General ledger

What is General ledger?

A general ledger is a record of a company's financial transactions that is used to produce financial statements. It typically includes accounts for assets, liabilities, equity, revenue, and expenses.

In order to create the company’s financial statements, a general ledger, which is used to record all financial activities within a business, must be updated regularly. They are used by businesses that employ double-entry accounting to log all financial transactions.

According to the principles of double-entry accounting, each transaction must contain both a debit and a credit entry, with debit entries recorded on the left side and credit entries recorded on the right side. The credit and debit balances should always be equal.

A general ledger is a master accounting record that lists all of a company’s previous credit and debit transactions and forms the basis of the double-entry accounting system. Accounts such as assets, liabilities, expenses, and revenue are used to organize these activities.

For evaluating a company’s financial performance, they are crucial. In order to make better financial decisions as a business owner, you can utilise a them to create a more accurate picture of your organization’s financial health and profitability.

The transactional information found in the general ledger is used to generate a number of financial reports, including cash flow statements, income statements, and balance sheets.