Accounting

Debt Ledger Accounts

This group is divided into two sub-groups:

  1. Long-Term Debt.
  2. Short-Term Debt.

     

Long-Term Debt

Long-term debt includes mainly loans that the firm received for long periods of over one year. Every ledger account in this group constitutes evidence of the balance of a specific loan that the company received. If the company received five long-term loans, it will usually have five different ledger accounts.

Short-Term Debt

Short-term debt includes mainly two groups of liabilities:

  • Short-Term Loans – loans that the firm received for short periods (up to one year).
  •  Accounts Payable – This refers to suppliers who sold products to the company, and have not yet received full payment for them. A separate ledger account is kept for each supplier. The balance of the ledger account constitutes evidence of the company’s debt to the supplier.

Loan ledger accounts usually represent both receipt (of the principal of the loan) and giving (of payments on the loan). Suppliers’ ledger accounts usually represent both receipt (of raw materials or services – in short, goods) and giving (payment to a supplier).

Loans from Citigroup Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
Loan A Cash 7,000 7,000
Loan B Cash 2,000 9,000
Payment on Account of Loan A 1,500 7,500

Africa Wood (Supplier) Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
Purchase of 10 Kg wood Purchase of wood 10,000 10,000
Purchase of 10 Kg wood Cash 10,000 0
Debt Ledger Accounts593  Debt Ledger Accounts