General ledger - What is a general ledger?

The general ledger is the primary accounting record of a company that uses double-entry bookkeeping

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Accounts that are usually included in the general ledger are:

• Current assets and fixed assets
• Liabilities
• Revenues & Expenses
• Gains & losses

The information in the general ledger allows a business to keep track of all incoming and outgoing cash flow as well as generate financial reports and statements to gain a better understanding of the company’s financial health.

The accounts are designed to allow a company to record all transactions that occur. Closely connected to the general ledger is the chart of accounts, the size of which can vary depending on the size of the company (a larger company will have more accounts, a smaller one fewer).

The layout of a general ledger

A general ledger has a typical layout that is followed closely by all businesses that use it in their accounting records. It is divided into two sections that are balanced:

• The left side lists all debit transactions
• The right side contains the credit transactions

Entries to the general ledger are typically handled by a company’s accountant, though smaller businesses and freelancers sometimes choose to manage the recording of basic entries themselves, working with an accountant when necessary.

The general ledger and your financial statements

The general ledger is a group of accounts that support the main items (assets, liabilities and equity) that are shown in the major financial statements such as the balance sheet and income statement.

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

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 ensure that accuracy is part of the process of preparing a trial balance.

General ledger and Debitoor

If you already have a Debitoor account, you’ve probably discovered that it doesn’t have a typical layout for numbered accounts. This is because it is built-in to the software. Income is registered as it is entered on invoices or received directly through online payment or bank statement uploads.

Expenses are easily recorded as they occur from the mobile app or the web app, complete with auto-filling of the important details and automatic category suggestions.

Some Debitoor plans also offer the option to create financial statements such as the profit & loss report, balance sheet, and VAT report with just a click.