Important Points for IC 26 - Life Insurance Finance Exam
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A ledger is the principal book as well as the book of final entries. It contains, in a series of classified and summarized accounts, a permanent record of all the trader's transactions under various Heads of Accounts.
Journal entries are to be posted to the Principal Ledger twice. The amount appearing against the account head in the Debit column of the journal is posted to the debit side of the account in Principal Ledger and amount appearing against the account head in the credit column of the journal is posted to the credit side of the account in the Principal Ledger.
The cash book is a book of prime entry of a special kind as it is also a part of the ledger system. The cash book is meant to record all cash transactions, whatever may be their nature.
A trial balance is the summary of all the ledger account balances at a particular point in time. A trial balance is prepared to list, at one place, the balances of all the ledger accounts. This helps the accountant to check the arithmetic accuracy of accounting.
The accounting equation is the fundamental relationship between the following three concepts: Assets = Liabilities + Capital
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