What is a ledger? |

A ledger is used in business or personal finance to keep track of the flow of money over time. When people talk about a "book keeper" or "keeping the books" the word "book" is an informal way of referring to the ledger. Although there are many forms of ledgers (some with stricter rules than others) what most ledgers have in common is that they take the form of an organized list or table of monetary...

A ledger is used in business or personal finance to keep track of the flow of money over time. When people talk about a "book keeper" or "keeping the books" the word "book" is an informal way of referring to the ledger. Although there are many forms of ledgers (some with stricter rules than others) what most ledgers have in common is that they take the form of an organized list or table of monetary gains (credits) or losses (debits). The rows of the table are often ordered by the time at which the credits or debits took place, and this information is often included in one of the columns as a date and/or time of day. The time at which a monetary event occurred, the amount of money involved, and whether the event was a credit or debit (often there are separate credit and debit columns) are the core information in most ledgers. Other information often kept for each transaction include the parties involved in the transaction (i.e. who received the money and who paid the money), as well as any taxes, interest, adjustments, or fees involved in the transaction. Very frequently, ledgers involve a final row or area where all of the credits and debits are added together to get the net balance of money  available.

Ledgers take many physical forms and can be written down with pen and paper or managed digitally in an Excel spreadsheet or database. All that matters is that there is a way to conveniently manage and access the information in the ledger. Ledgers are used in a wide variety of settings and virtually anywhere that money is flowing frequently (for individuals and business alike) there is a need for some form of ledger. Ledgers can be used  for everything from keeping track of sales and returns at retail store to keeping track of the money in a personal bank account. I have attached a  very simple and informal example of ledger for sales at a fictitious fruit stand called "Tom's Fruit Stand."