Question

Explain ledger utilities.

Answer 1

1. Quick information about a particular account: Ledger account helps to get all information about a particular account like sales, purchases, machinery, etc., at a glance. For example, where there are several transactions with a debtor, the net amount due from a debtor can be known from the ledger account.
2. Control over business transactions: From the ledger balances extracted, a thorough analysis of account balances can be made which helps to have control over the business transactions.
3. Trial balance can be prepared: With the balances of ledger accounts, a trial balance can be prepared to check the arithmetical accuracy of entries made in the journal and ledger.
4. Helps to prepare financial statements: From the ledger balances extracted, financial statements can be prepared for ascertaining net profit or loss and the financial position.