What it is:
How it works/Example:
The general ledger is the central place, usually electronic, that stores every debits and . The entries are made to various accounts (for example, payroll, inventory, or advertising). These accounts fall into categories such as assets, liabilities, , etc.
A company often has dozens of accounts and tens of thousands of journal entries in the general ledger in a year. Every journal entry should involve a and an offsetting this is the of the double-entry bookkeeping method.
Why it matters:
The general ledger is what generates the income statement, the balance sheet, and the cash flow statement. As such, it is critical to keep the GL error-free and secure.
The sum of all the in the GL should equal the sum of all the in the GL for a given period, which is why you might hear accountants talking about working on the "trial balance."