Keeping a general ledger (sometimes called a ledger) is an important part of the accounting process. The ledger allows the company to quickly view all the transactions affecting a particular account, rather than having to pick out each transaction from the general journal. Fortunately, keeping it is fairly simple, and by following a few easy steps, you can learn how to write an accounting ledger.
1
Familiarize yourself with the accounting cycle. Posting to the general ledger is just 1 step in what is known as the accounting cycle. On its own, the ledger wouldn't be very helpful, but used as a part of the cycle, it is an invaluable tool. The accounting cycle can be broken down into 5 (rather simplified) steps.- Prepare the source document for the transaction. This may be an invoice or receipt.
- Record the transaction in the general journal. These entries are made in chronological order.
- Post the journal entries to the general ledger accounts.
- Prepare the trial balance. This is a listing of all the ledger accounts pooled together, and it should be prepared at the end of the accounting period.
- Prepare the financial statements. These can be compiled after adjusting the trial balance properly.
- 2Purchase accounting software or a general ledger notebook. If you are using a paper ledger, make sure to allot at least 1 page for each account, and more than this if you think you will need the space. Remember, all the transactions that affect that account during the accounting period will need to fit on the page(s).
- 3Set up the ledger's pages to receive entries. Print the account title across the top of the page. Divide the page into 2 equal columns using a straight line down the center of the page. Draw a second line under the title across the top of the 2 columns. You have created what is called a "T-account," because the 2 lines form a T.
- 4Record transactions as they occur. Any time a journal entry is made, that entry should be immediately posted to the ledger. For example, consider the following journal entry: a debit to Cash for $500 is made, and a credit to Accounts Receivable for $500 is made (this entry would reflect collection of a customer's account).
- This journal entry affects 2 accounts (Cash and Accounts Receivable), so you must make entries to both of those ledger accounts.
- Turn to the Cash page of your ledger. In the left column (which is used for recording debits), write the date of the transaction, and then write the amount. In this example, the amount is $500.
- Turn to the Accounts Receivable page of your ledger. Write the date in the right column (which is used for credits), followed by the transaction amount. In this example, the amount is $500.
- 5Record any additional information. You may want to establish a third or fourth column on your ledger for recording additional information regarding each transaction. This information could include a running total account balance, or notes on the transaction (just like the notes recorded underneath journal entries).
