What is General Ledger?

The general ledger, or GL, is the master record of your accounting system. Every transaction, whether a sale, a bill, a payroll run or an adjustment, is posted to accounts in the general ledger, which is organized by the chart of accounts.

What it contains

For each account, the general ledger lists every posting with its date, description, reference, debit or credit amount and running balance. Financial statements are summaries of general ledger balances: the balance sheet uses asset, liability and equity accounts; the profit and loss uses income and expense accounts.

Subsidiary ledgers

Detail for some accounts is kept in subsidiary ledgers, such as customer balances for accounts receivable or vendor balances for accounts payable. The subsidiary totals should equal the control account in the general ledger.

Why it matters

When a number on a report looks wrong, the general ledger detail shows exactly which transactions make it up. Tax preparers and auditors often ask for a general ledger export to trace figures on a return back to individual transactions.

Keeping it reliable

• Reconcile bank, card and loan accounts to statements monthly
• Use journal entries with explanations for adjustments
• Lock closed periods so past months cannot be changed accidentally

The IRS's recordkeeping guidance explains that records should support each item on your return, and the general ledger is the backbone of that support.

Related terms

• Accounts Receivable: Accounts receivable is money customers owe your business for goods or services already delivered.
• Accounts Payable: Accounts payable is the money your business owes suppliers and vendors for goods or services received but not yet paid for.
• Chart of Accounts: A chart of accounts is the organized list of every account a business uses to record transactions in its general ledger.
• Balance Sheet: A balance sheet shows what a business owns, what it owes and the owners' equity at a specific date.

Browse more definitions in the small business glossary.