AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Generalledger1/28/2024 ![]() Generally, a business enters transactions into a journal as they occur so that all information is as accurate as possible, rather than having to reconstruct or guess details at a later date. A journal entry consists of a description of the transaction, the date of the transaction, the accounts it affected (as dictated by the chart of accounts), the amount(s), and for most businesses will be entered in the double-entry bookkeeping method (more on that in a moment). To understand how a general ledger works, you'll need to understand a few related concepts: journals, the basic accounting equation, and double-entry bookkeeping.īefore being entered into a ledger, all transactions are first recorded in a journal, which is sometimes referred to as a “book of first entry” or “book of original entry” because it’s the first place a business records transactions. (If you’re getting hung up on the question, “What is a ledger?” it’s just a book where you will record transactions of a given account/accounts.) Stockholders' equity (common stock, preferred stock, retained earnings)Įach of the accounts in the general ledger has its own sub-ledger accounts, exclusively dedicated to invoices and financial transactions that affect that account, where you can view transactions in greater detail.Expenses (salaries, expense accounts, rent, depreciation).Revenues (sales, service revenues, interest income).Liabilities (accounts payable, mortgages, deferred revenues).Assets (accounts receivable, inventory, investments).Here we've listed the five types of general ledger accounts, along with a few examples of accounts classified under each type: Though some businesses may have more sub-ledgers, all individual transactions the business conducts is entered into the ledger under at least one of these categories. The general ledger for most businesses includes five subsidiary ledgers. Luckily, the general ledger definition is straightforward: It is a financial master document showing a comprehensive record of all business transactions and financial data needed to generate income statements, balance sheets, and financial reports, allowing founders and other stakeholders to quickly get a big-picture look at your business's finances. When it comes to bookkeeping for your business, the most essential record you'll use to understand its overall financial health is the general ledger, also known as a principal book of accounting, and sometimes referred to as a general journal or simply a GL. Blair is an award winning professional accountant and has been involved in designing, developing, and delivering professional accounting programs with Big 4 firms, national accounting bodies, and universities for over two decades.Fortunately, if you've arrived here, you're asking the right questions-or at least one of them-specifically, "What is a general ledger?" Understanding what a general ledger is and how it works (along with a few closely related and relatively straightforward concepts) will provide you a solid base of knowledge with which you'll be able to gain a better understanding of bookkeeping and accounting in general, and more importantly, what it all means for your business. ![]() This app has been developed by Blair Cook CA CPA MBA, founder of ExecutiveFinance.ca. Whether you are a first year student learning the basics of double-entry bookkeeping or a candidate for your professional accounting designation, this app teaches you how to apply International Financial Reporting Standards (IFRS) to practically any transaction. General Ledger is an innovate learning game to teach you all levels of accounting – introductory bookkeeping to intermediate accounting to advanced accounting Compete against other players to complete missions and get out fast before your cover is blown. Whether you are just learning accounting for the first time or perhaps you are working toward a professional accounting designation, this game will allow players to hone their accounting skills by learning journal entries for most sections of a set of financial statements. Welcome to General Ledger! The world's first adventure game for accountants.
0 Comments
Read More
Leave a Reply. |