General ledger

The general ledger is where financial information from all aspects of your business is consolidated.  Each General Ledger is divided into debits and credits sections. The general ledger is a collection of the group of accounts that supports the value items shown in the major financial statements. It is built up by posting transactions recorded in the sales daybook, purchases daybook, cash book and general journals daybook. The general ledger can be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger. For instance, an accounts receivable subsidiary ledger would contain a separate account for each credit customer, tracking that customer's balance separately. This subsidiary ledger would then be totaled and compared with its controlling account (in this case, Accounts Receivable) to ensure accuracy as part of the process of preparing a trial balance.

There basic categories in which all accounts are grouped are:

1. Assets
2. Liability
3. Owner's equity
4. Revenue
5. Expense
6. (Gains)
7. (Loss)

The balance sheet and the income statement are both derived from the general ledger.