General Ledger (GL) - Accounting - Corporate Finance Institute

A general ledger account (GL account) is a primary component of a general ledger. A GL account records all transactions for that account. The ... Home›Resources›Knowledge›Accounting›GeneralLedgerGeneralLedgerAcompany'spasttransactionssortedbyAccountUpdatedMay1,2022WhatisaGeneralLedger(GL)?Inaccounting,aGeneralLedger(GL)isarecordofallpasttransactionsofacompany,organizedbyaccounts. GeneralLedger(GL)accountscontainalldebitandcredittransactionsaffectingthem.Inaddition,theyincludedetailedinformationabouteachtransaction,suchasthedate,description,amount,andmayalsoincludesomedescriptiveinformationonwhatthetransactionwas.Inaccountingsoftware,ageneralledgersortsalltransactioninformationthroughtheaccounts.Also,itistheprimarysourceforgeneratingthecompany’strialbalanceandfinancialstatements.Theledger’saccuracyisvalidatedbyatrialbalance,whichconfirmsthatthesumofalldebitaccountsisequaltothesumofallcreditaccounts.GeneralledgeraccountAgeneralledgeraccount(GLaccount)isaprimarycomponentofageneralledger.AGLaccountrecordsalltransactionsforthataccount.Thetransactionsarerelatedtovariousaccountingelements,includingassets,liabilities,equity,revenues,expenses,gains,andlosses.Forexample,cashandaccountreceivablesarepartofthecompany’sassets.Ontheledger,eachoftheassetswillhaveitsownGLaccount.YoucanexploreFinancialStatementsfurtherwithCFI’sReadingFinancialStatementsCourse.ControllingAccountsvs.SubsidiaryledgerForalargeorganization,ageneralledgercanbeextremelycomplicated.Inordertosimplifytheauditofaccountingrecordsortheanalysisofrecordsbyinternalstakeholders,subsidiaryledgerscanbecreated.Asubsidiaryledger(sub-ledger)isasub-accountrelatedtoaGLaccountthattracesthetransactionscorrespondingtoaspecificcompany,purchase,property,etc.IfaGLaccountincludessub-ledgers,theyarecalledcontrollingaccounts.Forexample,CompaniesX,Y,andZaretheclientsofCompanyA.Foraccountingpurposes,CompanyAmaycreatethreesub-ledgeraccountscorrespondingtoitsthreeclientsunderaccountreceivables(controllingaccounts)totracetheamountsexpectedtobereceivedfromeachclient.GeneralLedgersandDouble-EntryBookkeepingAgeneralledgersummarizesallthetransactionsenteredthroughthe double-entrybookkeepingmethod.Underthismethod,eachtransactionaffectsatleasttwoaccounts;oneaccountisdebited,whileanotheriscredited.Thetotaldebitamountmustalwaysbeequaltothetotalcreditamount.Assets=Liabilities+Shareholder’sEquityisknownastheAccountingEquationandisamathematicalrepresentationofthedouble-entrysystemofaccounting.TheequationisbrokendowninCFI’sAccountingFundamentalsCourse.Source:WikimediaCommonsLinktoBalanceSheetandIncomeStatementAsaGeneralLedger(GL)recordsallofthetransactionsthataffectacompany’saccountingelements,suchasAssets,Liabilities,Equity,Expenses,andRevenue,itisthedatasourceusedtoconstructtheBalanceSheetandtheIncomeStatement.Thesetof3-financialstatementsisthebackboneofaccounting,asdiscussedinourAccountingFundamentalsCourse.DecentralizedLedger–BlockchainTechnologyBlockchaintechnologyhasgivenrisetoadecentralizedordistributedledger.Blockchainallowstheledgertobedistributedacrossusersworldwide,andeachuserispartoftheentirenetwork,makingitlessdependentonasinglecentralizednode.Therefore,everyonewithinthecompanynetworkcanaccesstheledgeratanypointandmakeapersonalcopyoftheledger,makingitaself-regulatedsystem.ThismitigatestherisksthatCentralizedGeneralLedgershavefromhavingonesourcecontroltheledger.Theimagebelowisagreatillustrationofhowtheblockchaindistributedledgerworks.AdditionalResourcesThankyouforreadingCFI’sguidetoGeneralLedger.Tocontinuelearningandadvancingyourfinancialcareer,theseadditionalCFIresourceswillbehelpful:AdjustingEntriesFinancialAccountingTheoryHowtoLinkthe3StatementsTAccountsSharethisarticleGetAllFourPrograms(MonthlySubscription)LearnMoreCorporateFinanceInstituteBacktoWebsite0searchresultsfor‘’Peoplealsosearchfor:excelFreefreecoursesaccountingBalancesheetDCF2ExploreOurCertificationsFinancialModeling&ValuationAnalyst(FMVA)®LearnmoreCommercialBanking&CreditAnalyst(CBCA)™LearnmoreCapitalMarkets&SecuritiesAnalyst(CMSA)®LearnmoreCertifiedBusinessIntelligence&DataAnalyst(BIDA)™LearnmoreResourcesExcelShortcutsPCMacListofExcelShortcuts Excelshortcuts[citation...FreeFinancialModelingGuideACompleteGuidetoFinancialModeling Thisresourceisdesignedtobethebestfreeguidetofinancialmodeling!Wewillbreakdownthemostimportant...SQLDataTypesWhatareSQLDataTypes? 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