There are two main classes of ledger accounts. These are

  1. Personal Accounts
  2. Impersonal Account.

Impersonal Accounts are sub-divided into two, namely real account and nominal account.

(1)     Personal Accounts: These are accounts in which transactions with persons and other businesses and organizations are recorded. Debtors and creditors’ accounts are typical examples. If the balances are due for settlement within a year, they represent current assets and current liabilities respectively.

Note: The capital account is a special kind of personal account. It is an account in which the value of the proprietor’s investment in the business is recorded.

It is therefore the proprietor’s or owner’s personal account.

(2)     Impersonal Accounts: These are accounts which record transactions of either “real or nominal” nature. Impersonal accounts are therefore usually divided into “real” and nominal accounts.

(i)      Real Account: These record transactions relating to property and material objects. Examples of such accounts include; Land and buildings, cash at bank, motor vehicles, furniture and fittings, stock of goods for resale. They are known as tangible assets because we can see and touch them. All accounts that relate to tangible assets are therefore real accounts.

(ii)     Nominal Account:  Nominal accounts relate to items that exist in name only. You cannot touch or see such items as they have no physical form. Examples include income, expenses, losses and gains which have been incurred. Thus, wages and salaries general expenses, rents and rates, interest and dividends received (or paid for), are examples of nominal accounts.


A business that is fairly small can conveniently maintain a single ledger in which transactions are recorded by one clerk. But, if the firm is bigger in size, such practice can create problems. First, the work might be too much for one clerk to handle effectively. Secondly, the book can become too unwieldy to permit the extraction of information in time, if and when the need arises. To minimize these problems, it is often considered necessary to divide the ledger into several parts, each concern with specific classes of transactions. The usual divisions of the ledgers are as follows:


This is also called “sold ledger” or “debtors ledger”. The sales ledger contains a separate account for each individual to whom goods have been sold, or for whom services have been performed on credit.

The sales ledger is referred to as the debtors’ ledger because it contains the personal accounts of debtors to the business.

Interpretation of a sale ledger account

The following is an example of a debtor’s account in the sales ledger.

Dr.                                           S. Osakwe            Folio 8                  Cr.

Date Particulars Folio Amount


Date Particulars F. Amount


19X 8       19X 8      
Oct. 1 Balance b/d 800 Oct. 15 Cash 2 720
Oct. 20 Sales   600 Oct. 15 Discount


6 80
Oct. 24 Sales Under

Change on

Sales of

Oct. 20

10 10  
  Oct. 23 Returns


9 150
  Oct. 31 Balance c/d 460
      1,410       1,410
Nov. 1 Balance b/d 460        


The entries in the account may be interpreted as follows:

  1. S. Osakwe’s account is kept on page 8 of the sales ledger.
  2. On 1st Oct., 19×8, he owed N800 to the business being as the balance unpaid at the end of the previous month. This conclusion is derived from the debit balance in his account on 1st October, 19×8.

iii.      On 15th October, he paid N720, having cash deducted as a discount of N80 (i.e. 10% of N800) from his debt for paying promptly. The cash and discounts allowed accounts are kept on pages (i.e. folio 2 and 6 of the relevant ledger respectively.

  1. On Oct. 20, goods worth N600 were sold to him on credit. This fact was stated on the invoice sent to him with goods. The sales account is maintained on page 10 of the relevant ledger.
  2. Good worth N150 were returned by him on 23rd Oct. and he was sent a credit not for N150 on the same date. The returns inwards account is maintained on folios of the relevant ledger.
  3. On 24th October, it was discovered that Osakwe should have been changed N610 instead of N600 for the sale on 20th October. He was therefore sent a debit note of N10 for this undercharge.

vii.      At the end of the month, Osakwe owed N460. If a balance sheet is prepared on 31st October this amount will be included in the amount shown as debtors under current assets.


          This is called a “bought Ledger” or “creditors Ledger”. It contains the personal accounts of creditors. A creditor is a supplier from whom goods or services have been obtained to be paid for at an agreed future date.

Until payment is made, the amount owing is reflected by a credit balance in the personal account of the supplier in the ledger. Such an amount is normally classified under current liabilities in the balance sheet.


Interpretation of a purchases ledger account.

The following is an example of a creditor’s account in the purchases ledger.

Dr.                                           R. Makinde                                        Cr.

Date Particulars Folio Amount


Date Particulars F. Amount


19X 8       19X 8      
May 15 Cash 2 1,080 May 1 Balance b/d 755
May 15 Discount received 7 120 May 12 Purchases 4 445
May 13 Purchases 4 1,000
May 16 Purchases returns 5 100        
May 31 Balance c/d 900        
      2,200       2,200
        June 1 Balance b/d 900


  1. The folio numbers and columns have the same interpretation as in the preceding example.
  2. May 1 on this date R. Makinde was owed N755. This is reflected by a credit balance in his personal account.

iii.      May 12 & 13. Goods were bough on credit from R. Makinde on these dates for N445 and N1000 respectively.

  1. May 15 N1,080 was paid to Makinde in cash in full settlement of the amount owed at the beginning of the month and credit purchases made on may 12th for Making this payment promptly, a discount of 10% on (N755 + N445), N1,200 was received.
  2. May 16th, of the goods bought on May 13th, goods worth N100 were returned to Makinde on this date probably because they were faulty or damaged.
  3. At the end of the month, N900 was owing to Makinde.


  1. GENERAL LEDGER: This is the ledger in which most deal and nominal accounts are kept. For example, the discount allowed and discount received accounts would normally be kept in the general ledger as would many other accounts.


  1. PRIVATE LEDGER: This is a ledger which, for confidential and security reasons, is kept by either the proprietor or the accountant outside the reach of office staff. Examples of accounts which would normally be kept in such a ledger include capital, drawings and profit and loss account.

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