What is the General Ledger?
The general ledger is the system of accounts that make up the double entry accounting system.
How it Works
The double-entry accounting system is based upon a series of accounts
Collectively, these accounts form something known as the general ledger.
Each account in the general ledger provides a record of transactions.
The account also has a balance.
These account balances can be shown diagrammatically.
Furthermore, each account falls into one of five categories.
Account Categories in the General Ledger
Asset accounts show what the business owns—or money owed to the business by customers.
Liability accounts show what the business owes to others.
Equity accounts show what the business owes to the owners or shareholders.
Income accounts show what the business earns during an accounting period.
Expense accounts show the business’s running costs during an accounting period.
The general ledger accounts are listed in the chart of accounts.
To learn more about the chart of accounts, join as a free member and read the section chart of accounts.
© R.J. Hickman 2020