What is a Customer Ledger? (with photo)

A customer ledger is a record of all accounts receivable from a company.

A customer ledger is a specific part of a company’s general ledger entirely devoted to the company’s transactions with its customers. Since putting all the various business transactions into one accounting place would be endlessly confusing, companies use separate ledgers dedicated to different aspects of their business. One such subsidiary ledger is the customer ledger, which details all the accounts receivable that a business has accumulated. This is especially necessary when companies have credit agreements with their customers, as these agreements often lead to multiple payments for a single purchased item.

Accounting is a necessary task for any company that wants to do business effectively. If a company cannot control all the money that comes in and goes out, it can cause the money to be lost and not recovered. In addition, tracking all the transactions that a company carries out is necessary when paying taxes. Since a general ledger can become cluttered and confusing if all the different transactions are added at random, ledgers dedicated to specific lines of business are needed. A customer ledger is one such specific ledger.

Certain things are required to be included in a customer ledger. First, all names and important information about a specific company’s customers must be included. Each customer must occupy its own page, which must detail all the different transactions that take place between the company and that customer. Transactions include all purchases made, customer returns and payments made to the company in question.

In many cases, companies may want to keep even more details in their customer books. This can avoid any confusion in the accounting process. For example, if items are being shipped, the shipping order and any shipping ID numbers must be included. The serial numbers of the items being purchased must also have a specific place in the ledger. Copies of actual bills that have been sent to clients are also useful to refer to if there are any discrepancies.

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When companies compiled a customer ledger in the past, it was often done by hand in a section of the ledger or a separate ledger that, combined with books dedicated to accounts payable, inventory, and other aspects of business, covered all accounting. Modern technology has made the accounting process a lot easier as it is often now done by computer software. This requires accountants to simply enter data relating to customers and their purchases. The software then does all the necessary calculations and organizes all the disparate details into a coherent whole.

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