General ledger

A general ledger is the central accounting record that organizes an entity’s accounts and summarizes financial transactions. It supports the preparation of financial statements and reconciliation of account balances.

Double-entry bookkeeping: An accounting system that records each transaction with equal debits and credits across accounts. It keeps the ledger’s total debits equal to its total credits.
Account (accounting): A record that tracks increases and decreases in a particular asset, liability, equity, revenue, or expense. A general ledger consists of individual accounts with their own balances.
Bank reconciliation: The process of comparing an entity’s cash records with a bank statement and explaining differences. It checks whether the ledger’s cash balance agrees with external bank activity.
Accounts receivable ledger: A subsidiary record of amounts owed by individual customers. It provides customer-level detail behind the general ledger’s receivables balance.
Chart of accounts: An organized list of the accounts an entity uses to classify financial activity. It determines which ledger accounts receive each transaction.
Debit and credit: The two sides of an accounting entry, used to record changes in accounts. Every ledger posting assigns amounts to debit or credit sides.
Financial close: The process of finalizing accounting records for a reporting period. Closing procedures review, adjust, and finalize general ledger balances.
Accounts payable ledger: A subsidiary record of amounts an entity owes to individual suppliers. It supports the summarized payables account in the general ledger.
Journal entry: A dated accounting record that identifies the accounts and amounts affected by a transaction. Journal entries post transaction details into the ledger’s accounts.
Accounting equation: The relationship stating that assets equal liabilities plus owners’ equity. The ledger’s account balances collectively reflect this foundational relationship.

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