Using Excel to Create Business Account Ledgers

5Keeping track of your account ledgers manually can be quite a headache. Every business transaction will require you to do the necessary calculations and key in the digits manually. With the rise in technology, it has now become easier to keep track of your business transactions. This is through the use of Microsoft Excel’s ledger templates. With these templates, it is quite easy to create your ledgers. You can easily customize the categories and codes. To make it even better, you can easily reuse the same forms from the start. Microsoft Excel does all the saving for you. All you have to do is retrieve the forms and key in the required figures when necessary.

Getting to open the ledgers using Excel is quite simple. All you have to do is follow the steps below:

#1: Open a new Excel tab and click on the ‘File’ tab. Click on the ‘New’ link. A new window contain the available templates will appear on the screen.  Key in “Ledgers” in the search box and perform the search. You will get a couple of ledger templates to choose from. Keenly go through the available leger templates and choose one that best fits your kind of business. You will be required to download it in order to access in in Excel.

#2: The next step is to edit the content of the ledger template. In most cases, the ledger templates will come with general wordings in the various fields. You are required to erase these generic wording and key in the exact information of your business where necessary. The same applies to the G/L Code column. It is up to you to customize it whoever you want. To start with, if the term G/L Code does not impress you, then edit it to GL Code or whatever you prefer. On the other hand, the first cell on the column will also come with a generic number. It is up to you to key in whatever number you want to start the ledger with.

#3: The next step is general modifying all the placeholder texts used in the template. Enter your business name, money budgeted and remaining fields plus any other required fields.

#4: If you feel that you ledger template is now ready to go, the final step is to save it. Click on the ‘File’ tab then ‘Save As’ and finally ‘Save’. Name the ledger file in a manner that you can easily distinguish it; that is if you have a number of them saved up in your computer.


The Different Types of Ledgers

4There are 3 main kinds of ledgers used in the accounting world today. Each of them differs in a number of ways. The main distinction is the function of each. The three ledgers are:

  • Nominal ledger
  • Purchase ledger
  • Sales ledger

Nominal Ledger

The most basic ledger among the three is the nominal ledger. Normally, every business operates in terms of transactions. Some transactions result into a decrease in the amount of assets whereas some result into the decrease of the business’ assets. Apart from the three ledgers, the transactions are also recorded in to some subsidiary accounts such as the capital account, asset account, liability account, gain account, expenditure account and the loss account. Depending on what kind of transaction is being recorded, it will be recorded on the rightful subsidiary account as well as a general ledger. The general ledger is what accountants refer to as the nominal ledger. In most cases, the nominal ledger is always the largest. This is because it contains transactions from all the other subsidiary accounts. In other words, the larger the business, the larger the nominal accounts.

Sales Ledger

Just as the name suggests, a sales ledger is one where all the records of sales are maintained. However, the kind of sale will determine the number of records placed. As earlier stated, each transaction should be recorded in two accounts; the general ledger and the specific account ledger. In this case, if the sale was made on credit, the transaction will be recorded in the general ledger as sales and in the credit account. This will push for a complete record of accounts. A sales ledger is more like a nominal ledger in terms of its appearance. It is normally divided into two; the debit side and the credit side. The debit side is one on the left and the credit side is one on the right. Each client should also have his or her own account. There is no general account for customers. Many a times, the debit sum figure is higher than that of the credit side. This shows that the business transactions are profitable.

Purchase Ledger

The purchase ledger is more or less similar to the sales ledger. The concept is the same the only thing that changes in this case is that the accounts are for purchases. In other words, the purchase ledger reflects the sales accounts. The invoices brought in by the suppliers are the ones used to fill in a purchase ledgers. The layout is similar to that of the sales or nominal ledger.



General vs. Subsidiary Ledger

3Accounting can easily be termed as the backbone of any business or company. It is through accounting processes that the company manages to keep tabs on the transactions of the firm. They are the only ways of knowing just how profitable the business transactions are and vice-versa. However, there are various kinds of ledgers or journals used for this [particular function. There are the subsidiary ledgers and the general ledgers. The two hold rather the same financial information although the general ledger tends to be more diverse since it contains information all the transactions done. There are however a couple of differences between the two as well as similarities.

  • History

The two journals share the same history. They both originated from the father of accounting; Luca Pacioli. He is the one who invented the concept of using journals and ledgers in accounting. He also established the double-entry system of which he referred to as self-balancing. In this case, he meant that the debits and credits are supposed to balance in order for the ledger to be correct. However, the only difference in this case is that the general ledger is meant to contain more general information whereas the subsidiary ledger is meant to contain specific and detailed information.

  • Facts

Usually, subsidiary ledgers are meant to contain very detailed data concerning the financial situation of the firm. However, this information is never mixed up with the data filled into the general ledger. The very large business organizations are the ones most likely to use subsidiary ledgers. The main reason behind this is that the subsidiary ledger contains quite a number of various transactions. This way, the company can easily keep tabs on each and every financial sector of the company. General ledgers on the other hand are just that; general. They do not actually get in the whole aspect of capturing specific financial aspects of the firm.

  • Functions

As stated earlier, subsidiary ledgers are more common in very large organizations. This is mainly due to their ability to separate the various accounting responsibilities and duties within the firm. Each employee gets assigned a different subsidiary ledger to maintain. However, the general staff is assigned with the general ledger. At the end of the day, the findings of the subsidiary ledgers are brought together in the general ledger to come up with a more general view of how the organization is performing. It is now the job of the staff accountants to go through both ledgers and make sure that the information rhymes.


General Tips for Using a Ledger

2Ledgers are what define any businesses financial scene. They provide the business owners and shareholders with a documented account of all the transactions that have been taking part in the business. They also help the key players in the firm understand how positively or negatively the transactions are affecting the business. At the end of the day, the gathered and analyzed financial data is used in various decision making process of the firm. However, getting to understand how to use the ledgers appropriately takes thorough taking in of some basic concepts of the ledger.

The very first concept to be understood is the actual definition of a ledger. What is ledger? How does it benefit your business, company or firm? These are some of the questions that you should be able to answer in order to understand fully just how to use the ledgers. Basically, a ledger is a documented record that is used to maintain all accounts of the firm in its entire accounting system. It is through the ledger that the accounts are neatly maintained and updated. In other words, a general ledger is the only way of keeping tab on the trends happening on various company accounts in accordance to the transactions of the firm with regards to whether it is increasing or decreasing. The final sum found in the ledgers is the ones used in various financial documents of the firm. Once you have fully understood all these, you will be in a better position to get more insight on how to use ledgers.

The chart of accounts is another vital concept in this case. The very step taken in building a general ledger is setting up the chart of accounts. In this case, you will be required to make a list of all your accounts on the chart of accounts (simply referred to as the COA). Balance sheet entries are normally listed under liabilities, assets or maybe equity. The income state meant on the other hand starts with operating revenue, then goes to operating expenses, then the non-operating gains and revenue and finally the operating loses. Normally, the COA is arranged in a numerical manner. Number 1 goes to Equity accounts and liabilities. Number 2 goes to Revenues. Number 3 goes to the cost of goods sold. Finally number 5 goes to the expenses incurred.

Lastly, the terminologies used in accounting are also important. Terms such as t-accounts are very essential in accounts. By understanding what they refer to, one will be in a much better position to understand the whole concept of ledgers and their functioning.



What are General Ledgers?

UntitledA general ledger, more commonly referred to as an accounting ledger, is a basic record for accounting. The main aim of the record is so as to help the business keep track of any financial transaction made during a particular range of time. Financial transactions in this case can be easily divided into two main categories namely credits and debits. Debits normally lead to an increase in the assets of the business whereas credits do the exact opposite. Just as the name suggests, general ledgers contain ALL records of transactions regardless of whether or not the transactions are to be recorded in any of the subsidiary ledgers. Whether it includes cash at hand, accounts receivable, debts or the likes; they all have to be included in the general ledger.

Today, the whole concept of ledgers has been taken to a whole other level with the computerizing of most ledgers. In the past, ledgers were normally maintained manually. Most business men used hand written books as ledgers. They would note down all the transactions after they happened in one account and include receipts and the likes as proof of transactions. However, today, all you need is a fast computer and an accounting software. There are quite a number of software programs available online today. One can easily download one for free online or buy one. The difference will be the features.

The whole concept behind maintaining a general ledger is what accountants refer to as double-entry book-keeping. Normally, there are five types of accounts used in creating a general ledger. These are:

  • Liabilities
  • Assets
  • Expense
  • Revenue
  • Owner’s equity

In some cases, loses and gains are included in the ledger. With that in mind, double-entry book keeping normally affects two accounts. Normally, every time a transaction occurs, it is reflected in two accounts. It is translated equally but with opposite effects on the two accounts. In other words, the credit on one should be a debit in another. The two digits should be equal. At the end of the day, the credit side and the debit side of the general ledger should be equal. The sum figures of the debit and credit on both sides should be equal. If it so happens that the two are not equal, then that will automatically mean that the ledger is wrong. With any errors, the ledger cannot be used in compiling of the financial statements.




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