The general ledger contains an entry for every transaction ever made with a business. The
general ledger's first entry should be the one of the business's transaction, and it should be
updated as often as necessary to ensure that every single future transaction is recorded. Since
the general ledger holds all of the information regarding every single transaction in the
business's history, it is the core of all of the business's accounting activity. Balance sheets and
income statements are both derived from information contained in the general ledger. Each
entry it records the following information:
•the date of the transaction,
•the balance of the transaction, and
•a description of the transaction
Entering this information is referred to as "posting" a general transaction and the entry itself is
referred to as a "post".
The general ledger may consist of smaller sub-ledgers, or accounts. Examples of commonly
used sub-ledgers are accounts receivable sub-ledgers and accounts payable sub-ledgers.
Each transaction either posts only in the general ledger or in both sub-ledger and the general
When a general ledger is set up for the first time, the value of the starting balance and the
balances of all of the sub-ledgers should be carefully determined. The worth of a business's
assets such as cash and equipment, for example, should be included in the starting balance of
the asset sub-ledger.
A business's general ledger should be updated to include new transactions as often as it is
necessary to prevent the process from becoming cumbersome. Sometimes, a particular sub-
ledger should be updated more often than another sub-ledger.
When using a double-entry accounting method, a method which relies on the accounting
equation, the general ledger is kept with two opposite posts for each transaction in two
separate ledgers or sub-ledgers. This is a beneficial method because it helps ensure that the
accounting is kept in balance, and any errors in the accounting are quickly identified.
If it is kept up properly, the general ledger can be a great resource for finding, verifying, and
identifying transactions, even if the transactions were completed a relatively long time ago. For
example, in case the accounting activities and reports of a business are audited, either
externally or internally, a well-kept general ledger can be a source of detailed transaction
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