Accounting 101: What is General Ledger Accounting?

Let’s look at some of the accounts small businesses may use in the general ledger. Are you a small business owner looking to understand general ledger accounting? In this guide, we’ll provide you with an introduction to where general ledgers fit into small business accounting.

This is posted to the Salaries Expense T-account on the debit side (left side). You will notice there is already a debit balance in this account from the January 20 employee salary expense. The $1,500 debit is added to the $3,600 debit to get a final balance of $5,100 (debit). This is posted to the Salaries Payable T-account on the credit side (right side).

6 Prepare a Trial Balance

This is often the role of a bookkeeper or other accounting staff,” said Cross. The set of 3-financial statements is the backbone of accounting, https://www.bookstime.com/ as discussed in our Accounting Fundamentals Course. A general ledger account (GL account) is a primary component of a general ledger.

• If a GL account includes sub-ledgers, they are called controlling accounts.
• Visit the website and take a quiz on accounting basics to test your knowledge.
• “A general ledger (GL) is a parent copy of all the financial transactions of a business.
• Doubling the useful life will cause 50% of the depreciation expense you would have had.
• It’s important to note that investors should be careful to not confuse earnings/profits with cash flow.
• It includes three main components that are balance sheet, income statement and cash flow statement.

On the other hand, if the company incurs expenses, this will decrease the owner’s equity because it means there’s less money available for you to draw out. “As transactions in your business occur, which accounts are found on an income statement they are noted in the general ledger under each account using double-entry accounting. It’s essential to have an accurate accounting of all transactions so that financial statements are correct.