What is General Ledger?

General Ledger is a major accounting note for your business if you use double-entry bookkeeping. Or it could be said to be a complete record of all your company's financial transactions. General ledger is commonly used in preparing financial statements, examining out-of-balance conditions, internal and external audits, and also includes accounts for assets, liabilities, owner's equity, revenues and costs.
The general ledger contains all the financial information used in making the income statement as well as the balance sheet report, and also presents some of the main goals in your business's financial operations.

If the general journal is a chronological record of the transaction, the general ledger is prepared by the account and transaction records, and in the formal notes, the company is able to display the account balance in each post.

Chart of Accounts

The general ledger account is built on your Small Business Account Chart showing the main account that will appear in the financial statements. Chart of Accounts can consist hundreds of accounts depending on the size and complexity of the business.

The general ledger consists of charts such as current assets, fixed assets, current liabilities, long-term liabilities, owner's equity accounts, sales revenue, expense accounts, profits and losses.

The general ledger is built by transferring journal entries from a company's financial transaction or accounting journal to a general ledger.

Entry Journal

Most businesses usually put most of their financial transaction data into an accounting journal.
When a financial transaction occurs and a source document is generated, the transaction goes into the general journal. This general journal will list transactions in chronological order. The date, amount, affected account, and direction of the affected account report will be recorded. When you record transactions, you should make sure your debits and credits stay in balance.

Companies may also have a variety of specialized journals. Some of these specialized journals such as sales journals, cash receipts journal, and cash dispensing journals. The number and type of special journals that the company keeps is determined by each company. If a company uses a computerized accounting system, different special journals will be generated when you enter your financial transactions to a computer.

General Ledger Entry

Once the financial transaction entries are made in the appropriate journal, they will be summarized and entered into the general ledger, generally once a month. Each account has a separate page. Details of the company's financial transactions will be stored in the journal. The general ledger shows all summary information for financial transactions for the company from general journals as well as special journals