General Ledger

Manager Settings > Accounts and General Ledger

The General Ledger Module sets up, organizes, maintains your account balances, and provides information for your financial reports.

Tasks Performed:

Sets up Beginning Balances (If Necessary)

Updates and maintains account balances from transactions entered using the different tabs/modules.

Terms and Explanations:

What's the General Ledger ?

The General Ledger is just a book (manual system) or computer file (computer system) containing all the account balances and activity (increases and decreases) for all of a business's assets, liabilities, equity, revenue, and expense accounts that are included in the business's chart of accounts. The General Ledger has an account for each account that is listed in the Chart of Accounts. In other words, your General Ledger is derived from your chart of accounts.

The General Ledger is the central repository of the accounting records and data.

The general ledger is the central point for accounting information, receiving entries from other modules, such as cash receipts, sales, accounts receivable, accounts payable and payroll modules.
The general ledger is the basis for creating key financial documents namely the balance sheet and income statement.
The general ledger is used to record financial transactions not recorded in other modules such as adjusting and closing entries.
The general ledger creates a trail of information used for audit purposes.

Special General Ledger Accounts-Control Accounts

A Control Account is a general ledger account that provides a summarized balance of the detailed balances of the individual records maintained in a subsidiary ledger.

General Ledger Control Accounts only provide us with total amounts. The Accounts Receivable Control Account provides us with the total amount that customers owe us. The General Ledger Accounts Payable Control Account only provides us with the total amount that we owe to suppliers.

Subsidiary Ledgers

A subsidiary ledger is a group of similar accounts whose combined balances equal the balance in a specific general ledger account. The general ledger account that summarizes a subsidiary ledger's account balances is called a control account. The Subsidiary Ledger's purpose is to provide detail information about transactions that are summarized in a General Ledger Control Account.

Examples of subsidiary ledgers are accounts receivable, accounts payable, and equipment.

Another early task to get your books ready is entering beginning balances for the accounts in the General Ledger and detail balances in the Subsidiary Ledgers for businesses that are starting to use a new bookkeeping software program or transfering from a manual bookkeeping system to a computerized system.

If you need to review or learn more about Control Accounts and Subsidiary Ledgers check out my free Special Journals Tutorial.