Definition
A ledger account, often a control account, is the second level of a coded chart of accounts, such as 11 Cash and bank balances or 13 Trade receivables. It totals the postable accounts beneath it. Financial statements are usually presented at this level, so its name should match a line you want to see in the statements.
How it works
Think of ledger accounts as the lines of your balance sheet and income statement. Under them sit postable accounts that carry the actual entries: individual bank accounts under cash, types of receivable under receivables.
When a ledger account is a control account for a subsidiary ledger, such as receivables or payables, every posting should carry the counterparty so the detail can be reconciled to the total.
Naming matters: use the wording of your reporting framework (for example "Trade and other receivables" under IFRS) so the statements need little relabelling at year end.
Example: a control account and its accounts
13 Trade receivables totals three postable accounts. Its balance appears as one line on the balance sheet.
| Code | Account | Balance |
|---|---|---|
| 1301 | Trade receivables | 42,000 |
| 1302 | Notes receivable | 6,000 |
| 1304 | Allowance for doubtful receivables | (3,000) |
| 13 | Trade receivables (ledger account) | 45,000 |