Ledgers

Ledgers are principal records used to store all financial transactions of an entity, organized by account to show cumulative balances. In traditional accounting, the general ledger is the central repository, containing all accounts such as assets, liabilities, equity, revenues, and expenses. Sub-ledgers, such as accounts receivable, accounts payable, and fixed assets, feed data into the general ledger and provide detailed information for individual accounts.

Most ledgers operate under double-entry bookkeeping: every transaction affects at least two accounts with debits and credits, preserving the accounting equation. Transactions are first recorded in a journal and then posted to the appropriate ledger accounts. The posting process updates balances, enabling the production of financial statements. Periodic reconciliation and preparation of a trial balance help verify accuracy before statements like the income statement and balance sheet are issued.

Ledgers have evolved from paper books to electronic systems, including enterprise resource planning (ERP) and cloud-based accounting. In addition to traditional ledgers, the term distributed ledger technology (DLT) refers to a database maintained across multiple nodes in a network, where transactions are recorded on a shared ledger. Blockchain is a well-known form of DLT, characterized by immutability, cryptographic security, and consensus mechanisms.

Historically, ledgers originated with double-entry bookkeeping developed in the Renaissance; Luca Pacioli described the system in 1494. In practice, ledgers distinguish between the journal (the initial record) and the ledger (the organized account-by-account record used to summarize activity and produce reports).