General Ledger & Journals - Learn Bookkeeping & Accounting For Free |


Go to content

Main menu:

General Ledger & Journals

Courses & Lectures > BC Lectures Hidden
General Ledger and Journals

Each account that we want to track and keep up with has a separate page or pages maintained in a record book called the General Ledger. The book is organized into major sections just like the Accounting Equation. Do you have any idea what these sections might be ? Come on this question is not that hard. The general ledger's major sections are Assets, Liabilities, Owner's Equity, Revenues, Expenses, and Draws.  

For each item (account) in our General Ledger, we record the increases and decreases for a period(usually a month) and calculate its ending balance. The ending balance of the account is easily determined by adding the increases and subtracting the decreases from the account's beginning period balance.

Ending Account Balance = Beginning Balance plus Increases minus Decreases.  

Simply stated a General Ledger is just a book containing the summarized financial transactions and balances of the accounts for all of a business's assets, liabilities, equity, revenue, and expense accounts.

Methods and symbols you might run across that indicate an account's balance is a debit or credit amount are - (1) Parentheses indicate a credit balance and no parentheses indicate a debit balance. (2) Brackets indicate a credit balance and no brackets indicate a debit balance. (3) Dr indicates a debit balance and Cr indicates a credit balance. (4) Plus Sign indicates a debit balance and Minus Sign indicates a credit balance. Note- The plus and minus are often used by accounting and bookkeeping software programs to indicate debits and credits. Don't get confused and think that the plus sign means an increase or that the minus sign means a decrease. They do not. In this case, they are simply symbols that mean either a debit or a credit.

It logically follows that since we only want summary amounts in our Ledger we need to record the detail entries some place else first. What record(s) do you use to do this ? Your right ! Journals are the preliminary records. All transactions are first entered in a preliminary record called a journal or book of original entry. This process is called journalizing. After your business transactions have been entered in your journals, they are then periodically (usually monthly) summarized and totaled and then transferred (posted) to the General Ledger as summary entries.  

Specialized Journals are journals used to initially record and group special types of transactions such as sales, cash disbursements, and cash receipts in their own journal. Some Special Journals a business will normally have are-Cash Receipts Journal, Cash Disbursements Journal (Check Register), Payroll Journal, Sales Journal, Purchase Journal, and the General Journal. All these journals are designed to record special types of business transactions and post the summarized debit and credit totals accumulated in these journals to the General Ledger periodically (usually once a month).

Back to content | Back to main menu