Maintaining of ledger is a must in every accounting system. It is necessary as will be clear from its advantages.
- Transactions relating to a particular person, item or heading of expenditure or income are grouped in the concerned account at one place.
- When each account is periodically balanced it reflects the net position of that account.
- Ledger is the stepping stone for preparing Trial Balance - which tests the arithmetical accuracy of the accounting books.
- Since the entries recorded in the journal are referenced into ledger the possibility of errors of defalcations are reduced to the minimum.
- Ledger is the destination of all entries made in journal or sub-journals.
- Ledger is the "store-house" of all information which subsequently is used for preparing final accounts and financial statements.