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4. Knowledge of financial position: Ledger provides information about assets
and liabilities of the business. From this we can judge the financial position and
health of the business.
5. Instant information: The business always needs to know what it owes to others
and what the others owe to it. The ledger accounts provide this information at
a glance through the account receivables and payables.

Illustrations:

1. Pass the journal entries of the following transactions for the month of
Ashadh and post them into necessary ledgers.

Ashadh 1 Started business with cash Rs. 30,000
Ashadh 3 Cash purchased Rs. 2,000
Ashadh 5 Cash sales Rs. 1,000
Ashadh 7 Purchased furniture Rs 2,000
Ashadh 9 Paid rent Rs. 2,000
Ashadh 11 Cash deposited in to the bank Rs. 6800
Ashadh 12 Goods withdrawn from business for personal use Rs. 1,000
Ashadh 15 Withdrawn from bank Rs. 500 for personal use
Ashadh 16 Purchased goods from Dev Rs. 1,000
Ashadh 18 Goods sold to Amir Rs. 500
Ashadh 21 Rent paid by cheque Rs. 2,000

Solution:

Date Particulars LF Dr (Rs) Cr (Rs)
Ashadh 1 Cash A/c.......................................................................Dr 30,000
To Capital A/c 30,000
(Being business started with cash)
Ashadh Purchase A/c.......................................................................Dr 2,000
3
To Cash A/c 2,000
(Being Purchased goods for cash)
Ashadh Cash A/c.......................................................................Dr 1,000
5
To sales A/c
(Being goods sold for cash) 1,000

140 Office Practice and Accounting 9