Importance of sales ledger
Hello, in this article we will look at the importance of having a sales book so that you arm yourself with the necessary knowledge that an entrepreneur needs to know.
It is a type of ledger that records sales made on credit to customers. This is very important because as the business expands it will be necessary to sell some goods on credit terms.
1. When there are many sales transactions on credit basis then it will be very difficult to keep track of all sales transactions hence the need of sales ledger in accounts which is used to record details of various customers to whom given credit for goods. For example; If you are in the business of selling women’s shoes and you buy them in large quantities, then sell the large quantities to your customers on credit basis. For example, customer x buys $200,000 worth of women’s shoes on credit. You will need to open for customer x an account under the sales ledger account and record the amount on the debit side of customer X’s account. When customer X partially pays for the women’s shoes, you will post this amount to the credit side of X’s account as this way, you will reduce what that customer owes you.
2. The figures that are posted on the debit side of various customers are used to determine credit sales for a given period of time. This is used to determine total sales for that financial period when you combine or add it to cash sales for the same financial period.
3. This account is also used to reconcile the debtor’s control account, which shows the total receivable of the debtor’s account for a given period of time.
4. The sales ledger can also be used by the auditors of accounts to detect grouping and loading.
I hope the above information was helpful to you.
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