Maintaining of ledger is a must in every accounting system. It is necessary as will be clear from its advantages.
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- 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.