Create customizable general ledger templates for accurate double-entry bookkeeping and financial record-keeping.
A general ledger is the master set of accounts that summarizes all transactions occurring within an entity. It's the foundation of a company's double-entry bookkeeping system and is used to prepare financial statements.
Double-Entry Bookkeeping:
Debits = Credits
Every financial transaction affects at least two accounts, with equal debits and credits to maintain the accounting equation.
| Column | Description | Purpose |
|---|---|---|
| Date | Transaction date | Chronological organization of transactions |
| Reference | Document number (invoice, receipt, etc.) | Audit trail and transaction tracking |
| Description | Transaction details | Explanation of the transaction purpose |
| Debit | Amount recorded on the left side | Increases assets and expenses; decreases liabilities, equity, and revenue |
| Credit | Amount recorded on the right side | Decreases assets and expenses; increases liabilities, equity, and revenue |
| Balance | Running account balance | Shows current balance of the account after each transaction |
Set Up Chart of Accounts: Create a list of all accounts that will be used in the ledger, organized by account type (assets, liabilities, equity, revenue, expenses).
Record Journal Entries: For each transaction, record a journal entry that includes at least one debit and one credit with equal amounts.
Post to General Ledger: Transfer journal entry information to the appropriate accounts in the general ledger.
Calculate Account Balances: For each account, calculate the running balance after each transaction.
Prepare Trial Balance: List all accounts and their balances to verify that total debits equal total credits.
Generate Financial Statements: Use the general ledger balances to prepare income statement, balance sheet, and cash flow statement.
| Transaction Type | Debit Account | Credit Account |
|---|---|---|
| Cash sale | Cash | Sales Revenue |
| Purchase inventory on credit | Inventory | Accounts Payable |
| Pay rent expense | Rent Expense | Cash |
| Owner investment | Cash | Owner's Capital |
| Purchase equipment with loan | Equipment | Bank Loan |
| Accrue salary expense | Salary Expense | Salaries Payable |
Tool Features:
| Rule | Description |
|---|---|
| Double-Entry | Every transaction has equal debit and credit |
| Debit Rules | Increases assets and expenses; decreases liabilities, equity, revenue |
| Credit Rules | Increases liabilities, equity, revenue; decreases assets and expenses |
| Accounting Equation | Assets = Liabilities + Equity |