A ledger is a book or digital record used to track financial transactions. It organizes information about income, expenses, assets, and liabilities, making it easier for individuals and businesses to manage their finances. Ledgers can be maintained manually or through accounting software, ensuring accurate and up-to-date records. In accounting, ledgers are essential for creating financial statements, such as the balance sheet and income statement. They help in monitoring cash flow and ensuring compliance with regulations. Different types of ledgers include the general ledger, sales ledger, and purchase ledger, each serving a specific purpose in financial management.