What Are General Ledger Accounts?

February 19, 2021 5:47 am

Category:

General ledger accounts are used by many types of businesses to keep track of the financial records and activities of the business. They are general in nature as they record every single transaction that occurs in the company and include all the parties to that transaction such as customers, vendors, employees, stockholders, etc. Generally speaking, the general ledger is divided into two main sections: the income statement section which document all the cash flows, and the balance sheet section which describe the performance of the company’s financial assets and liabilities. As an example, if you have a business where you sell widgets to customers, you will have sales records on your income statement, and accounting records on your balance sheet, which include the purchase order and sale balance.

Image credit

Why should you care about what your general ledger accounts? The reason is because these general records are extremely helpful in decision-making. For example, if you are running a manufacturing company, the general ledger can serve as a very valuable resource because it will show you how your manufacturing costs are changing as well as how much profit you are earning. This information can help you make timely decisions regarding inventory, investing, financing, etc. For help with Bookkeeping Chippenham, visit Chippendale and Clark

Image credit

By having a general ledger, an entrepreneur will be able to find out how his or her money flow works within the company, how much money he or she needs to lend and at what interest rate. There are so many advantages of using general ledger records and it is definitely worth taking a look at.