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General Ledger Accounting: An Accounting Cycle
General Ledger often time known as the nominal ledger, is the major accounting record of a business which uses double entry bookkeeping.
The general ledger is a collected works of the group of accounts that supports the items shown in the major financial statements. It is built up by posting transactions recorded in the sales book, purchases book, cash book and general journals book. The general ledger can be supported by one or more supplementary ledgers that provide details for accounts in the general ledger.
The general ledger is the core of your company’s financial records. These constitute the central “books” of your system, and every transaction flows through the general ledger. These records stay as a permanent track of the history of all financial transactions since day one of the life of your company.
Subledgers and the General Ledger
Your accounting system will have a number of secondary ledgers (called subledgers) for items such as cash, accounts receivables and accounts payable. All the entries that are entered to these subledgers will transact through the general ledger account. For example, when a credit sale posted in the account receivable subledger turns into cash due to a payment, the transaction will be posted to the general ledger and the two (cash and accounts receivable) subledgers as well.
Business transactions are to be properly classified into appropriate accounting heads to maintain the prescribed general ledger accounting reconciliation standards and the applicable legal provisions.
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