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Financial Costing Ledgers

Financial ledgers

The three important financial ledgers are:

1. General ledger: It contains:

(i) All real, nominal and personal accounts except these of trade debtors and trade creditors.

(ii) A total account, termed as “Cost Ledger Control Account”. It records all items of expenditure and income which relate to cost accounts. This account is a memorandum account only.

2. Debtor’s Ledger: It contains personal accounts of all trade debtors.

3. Creditor’s Ledger: It contains personal accounts of all trade creditors.

Costing ledgers

1. Stores ledger: This ledger contains all stores accounts. A separate account is opened for each item of store.

2. Work-in-progress or job ledger: This ledger records production during a period and the costs incurred. A separate account is opened for each job, product etc. in process.

3. Finished goods or stock ledger: This ledger records details of finished goods. A separate account is opened for each finished or completed product or job.

4. Cost ledger: It is the principle ledger of cost department. It contains:

Cost control accounts: These accounts are maintained for the purpose of exercising control over the three Subsidiary ledger discussed above and also to complete double entry in cost accounts. They summarise masses of detailed information contained in the subsidiary ledgers and thus provide immense help to management in policy formulation. They also facilitate reconciliation of cost and financial accounts.

The important cost accounts are as follows:

Stores ledger control account: The purpose of stores ledger is to maintain item-wise record of raw materials and other stores. In cost ledger, a stores ledger control account is opened pertaining to this subsidiary ledger. The total materials received in stores ledger control account and the total materials issued out of stores (which can be found by looking at materials abstract) is credited in the account.

Work-in-progress ledger control account: For every job, product or process, cost of materials, labour and factory expenses are incurred. All such costs are debited in different accounts relating to different jobs. These accounts are kept in a job or work-in-progress ledger.

Finished goods ledger control account: In finished goods ledger, a separate account is opened for recording the quantity and price of each and every finished product manufactured. In cost ledger, a finished goods ledger control account is maintained. It is also known as stock ledger control account. It represents the total value of finished goods in stock at a particular time.