What is Capital?

Capital is the total financial asset of a business. It includes cash-in-hand, cash-at-bank, building, furniture, machinery, land etc. Capital is categorized into two different types i.e. working capital, fixed capital.

Working Capital: Those assets or capital used or available for day-to-day operations are called as working capital.

To calculate working capital: working capital = current assets – current liabilities

Fixed Capital: Capital or assets like furniture, machinery is termed as fixed capital. Fixed capital is the biggest advantage for a business as these can be used in bad times to pay debts.

What is Ledger?

Ledger is a collection of different accounts like sales, purchase, income, expense etc. Every transaction should be placed in their respective ledger.
Ledger includes few accounts like assets, liabilities, income and expense, account receivable, accounts payable etc.

Here is an example: