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What is a general ledger?

Author:
Harold Averkamp, CPA, MBA

Definition of General Ledger

A general ledger is a grouping of perhaps hundreds of accounts that are used to sort and store information from a company’s business transactions. The general ledger is organized as follows:

  • Balance sheet accounts (assets, liabilities, equity), and
  • Income statement accounts (revenues, expenses, gains, losses)

Under the double entry system of accounting and bookkeeping, every business transaction will affect two (or more) general ledger accounts. In addition, each transaction’s debit amount(s) must be equal to its credit amounts. As a result, the general ledger is expected to have the total amount of debits equal to the total amount of credits. Further, when the account balances are listed on a trial balance, the totals should be equal.

Examples of a General Ledger

In a manual accounting or bookkeeping system, the general ledger is a “book” with a separate page or ledger sheet for each account. (When a significant amount of detailed information is needed for an account such as Accounts Receivable, a subsidiary ledger is often used.)

In a computerized system, the general ledger will be an electronic file of all the needed accounts. This also facilitates the electronic preparation of the company’s financial statements.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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