General Ledger (GL) - Corporate Finance Institute

In accountingAccountingAccounting is a term that describes the process of consolidating financial information to make it clear and understandable for all, a ... GeneralLedgerAcompany'spasttransactionssortedbyAccountHome›Resources›Knowledge›Accounting›GeneralLedgerWhatisaGeneralLedger(GL)?InaccountingAccountingAccountingisatermthatdescribestheprocessofconsolidatingfinancialinformationtomakeitclearandunderstandableforall,aGeneralLedger(GL)isarecordofallpasttransactionsofacompany,organizedbyaccounts. GeneralLedger(GL)accountscontainalldebitandcredittransactionsCreditSalesCreditsalesrefer toasaleinwhichtheamountowedwillbepaidatalaterdate.Inotherwords,creditsalesarepurchasesmadebyaffectingthem.Inaddition,theyincludedetailedinformationabouteachtransaction,suchasthedate,description,amount,andmayalsoincludesomedescriptiveinformationonwhatthetransactionwas.   InaccountingAccountingAccountingisatermthatdescribestheprocessofconsolidatingfinancialinformationtomakeitclearandunderstandableforallsoftware,ageneralledgersortsalltransactioninformationthroughtheaccounts.Also,itistheprimarysourceforgeneratingthecompany’strialbalanceTrialBalanceAtrialbalanceisareportthatliststhebalancesofallgeneralledgeraccountsofacompanyatacertainpointintime.TheaccountsandfinancialstatementsThreeFinancialStatementsThethreefinancialstatementsaretheincomestatement,thebalancesheet,andthestatementofcashflows.Thesethreecorestatementsare.Theledger’saccuracyisvalidatedbyatrialbalance,whichconfirmsthatthesumofalldebitaccountsisequaltothesumofallcreditaccounts. GeneralledgeraccountAgeneralledgeraccount(GLaccount)isaprimarycomponentofageneralledger.AGLaccountrecordsalltransactionsforthataccount.Thetransactionsarerelatedtovariousaccountingelements,includingassets,liabilities,TypesofLiabilitiesTherearethreeprimarytypesofliabilities:current,non-current,andcontingentliabilities.LiabilitiesarelegalobligationsordebtequityEquityMethodTheequitymethodisatypeofaccountingusedininvestments.Itisusedwhentheinvestorholdssignificantinfluenceoverinvesteebutdoes,revenues,expenses,AccruedExpensesAccruedexpensesareexpensesthatarerecognizedeventhoughcashhasnotbeenpaid.Theyareusuallypairedupagainstrevenueviathematchingprinciplegains,andlosses.Forexample,cashandaccountreceivablesAccountsPayablevsAccountsReceivableInaccounting,accountspayableandaccountsreceivablearesometimesconfusedwiththeother. Thetwotypesofaccountsareverysimilarinarepartofthecompany’sassets.Ontheledger,eachoftheassetswillhaveitsownGLaccount.YoucanexploreFinancialStatementsfurtherwithCFI’sReadingFinancialStatementsCourse. ControllingAccountsvs.SubsidiaryledgerForalargeorganization,ageneralledgercanbeextremelycomplicated.Inordertosimplifytheauditofaccountingrecordsortheanalysisofrecordsbyinternalstakeholders,subsidiaryledgerscanbecreated.Asubsidiaryledger(sub-ledger)isasub-accountrelatedtoaGLaccountthattracesthetransactionscorrespondingtoaspecificcompany,purchase,property,etc.IfaGLaccountincludessub-ledgers,theyarecalledcontrollingaccounts.Forexample,CompaniesX,Y,andZaretheclientsofCompanyA.Foraccountingpurposes,CompanyAmaycreatethreesub-ledgeraccountscorrespondingtoitsthreeclientsunderaccountreceivables(controllingaccounts)totracetheamountsexpectedtobereceivedfromeachclient. GeneralLedgersandDouble-EntryBookkeepingAgeneralledgersummarizesallthetransactionsenteredthroughthe double-entrybookkeepingBookkeeperTheprimaryjobofabookkeeperistomaintainandrecordthedailyfinancialeventsofthecompany.ABookkeeperisresponsible forrecordingandmaintainingabusiness'financialtransactions,suchaspurchases,expenses,salesrevenue,invoices,andpayments.method.Underthismethod,eachtransactionaffectsatleasttwoaccounts;oneaccountisdebited,whileanotheriscredited.Thetotaldebitamountmustalwaysbeequaltothetotalcreditamount.Assets=Liabilities+Shareholder’sEquityisknownastheAccountingEquationandisamathematicalrepresentationofthedouble-entrysystemofaccounting.TheequationisbrokendowninCFI’sAccountingFundamentalsCourse. Source:WikimediaCommons LinktoBalanceSheetandIncomeStatementAsaGeneralLedger(GL)recordsallofthetransactionsthataffectacompany’saccountingelementssuchasAssets,Liabilities,Equity,Expenses,andRevenue,itisthedatasourceusedtoconstructtheBalanceSheetBalanceSheetThebalancesheetisoneofthethreefundamentalfinancialstatements.Thefinancialstatementsarekeytobothfinancialmodelingandaccounting.andtheIncomeStatementIncomeStatementTheIncomeStatementisoneofacompany'scorefinancialstatementsthatshowstheirprofitandlossoveraperiodoftime. Theprofitor.Thesetof3-financialstatementsisthebackboneofaccounting,asdiscussedinourAccountingFundamentalsCourse. DecentralizedLedger–BlockchainTechnologyBlockchaintechnologyhasgivenrisetoadecentralizedordistributedledger.Blockchainallowstheledgertobedistributedacrossusersworldwide,andeachuserispartoftheentirenetwork,makingitlessdependentonasinglecentralizednode.Therefore,everyonewithinthecompanynetworkcanaccesstheledgeratanypointandmakeapersonalcopyoftheledger,makingitaself-regulatedsystem.ThismitigatestherisksthatCentralizedGeneralLedgershavefromhavingonesourcecontroltheledger.Theimagebelowisagreatillustrationofhowtheblockchaindistributedledgerworks.  AdditionalResourcesCFIistheofficialglobalproviderofthe FinancialModelingandValuationAnalyst(FMVA)BecomeaCertifiedFinancialModeling&ValuationAnalyst(FMVA)®CFI'sFinancialModelingandValuationAnalyst(FMVA)®certificationwillhelpyougaintheconfidenceyouneedinyourfinancecareer.Enrolltoday!®BecomeaCertifiedFinancialModeling&ValuationAnalyst(FMVA)®CFI'sFinancialModelingandValuationAnalyst(FMVA)®certificationwillhelpyougaintheconfidenceyouneedinyourfinancecareer.Enrolltoday!designation,aleadingfinancialanalystcertificationprogram.Tocontinuelearningandadvancingyourfinancialcareer,theseadditionalCFIresourceswillbehelpful:AdjustingEntriesAdjustingEntriesThisguidetoadjustingentriescoversdeferredrevenue,deferredexpenses,accruedexpenses,accruedrevenuesandotheradjustingjournalFinancialAccountingTheoryFinancialAccountingTheoryFinancialAccountingTheoryexplainsthewhybehindaccounting-thereasonswhytransactionsarereportedincertainways.ThisguidewillHowtoLinkthe3StatementsHowthe3FinancialStatementsareLinkedHowarethe3financialstatementslinkedtogether?Weexplainhowtolinkthe3financialstatementstogetherforfinancialmodelingandTAccountsTAccountsGuideIfyouwantacareerinaccounting,TAccountsmaybeyournewbestfriend.TheTAccountisavisualrepresentationofindividualaccountsFreeAccountingCoursesLearnaccountingfundamentalsandhowtoreadfinancialstatementswithCFI’sfreeonlineaccountingclasses.Thesecourseswillgivetheconfidenceyouneedtoperformworld-classfinancialanalystwork.Startnow! BuildingconfidenceinyouraccountingskillsiseasywithCFIcourses! EnrollnowforFREEtostartadvancingyourcareer!CorporateFinanceInstituteBacktoWebsite0searchresultsfor‘’Peoplealsosearchfor:excelFreefreecoursesBalancesheetaccountingIRRwaccExploreOurCertificationsFinancialModeling&ValuationAnalyst(FMVA)®LearnmoreCommercialBanking&CreditAnalyst(CBCA)™LearnmoreCapitalMarkets&SecuritiesAnalyst(CMSA)®LearnmoreCertifiedBusinessIntelligence&DataAnalyst(BIDA)™LearnmoreResourcesExcelShortcutsPCMacListofExcelShortcuts 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