![]() Sales Ledger or Debtors Ledger is one of the three types of Ledgers that you prepare as a firm or a business entity. Likewise, you need to refer to the Creditor’s Account in your General Leger if you want to know the amount you are liable to pay to him on a specific date. So, you need to refer to your Customer’s Account in your General Ledger if you want to know the amount he is expected to pay you on a particular date. Therefore, a General Ledger helps you to know the ultimate result of all the transactions that take place with regards to specific accounts on a given date.įor this reason, General Ledger is also known as the Principal Book of Accounting System. ![]() Accordingly, all the cash or credit purchase transactions entered into with William Paper Mill would be recorded under the account of William Paper Mill. It is a group or collection of accounts that give you information regarding the detailed transactions with respect to each of such accounts.įor example, say you purchase raw material from your vendor William Paper Mill throughout the year. General Ledger refers to a record containing individual accounts showcasing the transactions related to each of such accounts. You will also learn the reasons as to why you need a General Ledger? So, in this article, you will learn what is a General Ledger, General Ledger examples, and the General Ledger accounts. Once you complete the Trial Balance, the account balance is finally entered in the income statement and the balance sheet. Then, the balance of each of the General Ledger Accounts is posted in your Trial Balance Sheet. Once the Journal is complete, these transactions are then posted to individual accounts contained in General Ledger. First, the transactions are recorded in the Original Book of Entry, known as Journal. Now, each of your transactions follows a procedure before they are represented in the final books of accounts. So such a system of debit and credit helps in finding out the final position of every item at the end of the given accounting period. Thus, accounts that get Debited or Credited are used to denote the give and take involved in every transaction. This means one account increases and the other account decreases. Thus, as per the Duality Principle, each transaction involves a minimum of two accounts while recording into books. You need to record various business transactions in your books of accounts based on the dual aspect of accounting.
0 Comments
Leave a Reply. |