Ledger explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A ledger holds one account for each head of the business: cash, capital, purchases, sales, each customer and each supplier. Posting means copying each journal entry to the debit side of one account and the credit side of another. Balancing means finding what is left on each account so that the figures can be listed and tested. Our bookkeeping and online accounting team does this every month for small businesses.
Post each debit to the debit side and each credit to the credit side of the named account, with the date and the name of the other account as the particulars. To balance, total both sides, enter the difference on the smaller side as "balance c/d" (carried down), and bring the same figure down on the opposite side as "balance b/d" at the start of the next period. Balances of assets, liabilities and capital are carried forward; income and expense accounts are closed into profit and loss at the end of the period.
What a ledger is for
The journal records transactions in time order. The ledger groups them by account so that you can see, for example, how much a supplier is owed or what the cash balance is. See journal entries and the rules of debit and credit for the step before this one. A ledger account is two-sided: the left side is the debit side, the right side the credit side.
Posting step by step
- Take the journal entry and identify the account debited and the account credited.
- In the debit account, write the date, the particulars ("To" followed by the name of the credited account) and the amount on the debit side.
- In the credit account, write the date, the particulars ("By" followed by the name of the debited account) and the amount on the credit side.
- Write the page or folio number of the ledger in the journal and of the journal in the ledger, so that each entry can be traced either way.
- For a compound entry, post each debit and each credit to its own account.
The folio is a cross-reference. It is how an auditor or a new accountant finds the source of a ledger line.
Balancing step by step
- Total the debit side and the credit side.
- If the debit total is larger, the account has a debit balance. Write "By balance c/d" (carried down) on the credit side for the difference, so that both sides now show the same total.
- If the credit total is larger, write "To balance c/d" on the debit side.
- Write the total on both sides at the same level, then bring the balance down on the opposite side at the start of the next period as "b/d".
- An account whose two sides are already equal needs only the totals and shows a nil balance.
Asset, liability and capital balances carry into the next period. Nominal accounts (income and expense) are transferred to the profit and loss account at the end of the year and start the next year at nil. For why this is so, see our article on final accounts of a sole proprietor.
Worked example: Kapoor Hardware, April 2026
The entity and all figures in this example are invented for illustration.
Kapoor Hardware starts business on 1 April 2026. GST is ignored here; see accounting entries under GST for the tax accounts. The eight journal entries are:
| No. | Date | Debit account | Credit account | Amount |
|---|---|---|---|---|
| 1 | 1 Apr | Cash | Capital | 1,50,000 |
| 2 | 3 Apr | Purchases | Mehta Suppliers | 90,000 |
| 3 | 6 Apr | Cash | Sales | 60,000 |
| 4 | 10 Apr | Rent | Cash | 12,000 |
| 5 | 14 Apr | Mehta Suppliers | Cash | 50,000 |
| 6 | 18 Apr | Purchases | Cash | 25,000 |
| 7 | 22 Apr | Cash | Sales | 45,000 |
| 8 | 27 Apr | Cash | Capital | 20,000 |
The total of the Amount column, 4,52,000, is both the total debits and the total credits of the journal.
Posting to six accounts. Each table shows the debit side on the left and the credit side on the right.
Cash account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 1 Apr | To Capital | 1,50,000 | 10 Apr | By Rent | 12,000 |
| 6 Apr | To Sales | 60,000 | 14 Apr | By Mehta Suppliers | 50,000 |
| 22 Apr | To Sales | 45,000 | 18 Apr | By Purchases | 25,000 |
| 27 Apr | To Capital | 20,000 | 30 Apr | By Balance c/d | 1,88,000 |
| Total | 2,75,000 | Total | 2,75,000 | ||
| 1 May | To Balance b/d | 1,88,000 |
Capital account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 30 Apr | To Balance c/d | 1,70,000 | 1 Apr | By Cash | 1,50,000 |
| 27 Apr | By Cash | 20,000 | |||
| Total | 1,70,000 | Total | 1,70,000 | ||
| 1 May | By Balance b/d | 1,70,000 |
Purchases account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 3 Apr | To Mehta Suppliers | 90,000 | 30 Apr | By Balance c/d | 1,15,000 |
| 18 Apr | To Cash | 25,000 | |||
| Total | 1,15,000 | Total | 1,15,000 | ||
| 1 May | To Balance b/d | 1,15,000 |
Sales account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 30 Apr | To Balance c/d | 1,05,000 | 6 Apr | By Cash | 60,000 |
| 22 Apr | By Cash | 45,000 | |||
| Total | 1,05,000 | Total | 1,05,000 | ||
| 1 May | By Balance b/d | 1,05,000 |
Mehta Suppliers account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 14 Apr | To Cash | 50,000 | 3 Apr | By Purchases | 90,000 |
| 30 Apr | To Balance c/d | 40,000 | |||
| Total | 90,000 | Total | 90,000 | ||
| 1 May | By Balance b/d | 40,000 |
Rent account
| Date | Particulars | Debit | Date | Particulars | Credit |
|---|---|---|---|---|---|
| 10 Apr | To Cash | 12,000 | 30 Apr | By Balance c/d | 12,000 |
| Total | 12,000 | Total | 12,000 | ||
| 1 May | To Balance b/d | 12,000 |
Closing balances.
| Account | Debit balance | Credit balance |
|---|---|---|
| Cash | 1,88,000 | |
| Capital | 1,70,000 | |
| Purchases | 1,15,000 | |
| Sales | 1,05,000 | |
| Mehta Suppliers | 40,000 | |
| Rent | 12,000 | |
| Total | 3,15,000 | 3,15,000 |
Check: cash side totals are 2,75,000 on both sides (1,50,000 + 60,000 + 45,000 + 20,000 = 2,75,000; 12,000 + 50,000 + 25,000 + 1,88,000 = 2,75,000). Debit balances 1,88,000 + 1,15,000 + 12,000 = 3,15,000 equal credit balances 1,70,000 + 1,05,000 + 40,000 = 3,15,000. The list of balances is the trial balance, which our guide on preparing a trial balance takes up.
Common mistakes in posting and balancing
- Posting to the wrong side: debiting cash when it was paid out. The trial balance will show the difference as twice the amount.
- Missing one side: an entry posted to one account only leaves the trial balance out of agreement.
- Balance written on the wrong side: the balancing figure goes on the smaller side so both totals match.
- Carrying forward a nominal account: rent and sales are closed to profit and loss, not carried forward.
- Skipping the folio: without it, a figure cannot be traced to the journal.
Need help with ledgers?
If your ledgers have unbalanced accounts or entries that cannot be traced, we can post, balance and reconcile them with the journal. Speak to us about bookkeeping and online accounting and we will bring the books to the month-end.
Key takeaways
- Post debits to the debit side and credits to the credit side of the named accounts.
- Balance by totalling both sides and entering the difference on the smaller side as balance c/d.
- The next period opens with the balance b/d on the opposite side.
- Asset, liability and capital balances are carried forward; income and expense accounts are closed.
- The list of ledger balances forms the trial balance.
Read next
- Journal entries: rules of debit and credit
- Trial balance: how to prepare it
- Subsidiary books of accounts
- Accounting entries under GST
Disclaimer: Based on the Accounting Standards issued by the Institute of Chartered Accountants of India as on 1 April 2025, the Companies (Accounting Standards) Rules, 2021 as amended up to G.S.R. 169(E) of 10 March 2026, the Companies Act, 2013 and the ICAI guidance named in the article, as consulted on 4 October 2026. The worked example uses invented figures. Later amendments should be checked on icai.org and mca.gov.in. This article is general information, not legal advice; check the official text before acting.