How to Prepare a General Ledger
The general ledger is a collected works of the group of accounts that supports the items shown in the major financial statements. It is built up by posting transactions recorded in the sales book, purchases book, cash book and general journals book. The general ledger can be supported by one or more supplementary ledgers that provide details for accounts in the general ledger.
The general ledger is the core of your company’s financial records. These constitute the central “books” of your system, and every transaction flows through the general ledger. These records stay as a permanent track of the history of all financial transactions since day one of the life of your company.
So, do you want to learn how to prepare a general ledger? If you are correctly recording your small business expenses and credits, the following guidance will help you to set up your general ledger sheets properly.
Step 1:
Divide your finances into five categories: assets, liabilities, owner’s equity, revenue and expenses
Step 2:
Create and maintain general ledger sheets for these five different categories.
Step 3:
Create and maintain on master general ledger sheet that includes all the information from all five general ledger sheets.
Step 4:
Record four different columns of information in each general ledger sheet and labeled them as: “Transaction Description,” “Debits,” “Credits” and “Balance.”
Step 5:
Compile your master general ledger sheet by using the balances of the other five general ledger sheets. If you find any discrepancy in balance, go back and check all general ledger sheets.
When you create and maintain your general ledger make sure you use double entry accounting method. You can do this through a computer or general ledger program. In a nutshell, all you have to do is you must have to maintain the general ledger sheet at all times thus you do not fall behind.
This article has been provided courtesy of www.outsourcingbookkeepingservices.com. Bookkeeping is an Accounting firm division offers a wide range of quality financial accounting and bookkeeping services include account reconciliation, general ledger reconciliation, bank reconciliation, payroll processing, cash flow management, financial planning budgeting, taxation services and vat services.
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