Ledgers

Exam code: 7707

Written by: Ashika|Reviewed by: Caroline Carroll|Updated 2 July 2026

The ledger is a collection of all the accounts for a business
- It could be a book where each account is on a new page
- It could be a spreadsheet file where each account is on a new sheet
- Accounting software could be used to manage the ledger accounts

The accounts in the ledger are referred to as ledger accounts
The ledger is divided into three separate ledgers
- The sales ledger
- The purchases ledger
- The nominal (general) ledger

Dividing the ledger means that the work can be shared amongst several people
It is easier to find and check information
- The same types of accounts are kept together
It can help to reduce the possibility of fraud
- If different people work with different ledgers then missing or incorrect information will be easier to find

The sales ledger is a collection of the accounts for all of the credit customers
- These are the trade receivables accounts
The sales account itself does not go into the sales ledger
- It goes in the nominal ledger

The purchases ledger is a collection of the accounts for all of the credit suppliers
- These are the trade payables accounts
The purchases account itself does not go into the purchases ledger
- It goes in the nominal ledger

The nominal ledger is a collection of all accounts of a business except for the accounts for credit customers and credit suppliers
- It is also known as the general ledger
The most common accounts in the nominal ledger are:
- Sales account
- Purchases account
- Sales returns account
- Purchases returns account
- Carriage inwards account
- Carriage outwards account
- Discount allowed account
- Discount received account
- An account for each other expense
- An account for each other income
- Cash and bank accounts
- Capital account
- Drawings account
- Inventory account
- An account for each type of non-current asset
- An account for each liability

The ledger