, equity, revenue and expenses for which a firm has decided to have specific accounts.

 

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