What is the general ledger?
The general ledger (GL) contains every account in your [chart of accounts](/glossary/chart-of-accounts) and every transaction posted to them. Each account shows date, description, reference, debit, credit and balance.
How transactions get there
- A transaction occurs (sale, bill, payment).
- It is recorded as a [journal entry](/glossary/journal-entry), or in a subledger such as sales or purchases.
- Entries are posted to the general ledger accounts.
- Balances feed the [trial balance](/glossary/trial-balance) and then the [financial statements](/glossary/financial-statements).
In accounting software, posting happens automatically.
Subsidiary ledgers
Detail is often kept in subledgers, such as the accounts receivable ledger (by customer), accounts payable ledger (by supplier) and fixed asset register. Their totals post to control accounts in the GL.
Example
A $500 cash sale posts a $500 debit to the Bank account and a $500 credit to the Sales account in the general ledger.
Why it matters
The GL is the single source of truth for a business's finances. Auditors trace figures in the financial statements back to it, and clean GL data makes month-end close, tax and reporting faster.