A ledger, also referred to as accounting journal or book, is defined as the record of commercial/financial accounts of an individual and/or business. There are different kinds of ledgers including general ledgers, sales ledgers, and purchase ledgers.

General ledgers take the form of simple two-column T accounts with debits located in the left column and credits on the right. All financial transactions are entered into the ledger in chronological order with the corresponding amount placed on either the left or right column, wherever is appropriate. At the end of the day the account balance is reflected at the bottom of the to show whether and shows whether the cash inflow for the day is negative or positive.

In some cases, a running balance tracked via a third column to the right, which shows the account balance after each transaction. Depending on the scale and nature of the business, there may be different accounts set up in every ledger to reflect different kinds of transactions.

It is very important that all transactions be entered correctly in the ledgers since one missed or incorrect entry can result in serious repercussions. To make help keep track of entries double entry booking is performed by most accountants so that it will be easier to spot inconsistencies. In case the balance sheets indicate that something is wrong bookkeepers will spend hours on end to find the missing or incorrect and remedy the mistake. Mistakes made that are not corrected in time can also be discovered during audits.