Theory question 104
Double Entry and the Ledger4. (a) What is a ledger? (b) List and explain three classification of ledger accounts (c) List six accounts found in nominal ledger.
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(a) The ledger is the main book of account in which all accounts are kept, each showing debit and credit entries.
(b) Personal accounts – accounts of people and firms (debtors, creditors, capital). Real accounts – accounts of assets and property (land, buildings, machinery, cash). Nominal accounts – accounts of incomes, expenses, gains and losses (rent, wages, commission received). (Alternatively by ledger: sales ledger, purchases ledger, general/nominal ledger, private ledger.)
(c) Any six: salaries; wages; rent; rates; insurance; electricity; carriage; discounts allowed; discounts received; commission received; interest; sales; purchases; returns.
Personal, real and nominal are the three classes of accounts.