Ledger Interview Preparation Guide

In a business, sometimes it is not feasible to carry accounts of all the suppliers and customers in the main ledger. In such cases apart from General or main ledger, the control ledgers are maintained. Control ledgers records the individual accounts. In the end of the period, balance shown in the main ledger has to tally with the balance in the individual ledger accounts maintained in the control ledger.

Purposes of maintaining control ledgers are:

- Sundry Debtors
- Sundry Creditors
- Advances to Staff

Ledger is the book where the transactions of similar nature pertaining to a person, asset, liability, income or expenditure are drawn from the journal or subsidiary books where the transactions are recorded in a chronological order and posted account wise in the Ledger account. Ledger maintains all types of accounts i.e. Personal, Real and Nominal Account.

All the business transactions are first recorded in Journal or Subsidiary books in a chronological order when they actually take place and from there the transactions of similar nature are transferred to Ledger and this process of transferring is called as Ledger Posting.

To know the net effect of all the business transactions recorded in the ledger account, the accounts need to be balanced. Thus, Balancing of Ledger Account means the balances of Debit and Credit side should be equal and this involves following steps:

-First total of both the sides are taken.

-Secondly difference between the totals of both the sides is calculated.

-If the debit side is in excess to the credit side then place the difference on the credit side by writing By Balance c/fd.

- If the total of credit side is in excess to the debit side, place the difference on the debit side by writing To Balance c/fd.

-After placing the difference on the appropriate side, make sure the totals of both the sides are equal.

To remove these checks from Bank Reconciliation, you must reconcile them outside of Bank Reconciliation.

When we are making a payment for services which include service tax, Then entry will be

1. Paid to Port trust for haulage, tipping, sidding etc charges including Service Tax

Party A/c ( Port Services) Dr. 100000
Service tax Credit A/c Dr. 12360
To Bank A/c 12360

2.When making any payment of service tax after availing Servcie Tax Credit

Service Tax A/c Dr. 15000
To Service tax Credit a/c 12360
To Bank A/c 2640

3.When we receive refund

Bank A/c Dr. 12360
To Srevice Tax Credit A/c 12360

Land is such an asset whose value goes on increasing, unlike other assets whose value gets reduce over a period of time. depreciation is charged on assets so that when in future , asset will be replace we will have money to purchase new asset. But in case of land this not happens that is why depreciation is not hcarged on land

For service provider portion
Expense A/C Dr
Service tax deposit A/C Dr
To Creditor A/C
For Service Receiver portion
First you have to create a service tax payable A/C and a vendor A/C in the name of govt. Then pass the following entries

At the time of booking exp.
For liability creation
1)ST payable A/C dr
To vendor a/c
At the time of payment
For payment
2) vendor a/c dr
To bank a/c
For availment of credit
3) ST deposit a/c dr
To ST payable a/c
(OR) otherwise pass manual entry
ST deposit a/c dr
To bank a/c
Note: st deposit a/c is Input credit a/c

Problem statement- There are 2 Regions in a country REGION X & REGION- Y REGION X is closed and GL Trial Balance (TB) is transferred to REGION Y books ( X-TB is uploaded in Y books like a journal we do normally)- No Sub Ledger (SL) level transfer was done There was 1 invoices lying AP SL in X books ( xx722002 )- for 1000 GBP When TB was uploaded in Y books xx722002 was automatically credited by 1000 GBP in Y books Questiion 1- in this scenario are we going to have a mismatch in AP-SL of Y books if yes then how to correct the same. Question-2- can we transfer the SL of X to Y without impacting the P&L & B/S ( creditors account)??