Accounting

Table of Contents

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

ParticularsDebitCreditBalance
Particulars of TransactionsContra Account
Loan ACash7,0007,000
Loan BCash2,0009,000
Payment on Account of Loan A1,5007,500

Africa Wood (Supplier) Ledger Account

ParticularsDebitCreditBalance
Particulars of TransactionsContra Account
Purchase of 10 Kg woodPurchase of wood10,00010,000
Purchase of 10 Kg woodCash10,0000