Ledger accounting is the process of recording and organizing financial transactions in a systematic way. A ledger is a book, or software system, that contains a company’s financial transactions. Every transaction is recorded in the ledger with equal debits and credits. Transaction debits are written on the left side, while credits are written on the right side. All transactions must balance out.
Ledger accounting helps provide companies with an accurate and comprehensive view of their finances. It provides a real-time snapshot of vital financial information, like cash flow and solvency, and it’s essential for businesses to understand trends, identify opportunities, and ensure long-term success. Put simply, ledger accounting is an important component in the complex world of business.