A general ledger is a bookkeeping ledger in which accounting data are posted from journals and aggregated from subledgers, such as accounts payable, accounts receivable, cash management, fixed assets, purchasing, and projects. It is the master set of accounts that summarize all transactions occurring within an entity. The general ledger holds financial and non-financial data for an organization, and each account in the general ledger consists of one or more pages. The ledger accounts are created for each account in the chart of accounts for an organization and are classified into account categories, such as income, expense, assets, liabilities, and equity. The collection of all these accounts is known as the general ledger.
The general ledger is the foundation of a system employed by accountants to store and organize financial data used to create the firm’s financial statements. Transactions are posted to individual sub-ledger accounts, as defined by the company’s chart of accounts. General ledger accounts encompass all the transaction data needed to produce the income statement, balance sheet, and other financial reports. General ledger transactions are a summary of transactions made as journal entries to sub-ledger accounts. The trial balance is a report that lists every general ledger account and its balance, making adjustments easier to check and errors easier to locate.
A general ledger is the system of record for an organizations financial transactions, whether its maintained on paper, on a computer, or in the cloud. It is used to record a company’s ongoing transactions. The general ledger functions as a collective summary of transactions posted to subsidiary ledger accounts, such as cash, accounts payable, accounts receivable, and inventory. The general ledger summarizes a company’s financial position and is the single, agreed-upon record of data for accounting teams tasked with ensuring the books balance, providing status updates on the company’s cash position, recording the information needed for financial statements, and kicking off audit trails.
