Accounting – General Ledger
The general ledger is a document that an accounting firm Johor Bahru will prepare for you if you outsource the accounting related tasks to them. A general ledger is the main sat of accounts which summarises all the transactions that happen in a company. So, what is a general ledger account?
All the companies would record a particular type of transaction in a general ledger account using double entry accounting. Those transactions can be relevant to gains, losses, expenses, sales, assets, liabilities or equity. In short, these transactions include what you will aggregate into your company’s income statement and balance sheet.
You need to set aside a different general ledger account for a particular type of transaction. As an instance, there can be some different general ledger accounts for the general area of inventory, such as merchandise inventory, finished goods inventory, work-in-process inventory, as well as the raw materials inventory. In the chart of accounts (which lists all the accounts description and accounts number), you can see a list of all general ledger accounts your company has created. Typically, the first thing you will see from the chart is all the balance sheet accounts, and the next will be the income statement accounts.
Listed below are the examples of other general ledger accounts that the companies will usually use:
For balance sheet accounts, the examples include:
– Cash
– Retained earnings
– Accounts receivable
– Accounts payable
– Accrued liabilities
– Fixed assets
– Share capital
For income statement accounts, the examples are:
– Gain/loss on the sale of assets
– Sales
– Cost of goods sold
– Advertising expense
– Business insurance expense
– Compensation expense
– Impairment loss expense (Also see Impairment versus Depreciation of Fixed Assets)
– Office supplies expense
– Payroll expense
– Rent expense
– Utility expense
There are a few general ledger accounts that fall under the category of control accounts, which contain only the summarised balances that the accountant has posted them from the subsidiary ledgers. By doing so, there will be a lower volume of transactions in the general ledger so that it would not be messed up badly (Also see How to Avoid Financial Ruin?). The accounts that are most likely to be the control accounts are the accounts payable account and the accounts receivable accounts.