The general ledger contains a page for all accounts in the chart of accounts arranged by account categories. The general ledger is usually divided into at least seven main categories: assets, liabilities, owner’s equity, revenue, expenses, gains and losses. The extraction of account balances is called a trial balance.
What order are accounts arranged in a general ledger?
The groups of accounts usually appear in this order: assets, liabilities, equity, dividends, revenues, and expenses. Think of the chart of accounts as a table of contents of a textbook.
What are the accounts in the general ledger?
General Ledger Accounts 1 Assets (Cash, Accounts Receivable, Land, Equipment) 2 Liabilities (Loans Payable, Accounts Payable, Bonds Payable) 3 Stockholders’ equity (Common Stock, Retained Earnings) 4 Operating revenues (Sales, Service Fees) 5 Operating expenses (Salaries Expense, Rent Expense, Depreciation Expense)
How is the accuracy of the general ledger valid?
. The ledger’s accuracy is validated by a trial balance, which confirms that the sum of all debit accounts is equal to the sum of all credit accounts. A general ledger account (GL account) is a primary component of a general ledger. The GL account is a list of all transactions for a certain type of account.
What’s the best way to split a general ledger?
There are many ways to separate the general ledger into groups of accounts with common characteristics, these are more fully discussed in our subsidiary ledgers in accounting post. For a small business the most common way to split the ledger is into four subledgers. Nominal ledger with all income statement revenue and expense accounts.
What does the balance on the GL Ledger mean?
A sample GL ledger paper in PDF format is available for download here. At the month end the difference between the total debits and the total credits on each account represents the balance on the account. We discuss the process of balancing the account in our post on balancing off accounts.
