Debitoor Dictionary

Accounting terms explained in a simple way

Over 150 Articles for Founders and Small Enterpreneurs

  1. Audit trail
  2. Balance Sheet
  3. Double entry bookkeeping
  4. Expense
  5. Losses

General ledger - What is a general ledger?

Definition: The general ledger is the primary accounting record of a company which uses double-entry bookkeeping.

Accounts that are usually included in the general ledger are:

The layout of a General Ledger

Each ledger is divided into two sections. The left hand side lists all debit transactions and the right hand side is for the credit transactions.

How the Ledger connects to the Financial Statements

The general ledger is a group of accounts that support the value items which are shown in the major financial statements (balance sheet, income statement).

These value items are created by posting transactions recorded in the sales daybook, purchases daybook, cash book and general journals daybook.

Subsidiary ledgers

The general ledger can also be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger.

For instance, an accounts receivable subsidiary ledger would contain a separate account for each credit customer, tracking that customer's balance separately.

This subsidiary ledger would then be totalled and compared with its controlling account ( Account Receivable in this case) to make sure that accuracy is part of the process of preparing a trial balance.