How does a General Ledger Work?
The functioning of a General Ledger involves a series of systematic steps:
1. Journal Entries: Financial transactions are initially recorded in the journal as journal entries. Each entry includes details such as the date, accounts involved, transaction description, and corresponding amounts.
2. Posting to the General Ledger: Once recorded in the journal, these entries are then posted to the General Ledger. Each account has a dedicated “T-account” in the General Ledger where the debits and credits for that account are recorded.
3. Balancing Accounts: Periodically, the accounts in the General Ledger are balanced to ensure that the debits and credits match. This process helps identify errors and maintain the accuracy of the financial records.
Contact Us