General Ledger

The general ledger is the primary accounting record used by a business in tracking its individual account balances.

• The general ledger is the core of any ERP financial management system.
• In order to group all the transactions of a similar kind in one place, transactions are rewritten to the respected accounts in general ledger.
• A general ledger account is an account or record used to sort and store balance sheet and income statement transactions.

The type of accounts that make up the general ledger is determined by the chart of accounts.

• This is a unique record where each type of asset, liability, equity, revenue and expenses.
• Examples of assets accounts include Cash, Accounts Receivable, Inventory, Investments etc.
• Examples of Liability accounts include Account Payable, Expenses payable, Customer deposits.
• Examples of Income statements account include Sales, Salary expenses, Rent Expenses etc.
• The process of recording a debit or credit in the general ledger is called posting.

The format of a general ledger looks like :

General Journal :

The general journal is the first book of entry where you record the accounting transactions in a chronological(starting with the earliest) order.

•  We can post the details of the journal and group those accounting entries as per a required account and track its balances.
• The posting of the entries from the journal to the ledger doesn't require deep analysis since it already involves using readily made information from the journal.
• You cannot check the balance of cash accounts in journal since it records entries according to the date of transaction.

The format of a general journal looks like :

General journal and General Ledger representation :

Examples of Ledgers and Journals :