Which of the following best describes a ledger?

The best description of a ledger is that it serves as a comprehensive collection of accounts that records all transactions of a business. In accounting, a ledger is an essential tool used to compile and organize all financial transactions over time. Each account within the ledger contains records of transactions related to specific aspects of the business, such as assets, liabilities, equity, revenues, and expenses. This systematic arrangement allows for efficient tracking of the company’s financial position and aids in preparing financial statements.

A ledger provides a clear and detailed view of how transactions impact each account and is crucial for maintaining accurate financial records. It is structured to allow easy retrieval and analysis of information, which is vital for decision-making and compliance with financial reporting standards. This comprehensive overview is what differentiates a ledger from the other choices, which center on different aspects of financial management but do not encompass the full scope of transaction recording within a business.