Definition
A ledger is an accounting record containing every transaction posted to a specific account or set of accounts. The general ledger is the master record containing every account in the chart of accounts. Subsidiary ledgers contain the detailed records behind specific control accounts: the AR subsidiary ledger holds every open customer invoice; the AP subsidiary ledger holds every open supplier bill; the fixed-asset subsidiary ledger holds every fixed asset with its depreciation schedule.
What a ledger means in practice
For a bookkeeper in a modern accounting platform, the ledger is the underlying data layer that every report draws from. The user enters a transaction at the front end (an invoice, a bill, a manual journal, a bank reconciliation match); the platform writes it to the appropriate accounts in the ledger. The reports (P&L, balance sheet, trial balance, ageing, cash flow) are all generated by reading the ledger.
The historical distinction between “journal” and “ledger” was meaningful in paper-based bookkeeping: the journal was a chronological log of every transaction; the ledger was the organised-by-account derivative posted from the journal. Modern platforms collapse the distinction. A single user action writes to both views simultaneously. The “journal” tab in Xero and QuickBooks is more accurately a chronological view of ledger transactions than a separate journal in the historical sense.
A practical example: a UK consultancy on Xero. When the bookkeeper enters a 6,000 invoice (5,000 net + 1,000 VAT), Xero writes three lines to the ledger: 6,000 debit to AR, 5,000 credit to revenue, 1,000 credit to VAT output. These three lines appear in the chronological journal view, in the by-account general ledger view, in the AR subsidiary ledger (as a new open invoice for the customer), and in the trial balance (as movements to the three accounts). All views are derived from the same underlying entries.
How the ledger works by country
United Kingdom
Ledger records must be retained for six years under MTD (for VAT) and the broader HMRC corporation tax rules. Companies Act 2006 section 386 requires adequate accounting records that show and explain the company’s transactions, with the books retained for at least three years for private companies and six years for public. Most modern UK SMBs run a single integrated ledger in Xero or QuickBooks, with subsidiary ledgers maintained automatically.
Australia
Ledger records must be retained for five years per the ATO. Single Touch Payroll means the payroll subset of the ledger is reported in real time to the ATO at each pay run, so that part of the ledger has a parallel record at the tax authority. The ATO can extend retention during an active audit or where an amendment is in progress.
Canada
Ledger records must be retained for six years after the end of the last tax year per section 230 of the Income Tax Act and section 286 of the Excise Tax Act. The CRA can require records to be produced under audit and applies the gross-negligence penalty in section 163(2) where the records are so inadequate as to amount to neglect.
New Zealand
Ledger records must be retained for seven years per the Tax Administration Act section 22, the longest of our target jurisdictions. Records must be in English or Te Reo Maori, or be readily translatable on request. Inland Revenue can extend the retention period where an investigation is in progress.
Singapore
Ledger records must be retained for five years per ACRA section 199 of the Companies Act and IRAS section 105 of the Income Tax Act. Records must be in English; foreign-language records need certified translations for audit purposes. The penalty for inadequate records is up to SGD 5,000 plus director liability.
Related terms
The ledger is the spine of the accounting system:
- General ledger is the master ledger containing every account in the chart.
- Chart of accounts is the structure the ledger is organised by.
- Every journal entry writes lines to the ledger.
- Accounts payable subsidiary ledger holds the supplier-side detail.
- Accounts receivable subsidiary ledger holds the customer-side detail.
- The trial balance summarises the ledger at a point in time.
See also
For the master ledger specifically, see the general ledger entry.
FAQ
See the answered questions above for general vs subsidiary ledger, ledger vs journal, and exporting the ledger from accounting platforms.