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General Ledger of Journal 1
General Ledger of Journal 1
It serves as the central repository for all financial activities, keeping a record of every transaction
in an organized manner.
2 Account Balances
It helps in tracking the balances of individual accounts, providing an overview of the company's
financial position.
3 Audit Trail
It creates a trail of financial information, assisting in the auditing process and ensuring
transparency and accuracy.
Why is a General Ledger Important?
A well-maintained general
It enables businesses to ledger helps companies It provides the foundation
analyze their financial comply with laws and for generating accurate
performance, identify regulations, ensuring financial statements, such as
trends, and make informed transparency and income statements and
decisions. accountability. balance sheets.
Components of a General Ledger
Chart of Accounts Debit and Credit Journal Entries
Entries
A systematic list of all accounts Detailed records of each
used to classify financial Every transaction is recorded as a transaction, including date,
transactions. debit and credit entry, ensuring the description, and amount.
balance is maintained.
Recording Transactions in the General Ledger
Revenue Expenses
2 Balance Sheet
Details a company's assets, liabilities, and equity at a specific point, giving an overall snapshot of the
financial position.
Highlights the inflow and outflow of cash during a particular period, revealing liquidity and cash management.
Benefits of Using a General Ledger System
A well-maintained general ledger ensures precise An organized general ledger simplifies auditing
financial statements, facilitating decision-making. processes, ensuring compliance with regulations.
Access to comprehensive financial data allows for With up-to-date and reliable financial information,
detailed analysis and better business insights. informed decisions can be made to drive growth.