The general ledger is the complete record of a company’s accounts: every posted journal entry, sorted by account, with each account’s running balance. Subledgers such as receivables and payables hold the detail and feed totals into it. The trial balance and the financial statements are produced from the general ledger.
What is a general ledger?
The general ledger, or GL, is where a company’s accounting lives. It holds one account for each item in the chart of accounts, and every journal entry posted to the books lands in two or more of those accounts. Each account shows its opening balance, every movement and its closing balance.
Most companies do not record every customer invoice directly in the GL. The detail sits in subledgers: accounts receivable for customers, accounts payable for suppliers, the fixed asset register for assets. The subledger posts to a control account in the GL, and at month end the subledger total should equal the control account balance.
How does the general ledger fit with the other records?
| Record | What it holds | Example |
|---|---|---|
| Source document | The evidence for a transaction | A supplier bill or a bank statement line |
| Journal entry | The debits and credits for one transaction | Debit rent, credit payables |
| Subledger | Detail by customer, supplier or asset | What each supplier is owed |
| General ledger account | Every posting to one account, with a running balance | All movements on the bank account |
| Trial balance | Every GL account’s balance at one date | The list behind the statements |
| Financial statements | GL balances grouped into reporting lines | The income statement and balance sheet |
Each layer should trace to the one below it. A figure in the statements should open to the GL lines behind it, each line to its journal, and each journal to its source document and approval. That chain is what an auditor calls the audit trail.
What does a general ledger account look like?
| Date | Description | Debit | Credit | Balance |
|---|---|---|---|---|
| 1 April | Opening balance | 100,000 | ||
| 8 April | Receipt from Customer A | 50,000 | 150,000 | |
| 15 April | Payment to Supplier B | 30,000 | 120,000 | |
| 30 April | Bank charges | 500 | 119,500 |
Why does the general ledger matter for finance teams in the GCC?
In a group, each company keeps its own general ledger, often on its own system and in its own currency. Comparing companies, or combining them into consolidated financial statements, starts from those ledgers. Adding amounts in different currencies line by line gives a meaningless total, so each ledger is read in its own currency first and translated afterwards.
Questions people ask
What is the difference between the general ledger and the general journal?
The journal records transactions in date order, one entry at a time. The general ledger sorts the same postings by account, so you can see each account’s balance and movements.
What is a control account?
It is a GL account that carries the total of a subledger, such as trade receivables for all customers. Its balance should equal the subledger total, and the two are agreed every month.
Who maintains the general ledger?
The accounting team, usually under a financial controller. Most entries come from subledgers and bank feeds automatically; manual journals should be prepared by one person and approved by another.
What is the difference between the general ledger and a trial balance?
The general ledger holds every posting. The [trial balance](/glossary/trial-balance) is a summary of it: one line per account with its balance at a date.