The General Ledger

The General Ledger is organized by ledger accounts. There is one ledger account for each account in your Chart of Accounts. The accountant will take the information from the General Journal and post it to each of the General Ledger accounts that were affected by the transaction. Again, this is normally done electronically today, with software that automatically posts to the ledger accounts each time you enter a transaction in the General Journal. But just to be sure you understand how the information is posted, let us look at an example of how we would post to the ledger accounts from the General Journal entry in our example above.

GENERAL JOURNALPAGE 2
FY20XXDescriptionFDebitCredit
Nov22Equipment14418,000 
  Cash101 6,000
  Accounts Payable200 12,000
  Purchase of Computer with R6,000 cash and R12,000 store credit   

You are going to want to post to three accounts:

  • Equipment (144)
  • Cash (101)
  • Accounts Payable (200)

GENERAL LEDGER

Equipment Account #144

FY20XXDescriptionFDebitCreditBalance
Oct31    42,000
       
Nov22ComputerJ218,000 24,000

GENERAL LEDGER

Cash Account #101

FY20XXDescriptionFDebitCreditBalance
Oct31    37,000
       
Nov22ComputerJ2 6,00031,000

GENERAL LEDGER

Accounts Payable Account #200

FY20XXDescriptionFDebitCreditBalance
Oct31    8,000
       
Nov22ComputerJ2 12,00020,000

To read the entries, here is an interpretation of the information:

  • The first entry in each ledger shows the balance from the previous month
  • In Column F, the reference is to the page in the General Journal (J for Journal, 2 for the page number) where the item was recorded.

Now that the information is posted, the financial statements that need the information can be prepared.