The Ledger is a central element of double-entry bookkeeping. Within it, business transactions are systematically recorded on general ledger accounts and grouped together according to objective criteria.
What is a General ledger?
The General ledger allocates a company's bookings to the respective general ledger accounts. This shows how business transactions affect individual asset, liability, expense and income items.
The allocation of a business transaction to the affected accounts is carried out via the Account assignment. The debit-credit allocation is made by a Booking entry depicted.
Which accounts does General ledger contain?
In General ledger, general ledger accounts are maintained in particular. Examples of these include:
- Balance sheet accounts for assets and liabilities
- nominal accounts for expenses and income
- further general ledger accounts according to the used Chart of accounts
From the individual bookings, account movements and balances are generated which can be relevant for further evaluations and closing procedures.
General ledger and Subsidiary ledger – what is the difference?
The General ledger records business transactions at the general ledger account level. Subsidiary ledgers, on the other hand, contain additional detailed information for specific areas.
Typical examples are the Debtors ledger, the Accounts payable or the Fixed asset accounting. Their detailed information is linked to the corresponding G/L accounts of the Hauptbuch.
In short: The General ledger consolidates the general ledger accounts, while subsidiary ledgers provide more detailed information on specific areas.
