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Expenses Ledger account: –
Expenses Ledger account means those specific ledger accounts which are related to that amount which is paid or due to paid for goods and services which are consumed within the current Financial year. These amounts are known as Expenses.
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The Following are the name of Expenses and losses account: –
- Purchase a/c
- Freight and Transportation
- Octroi
- Carriage
- Commission paid
- Rent paid
- Wages
- Salary
- Staff welfare
- Bonus to Employees
- Printing and Stationery
- Postage and Stamps
- Electricity Charges
- Telephone and Mobile bills
- Repair and Maintenance
- Interest on Loan
- Interest on Capital
- Loss on sale of Asset
- Loss of goods by Theft
- Loss of Goods in Transit
- Insurance Charges
- Bad Debts
Expenses Ledger account balancing: –
It is also known as Closing of Expenses Ledger account for the specific account. The closing of ledger accounts is included in the following steps : –
- 1st Step: Totaling both sides.
- 2nd Step: Writes the total of the largest side on both sides.
- 3rd Step: Subtract the shorter side total from the larger side total.
- 4th Step: Now, Write balance amount of larger side which we get after subtracting it from the shorter side on the shorter side of the ledger account.
Note: –
- Expenses account always has a “Debit balance”
- Expense Ledger account balance always transferred to the Income statement at the end of each financial year.
Now we will explain it further with the help of the following illustration.
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We will show only transactions related to the particular expense account
Illustration:
Prepare Freight and Transportation A/c for the Month of Jan-18.
| Date | Transaction | Amount |
| 01/01/18 | Transportation paid on the purchase of goods from Ram | 10,000 |
| 09/01/18 | Freight paid on the purchase of goods from Arun | 5,000 |
| 17/01/18 | Purchase goods from Raman and Transportation charge paid for | 20,000 |
| 29/01/18 | Purchase goods from Raman and Freight paid for | 7,000 |
Solution:
After posting all the transaction in the journal and then posted it in the ledger we will get ledger account as shown below:
Freight and Transportation A/c
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/01/18 | To Cash a/c | 10,000 | |||||
| 09/01/18 | To Cash a/c | 5,000 | |||||
| 17/01/18 | To Cash a/c | 20,000 | |||||
| 29/01/18 | To Cash a/c | 7,000 | |||||
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2nd Step: Writes the total of the largest side on both sides. So,
Freight and Transportation A/c
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/01/18 | To Cash a/c | 10,000 | |||||
| 09/01/18 | To Cash a/c | 5,000 | |||||
| 17/01/18 | To Cash a/c | 20,000 | |||||
| 29/01/18 | To Cash a/c | 7,000 | |||||
| 42,000 | 42,000 |
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3rd Step: Subtract the shorter side total from the larger side total.
Total of the debit side(Largest side) subtracted from the credit side total(shortest)
we got 42000 – 0 = 42,000/-
4th Step: Now, Write balance amount of larger side which we get after subtracting it from the shorter side on the shorter side of the ledger account as shown below.
Freight and Transportation A/c
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/01/18 | To Cash a/c | 10,000 | |||||
| 09/01/18 | To Cash a/c | 5,000 | |||||
| 17/01/18 | To Cash a/c | 20,000 | |||||
| 29/01/18 | To Cash a/c | 7,000 | |||||
| 31/01/18 | To Income Statement a/c (B. Fig.) | 42,000 | |||||
| 42,000 | 42,000 |
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