What is a General Ledger?

A general ledger is the master set of accounts that summarize all transactions occurring within an entity. The general ledger, in turn, is used to aggregate information into the financial statements of a business; this can be done automatically with accounting software, or by manually compiling financial statements from the information in a trial balance report (which is a summarization of the ending balances in the general ledger).

The General ledger Template

The general ledger has a specifically-defined template, which is used to organize the myriad of transactions that may be stored in the file. The template can vary somewhat by accounting software package, but usually includes the fields noted below:

Account number. The account number is the primary designator for an account. There are a number of possible account number configurations, such as two digits for a company code, two more digits for a department code within each company, and three more digits for a specific asset, liability, equity, revenue, or expense item within each department.
Account name. The account name is is the name of each account. It is normally set up in a separate file, and automatically appears in the general ledger when an account number is entered.
Debit. The debit is the field into which the debit portion of an entry is made.
Credit. The credit is is the field into which the credit portion of an entry is made.
Transaction number. A transaction number is entered as part of each transaction, possibly also with an identifier that describes the type of activity being recorded. For example, a journal entry transaction number may be preceded by "JE" while a cash receipt entered through the cash receipts system may be preceded by "CR".
Totals. There is a totals row at the bottom of each account detail, stating the debit total and credit total as of the general ledger date. There may also be a calculated running total to the right of the other general ledger fields, stating the ending account balance as of each transaction.
Budget file. Most general ledgers also allow for the entry of budget information. This information may be stored in a separate file, and only appears in the financial statements when the statements use a budget versus actual format.