A Guide to Keeping Sales and Purchase Ledgers

There are three sets of accounts necessary for the effective financial control of any business - the cash book, the sales ledger and the purchase ledger.

A cash book records any transactions that involve the inflow (receipt) or outflow (payment) of money from your business, and is explained in more detail in BIF 30, A Guide to Keeping a Manual Cash Book.

A sales ledger records each sale you invoice for during a month, and each payment you receive from your customers.

A purchase ledger is used to record all your purchase invoices and to show those that are still unpaid. It also allows you to account for any VAT that you could claim back.

Sales and purchase ledgers can be maintained in a simple cash book available from any office stationer. Computerised accounts packages are widespread and user friendly, but it is important that you understand the basic process of maintaining the sales and purchase ledgers for your business.

This factsheet explains what sales and purchase ledgers are and describes how transactions should be recorded in the ledgers. It includes hints and tips and sources of further information.

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