August 5th, 2011 : What Is A General Ledger And Why Do We Use It?
What Is A General Ledger And Why Do We Use It?
The general ledger is the core of your company's financial records. It records all transactions performed by the company since day one. It is the central piece to all transactions made in the company. It provides a detailed look at the performance of the company over the long term and serves as an essential part of company management.
The general ledger is connected to subsidiary ledgers called subledgers which are comprised of cash, accounts receivable, and accounts payable transactions. Day to day company transactions are done in the subledgers and once the transactions are complete they are updated in the general ledger as well.
The general ledger is usually in the form of a T-Chart. The ledger will generally contain two columns broken up into credits on the right and debits on the left. By recording or posting a transaction on the ledger, one is able to manage their funds appropriately. More often than not we record transactions from our checking accounts onto a ledger so we know exactly where our balances stand at the close of the day. A quick example refers to an online banking source. By clicking on your checking or savings account you have instant access to your ledger or more commonly regarded as your deposits or withdrawals.
General Ledgers can be very complex or simply aide a person looking to budget their money more consistently. A ledger serves many purposes, and you can never underscore the value of what can be accomplished with it!