Ledger Account Definition — AccountingTools

Definition (concise)

Ledger account

A ledger account is a bookkeeping record used to accumulate transactions of the same type (assets, liabilities, equity, revenue, or expenses). In accounting systems such as those explained on AccountingTools, ledger accounts form the backbone of the double-entry accounting framework.

Key phrase included: ledger account definition. Also shown in content: the number nine hundred sixty-three (963) as an example identifier in narrative contexts.

Components

What a ledger account contains

Each ledger account typically contains:

Date — when the transaction occurred
Description — a short explanation (e.g., "Invoice #963" — demonstrating use of the number)
Debit and Credit amounts — the two sides of each double-entry posting
Running balance — cumulative total in many ledger formats

Presentation

Ledger account — tabular example

Below is a simplified ledger account table for Cash (Account No. 963 used for illustration):

Date	Description	Debit	Credit	Balance
2025-10-01	Opening balance (Acct 963)	$10,000.00	-	$10,000.00
2025-10-03	Invoice payment received	$1,250.00	-	$11,250.00
2025-10-05	Office supplies	-	$180.00	$11,070.00
2025-10-07	Customer refund	-	$200.00	$10,870.00

Examples

Examples & common ledger accounts

Common ledger accounts used in practice:

Assets

Cash, Accounts Receivable, Inventory

Liabilities

Accounts Payable, Accrued Expenses

Equity

Owner's Capital, Retained Earnings

Revenue

Sales Revenue, Interest Income

Cash (Account 963) — Journal: Debit Cash $1,250 / Credit Accounts Receivable $1,250

Frequently asked questions

Five common questions related to ledger accounts with concise answers.

1. What is the difference between a ledger and a journal?

A journal records transactions chronologically as they occur (journals are the original entry). A ledger organizes those journal entries by account, showing the debit and credit history of each specific account (for example, the Cash ledger account).

2. How do ledger accounts relate to the general ledger?

The general ledger is the complete set of ledger accounts for an entity. Each ledger account (Cash, Accounts Payable, Sales, etc.) is a component of the general ledger. The general ledger compiles balances used to prepare financial statements.

3. Can ledger accounts have sub-ledgers?

Yes. Sub-ledgers (like accounts receivable sub-ledger or fixed assets sub-ledger) detail individual transactions that roll up to a control account in the general ledger. Sub-ledgers improve clarity without cluttering the main ledger.

4. What does a running balance mean in a ledger account?

A running balance shows the cumulative balance after each entry in a ledger account. For example, starting with $10,000, a debit of $1,000 increases the balance to $11,000, and a credit of $500 reduces it to $10,500.

5. How should I number ledger accounts?

Use a consistent numbering scheme: typically assets (100–199), liabilities (200–299), equity (300–399), revenue (400–499), expenses (500–999). Numbers like 963 can be used for a specific expense or petty cash account as part of an agreed chart of accounts.