Liability Ledger

You borrow money from a bank. That debt counts as a liability...you have to pay it back. Meanwhile, the bank makes similar loans all day long.

When you borrow $50 from your sister, she can probably keep the debt in her head. Even if you give her $12.50 as partial payment, it isn’t too taxing for her to recall, “that deadbeat still owes me $37.50.”

However, a bank has so many loans outstanding, each with a different terms and in a different state of repayment, it needs a central document to keep them straight.

That list is represented by the liability ledger. It's the main document outlining the loans the bank has outstanding.