A sales ledger represents a detailed breakdown of all sales whether they have been paid or not. The ledger often contains detailed information about the sale, including the itemized invoice, applied credit notes and amount of the tax. The sales ledger itemizes the sales by customer account and date by date. It also includes each invoice with the amount each customer owes or has already paid. By using this ledger, you can see the total amount of accounts and each individual account by customer. Every time a payment is received, it will be recorded in the sales ledger next to the invoice information, just to be sure that the received payment matches the amount owed.
Why is a sales ledger important to your business?
We can name different ways why this ledger can be useful for your business. At the beginning, it might not seem important to track sales if you are starting out, but once you have much more invoices, you will realize that having this record for your payments can save you a lot of time. Besides this, we can name three more reasons why you need to use the sales ledger:
1. Tracking your Accounts Receivable
On the other side, the purchase ledger is the record of the purchases and expenses, whether you have paid them or not, and the record of how much you still owe. When you put the total unpaid bills on a Balance Sheet, they are usually called trade creditors or accounts payable. This ledger has an account for every supplier that carries all the transactions for the supplier such as:
1. Purchase Invoices
2. Purchase Credit Notes
3. Payments Made
When you put these three types of transactions in the Accounting Software, you can get an immediate calculation of how much money you owe to the other businesses or people. This software will also show you how to allocate and apply the money paid to the bill it relates to. After this step, the bills are regarded as cleared. And if you run an open items or unpaid bills report, you will see just the bills you haven’t paid. And at the end, to make all the accounting records complete, the ledger has to be represented in the general ledger, even though they are separate ledgers. So that every time a transaction is recorded in the purchase ledger it will automatically be recorded in the purchase ledger control account. And that is the way that the general ledger stays in balance.