What is a General Ledger?

The General Ledger (GL) is the heart of any accounting system, not just software but any accounting process whether it is dedicated software, an excel spreadsheet or even old-fashioned pen and paper. 

The general ledger is synonymous with the term “the books”. It contains all the transactions for every account that a business/entity needs to track. 

The accounting system, “Smartwebs Accounting” is a shell built around the General Ledger. It is a set of tools and interfaces to facilitate and automate the proper tracking and documentation of the General Ledger transactions. 

General Ledger transactions are a mechanism to categorize and allocate monies into various GL accounts to help an entity track financial transactions and account totals. This allows for visibility into where monies are being paid and received. An entity may receive many payments for goods and services, those would be documented in the General. Then those monies may be used to pay for office furniture, which will be documented in the General Ledger. This allows the end user to see how much money came in and where it was allocated. 

Every transaction in the General Ledger is a collection of line-item entries. These would equate to individual lines in a handwritten ledger.  

• Each transaction is required to net to $0 (total debits equals total credits).  
• Each transaction must contain a minimum of 2 line-item entries (1 debit and 1 credit) but may contain n number of     each. 
• Each line item in the transaction must share the same posting date. 
• Each line item must specify the General Ledger account from the Chart of Accounts.