Application To Double Entry Book Keeping From Cash Book - SS1 Accounting Lesson Note

Ledgers play a crucial role in the double entry bookkeeping system. The cash book is a primary source document that records all cash transactions of a business, including cash receipts and cash payments. The cash book is used to update both the general ledger and the subsidiary ledgers.

General ledgers

The general ledgers are used to record all financial transactions of a business, including assets, liabilities, and equity. Each account in the general ledger represents a different type of transaction, such as accounts receivable, accounts payable, and inventory. The cash transactions recorded in the cash book are posted to the appropriate accounts in the general ledger, thereby ensuring that the financial statements accurately reflect the business's financial position.

Subsidiary ledgers

Subsidiary ledgers are used to keep detailed records of specific types of transactions or accounts. For example, the accounts receivable subsidiary ledger is used to record all transactions related to the business's sales on credit. Each entry in the cash book related to accounts receivable is posted to the appropriate customer's account in the subsidiary ledger, thereby ensuring that the business has an accurate record of all outstanding balances owed to them.