General Ledger

Loading the player...

What is a 'General Ledger'

A general ledger is a company's main accounting records. A general ledger is a complete record of financial transactions over the life of a company. The ledger holds account information that is needed to prepare financial statements, and includes accounts for assets, liabilities, owners' equity, revenues and expenses.

A general ledger is typically used by businesses that employ the double-entry bookkeeping method - where each financial transaction is posted twice, as both a debit and a credit, and where each account has two columns. Because a debit in one account is offset by a credit in a different account, the sum of all debits will be equal to the sum of all credits.

BREAKING DOWN 'General Ledger'

A company's general ledger can either be a physical book into which credits and debits are posted, or an accounting computer program where the various credits and debits are entered. The general ledger's double-entry bookkeeping requires that each transaction will be entered on the left side, or debit side, of one account and simultaneously on the right side, or credit side, of another account. A general ledger is used to prepare financial statements directly from the accounts, and as a means to identify errors and/or instances of fraud.

RELATED TERMS
  1. Asset Ledger

    The part of a company's accounting records that detail the journal ...
  2. Liability Ledger

    The central file that contains a comprehensive list of all of ...
  3. Accounts Receivable Subsidiary ...

    An accounting ledger that shows the transaction and payment history ...
  4. Ledger Balance

    The balance of a customer account as shown on the bank statement. ...
  5. Credit Ticket

    In accounting and bookkeeping, a credit ticket is a transaction ...
  6. Accounts Payable Subsidiary Ledger

    An accounting ledger that shows the transaction history and amounts ...
Related Articles
  1. Investing

    What's a General Ledger?

    As the heart of the double-entry accounting system, the general ledger is the record of a company's entire financial transaction history. The left side of the general ledger is for debits: assets, ...
  2. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  3. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
  4. Investing

    Accounting Basics: The Accounting Process

    By Bob Schneider As implied earlier, today's electronic accounting systems tend to obscure the traditional forms of the accounting cycle. Nevertheless, the same basic process that bookkeepers ...
  5. Investing

    Explaining Double Entry Accounting

    Double entry is an accounting and bookkeeping term describing the method of entering transactions into the accounting records.
  6. Investing

    Financial History: The Evolution Of Accounting

    Follow accounting from its roots in ancient times to the profession we now depend on.
  7. Investing

    Accounting Basics: The Basics

    By Bob Schneider The Difference Between Accounting and Bookkeeping Bookkeeping is an unglamorous but essential part of accounting. It is the recording of all the economic activity of an organization ...
  8. Investing

    Explaining the Accounting Equation

    The accounting equation is the basis for double-entry accounting, and requires that every business transaction affect two accounts equally.
  9. Investing

    Understanding the Accounting Cycle

    An accounting cycle consists of the traditional procedures performed to record business events and transactions in a company’s accounting records.
  10. Investing

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
RELATED FAQS
  1. What is double entry bookkeeping and how does it work in the general ledger?

    Learn about the double entry method of bookkeeping and how it works in the general ledger. Every accounting transaction has ... Read Answer >>
  2. What's the difference between the general ledger and a general journal?

    Keeping records for most organizations require a double-entry bookkeeping system, which revolves around transactions in the ... Read Answer >>
  3. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  4. How can I use Excel as my business's general ledger?

    Follow these steps to set up a general ledger accounting system in Excel. A small business can use Excel as a substitute ... Read Answer >>
  5. What is the difference between accrual accounting and accounts payable?

    Understand the difference between accrual accounting, an accounting method, and accounts payable, which is a ledger entry ... Read Answer >>
  6. What is the best general ledger software for small businesses?

    Learn more about accounting software and general ledger features. Find out how to choose the right program for small business ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center