General Ledger

Accounting

(noun)

General Ledger is the final repository of the accounting records and data. In modern accounting softwares, the general ledger works as a central repository for accounting data transferred from all sub-ledgers or modules like accounts payable, accounts recievable, cash management, fixed assets, purchasing and projects. General ledger is the backbone of any accounting system which holds financial and non-financial data for an organization.

Related Terms

Finance

(noun)

The central accounting record of a company or organization consisting of the accounts that support the value items shown in the major financial statements.

Examples of General Ledger in the following topics:

  • Posting

    • When posting the general journal, the date used in the ledger accounts is the date the transaction was recorded in the journal, not the date the journal entry was posted to the ledger accounts.
    • In cross-indexing a notation is made for each entry that indicates which general or special journal account the general ledger entry came from.
    • All transactions made by the company in relation to the bond must be recorded in its general ledger.
    • The general ledger contains all entries from both the General Journal and the Special Journals.
    • Describe how posting affects the General Journal, Special Journal and General Ledger

  • Inputs to Accounting

    • Inputs into accounting include journal entries, the bookkeeping process, and the general ledger.
    • The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger, and general ledger.
    • General Ledger is the final repository of the accounting records and data.
    • Each account in the general ledger consists of one or more pages.
    • The general ledger is where posting to the accounts occurs.

  • The Accounting Cycle

    • The accounting cycle includes analysis of transactions, transferring journal entries into a general ledger, revenue, and expense closed.
    • These Journal entries are then transferred to a Ledger, which is the group of accounts, also known as a book of accounts.
    • The purpose of a Ledger is to bring together all of the transactions for similar activity.
    • Once the entries have all been posted, the Ledger accounts are added up in a process called Balancing.
    • This lists all the balances from all the accounts in the Ledger.

  • Ledgers

    • Most organizations operate with two types of ledgers, the General Ledger and one or more subsidiary ledgers.
    • The General Ledger contains a minimum of one page for each account in the chart of accounts.
    • A General Ledger is a perpetual record of the activity and balances of the accounts.
    • Each company has only one General Ledger (Universal Accounting 2009)
    • The sum of the customer balances in the Accounts Receivable Subsidiary Ledger must equal the Accounts Receivable balance in the company's General Ledger.

  • Bonds Issued at Par Value

    • This generally means that the bond's market and contract rates are equal to each other, meaning that there is no bond premium or discount.
    • Next, it generally pays interest during the term of the bond.
    • When the bond is issued, the company must record a liability called "bond payable. " This is generally a long-term liability.
    • All transactions made by the company in relation to the bond must be recorded in its general ledger.
    • The general ledger contains all entries from both the General Journal and the Special Journals.

  • Reversing Entries

    • To get the expense correct in the general ledger, an adjusting entry is made at the end of the month A for half of the interest expense.

  • The Post-Closing Trial Balance

    • It is prepared after all of that period's business transactions have been posted to the General Ledger via journal entries.
    • The post-closing trial balance can only be prepared after each closing entry has been posted to the General Ledger.

  • A short history of accounting and double entry bookkeeping

    • Modern bookkeeping is generally thought to have been invented during the Italian Renaissance (around 1494 AD, according to one version:
    • It does this by ensuring that each individual transaction is recorded in at least two different (sections) nominal ledgers of the financial accounting system and so implementing a double checking system for every transaction.
    • A Debit value will always be recorded on the debit side (left hand side) of a nominal ledger account and the credit value will be recorded on the credit side (right hand side) of a nominal ledger account.
    • A nominal ledger has both a Debit (left) side and a Credit (right) side.
    • If the values on the debit side are greater than the value of the credit side of the nominal ledger then that nominal ledger is said to have a debit balance.Each transaction must be recorded on the Debit side of one nominal ledger and that same transaction and value is also recorded on the Credit side of another nominal ledger hence the expression Double-Entry (entered in two locations) one debit and one credit (Wikipedia 2009d).

  • What Is a Receivable?

    • In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer; who, in turn, must pay it within an established time frame.
    • The accounts receivable departments use the sales ledger.
    • This is because a sales ledger normally records:

  • Activities to Manage Receivables

    • In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established time-frame, called credit terms or payment terms.
    • The accounts receivable departments use the sales ledger.
    • This is because a sales ledger normally records:
    • The amount of the bad debt provision can be computed in two ways, either (1) by reviewing each individual debt and deciding whether it is doubtful (a specific provision) or (2) by providing for a fixed percentage (e.g. 2%) of total debtors (a general provision).
    • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.