Accounting

Asset Ledger Accounts

 This group is divided into two sub-groups:

  1. Fixed Assets
  2. Current Assets (also called Short-Term Assets)

Fixed assets include mostly equipment, machinery, and buildings – assets used by the firm for many years. Ledger accounts for fixed assets represent mostly receipts, such as the gluing machinery ledger account and the computers ledger account.

Guling Machinery Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions Contra Account
Purchase of gluing machinery Lisa Machinery 5,000 5,000D

Computers Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions Contra Account
Purchase of comuters Victory Computers 3,000 3,000D


Current Assets

Current assets consist mostly of four groups of assets. What all four types of current assets have in common is that they will not remain in the same group for long. This will be explained more thoroughly later.

The four groups of current assets are as follows:

  1. Accounts Recievable

    This refers to customers who have purchased products, but have not yet paid their full debt. The balance of their debt to the company is an asset to the company. A separate ledger account is kept for each customer. The balance in the ledger account constitutes evidence of the customer’s debt (like a customer who buys from a grocery store on credit, and has a ledger that lists all of his purchases and the total debt that he has accumulated). When the customer pays his debt, the asset called credit to customers is eliminated, and the company acquires a new asset in its place: cash.

  2.    Cash

    Cash is usually deposited in a current account in the banks. The ledger accounts in which the registration is handled are named Current Account in Bank A and/or Current Account in Bank B, etc.

  3. Inventory

    This refers to materials and/or goods in the possession of the company, which it intends to either use to make products or for sale in the near future. The concept of inventory and what it includes will be explained later in more depth.

  4. Deposits of Securities (or Securities for Short)

    The ledger accounts in which this registration is handled are called Securities Deposit in Bank A and/or Securities Deposit in Bank B, etc.

Both cash and cash deposits are usually used in the future for various cash payments, and do not remain in their current group (cash or deposits).

Central Furniture (a Customer) Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions Contra Account
Sales of 20 chairs Sales 7,000 7,000D
Sales of 5 chairs Sales 2,000 9,000D
Payment for 20 chairs Cash 7,000 2,000D

Current Account in Citigroup Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions Contra Account
Payment to Wood supplier Africa Wood 10,000 10,000
Payment to Wood supplier HaBench 2,000 12,000
Payment from custpmer Central Furniture 7,000 5,000

Current assets ledger accounts usually represent both receipt and giving, as in the example of the ledger accounts of Central Furniture (a customer) and Current Account in Citigroup.

Asset Ledger Accounts553Asset Ledger Accounts