General Ledger Accounting

Posted by Professor Cram in Accounting Cycle

The General Ledger

The general ledger is where all accounting transactions are posted in a double entry system using debits (on the left) and credits (on the right) for each transaction. An additional column to the far right can keep a running total of activity in the account, similar to your checkbook. 

The debit and credit entries impact at least two ledger accounts and it is usual to capture enough information in each leg of the entry to be able to identify the other one. To extend the comparison to your checkbook, if you also had a register for the types of income and expenses you receive and pay, you could set up a general ledger for yourself.

The general ledger provides data for the Balance Sheet and either the Single-Step Income Statement or the Multi-Step Income Statement (depending on which one the company prepares.) The ledger can be electronic or physical depending on whether you are using computer software or a manual system. Most companies use a computerized version of the general ledger, allowing for greater ease of entry and reporting.

All accounts in the chart of accounts are grouped in one of five categories: Assets, Liabilities, Owner's Equity, Revenue, and Expenses. The general ledger is organized according to the chart of accounts, with a separate register, file, page, or card for each account.

Examples of General Ledger Entries

Account No. 101

Cash – Regular Checking Debits Credits Balance
Date and Explanation On the Left On the Right 25,000.15
02/22/07 Deposit for Thorndike Widget Sales 12,800.00   37,800.15
02/24/07 Transfer to Payroll   11,252.46 26,547.69

Account No. 102

Cash – Payroll Checking Debits Credits Balance
02/24/07 Transfer from checking 11,252.46   16,272.51
02/27/07 Pay Billy Joebob   640.20 15,632.31

Account No. 401

Sales – Widgets Debits Credits Balance
02/22/07 Thorndike Order   12,800.00 24,343.62

Account No. 521

Expenses – Payroll Debits Credits Balance
02/27/07 Pay Billy Joebob 640.20   1,850.28


47 Responses to “General Ledger Accounting”

  1. Cheryl says:

    How and where do a post an entry in a general ledger when i have bought an item on credit?

  2. Michael says:

    You post first in the asset that you purchased (this will be a debit)

    And then in an “Accounts Payable” account (this will be a credit)

  3. Mike says:

    You would debit the item (asset) that you purchased for the amount of the purchase . You would then add a credit for the amount of the purchase to your Accounts Payable general ledger (liability). Example: Bought $500 in supplies on credit; debit your “Supplies” account $500 and credit your “Accounts Payable” account $500) Assets are increased as a debit and Liabilities are increased as a credit. Hope this helps!

  4. JOSEPH AISOSA says:

    Can i get more from you.

  5. Jen says:

    I am so confused. Is it safe to assume that for every item in the general ledger, there is a debit and a credit to balance out both sides?

  6. Patty says:

    Where do I post an overpayment for medical services? Which accounts get debited and credited?

  7. tsth says:

    I’m supposed to figure out the debit and credit out of 2 of the following accounts?

    An Asset acct.
    Cost of goods sold acct
    expense acct

    I’m confused.

    Total Sales of $52,000 received in cash.

  8. TJ says:

    are you suppose to add the income summary from the chart of accounts to the general ledger?

  9. zhes says:

    where do i post the cash in bank ?

  10. Keith says:

    Well, there are a lot of unanswered questions, and I am just learning this myself, so I won’t attempt to answer something I don’t know. But posting cash in the bank is fairly easy, depending on where the cash came from. You would post a debit entry to the cash account, or whichever account corresponds to where you actually have the money. I make that qualification because I personally use several different cash accounts depending on which bank account the money is in, but if you have all your cash in one place, then it’s simply a debit to cash. The corresponding credit will depend on where you got the cash. If you borrowed in from the bank, you would have a liability credit for the loan. If someone is investing the cash in the entity, it would go under contributed capital. If the money was generated through sales or earnings, it could be a credit to revenue. Fun stuff.

  11. Keith says:

    Just to add a few more, if you had the cash at the opening of the book, it could be a credit to opening cash. I started my book to calculate my net worth, so I carried a lot of balances at the start of the book. I just used accounts for opening cash, opening assets, etc.

  12. Keith says:

    Oops, now that I look at the example above more carefully, it isn’t a double ledger at all. My bad. Fail.

  13. Kế toán Nhất Nghệ says:


  14. Cyndi says:

    When setting up a General Ledger and having to set up a “Leave without Pay Account” which will not accumulate cost – where would this be set up? It is currently set up as an asset, but not sure if this was set up correctly.

  15. Shahhana says:

    To Jen
    Yes for every entry you make you have to make sure there is a credit and a debit so that the ledger is balanced.

  16. Tabah says:

    To Patty
    You credit cash with the amount paid, debit medical expense account with the correct expense incurred then credit prepaid account with the overpaid amount:

    Example: Amount paid $500, expense incurred 300
    Cr cash 500
    Dr Medical expense 300 subsequently debited in the income statement
    Dr prepayment 200 Transferred to the balance sheet under current assets

  17. vijay says:

    in accounts payable furniture 50000purchease on credit bassis after one month he will pay discount 10 % what entery will be posited in our a/c

  18. sacha says:

    OK…. in your general ledger you start off with, Capital (OE) then vehicles (A),Equipment(A) then we get to our Bank(A) now what i don’t understand is just say now you working on the month March then you write Mar 01 balance b/d 8700…ok….then you write underneath that 31 Total reciepts CRJ 68700 then you add the two which will come to 77 400…ok… now thats all in the Dr side(debt)..okay now still in the debt side ther is another month and balance b/d 13 050
    now how do you get that balance???

  19. MAJYAMBERE says:

    clarify for me the difference between the following:
    -general ledger and ledger
    -general journal and journal
    -purchase order and invoice
    -pro-format invoice and invoice.


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  21. Caleb Ryan says:

    Ok, I came here a few times because it seemed i could always find my answers here. I loved that you mentioned that when merchandise is not returned to the purchases journal on that page and even still continued to say it goes in the general jounral and even had a link! However on clicking that link theres nothing about what to do with returned merchandise, not a single word. Thanks for your amazing work here but please do fix!

  22. E.P says:

    Hi, my question is how do I enter a credit to a purchase made with a credit card purchase and only part of that is returned. How do I enter it in the general journal? Do I enter the full amount as a debit and then enter only the credited amount as a credit? need help please.thanks

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