Definition and Use of Ledger
Definition of Ledger
A Ledger is a section of a database table. A Ledger only contains those dimensions of the totals table that the ledger is based on and that are required for reporting. A ledger group is a combination of ledgers for the purpose of applying the functions and processes of General Ledger Accounting to the group as a whole. Often a ledger group only contains one ledger.
Use of Ledger
Within the General Ledger, Parallel Accounting stores and posts data in separate ledgers that allow different accounting principles to be used. There is a single leading ledger with the leading valuation view while the remaining principles are the parallel accounts.
For example, international companies that belong to a group may have multiple branches in different countries and need several statements with differing accounting principles. Parallel accounting allows them to enable valuation and closing transactions for a company code based on group accounting principles as well as those more specific to local specifications. The system prepares financial statements in accordance with local accounting principles and, also per IFRS or US GAAP.
Example of Ledger
Bike Company
Bike Company is using 2 ledgers to represent local accounting principles and international IFRS accounting principles:
- 0L: Local Accounting Principles
- 2L: IFRS Accounting Principles