General Ledger Templates
A general ledger is the set of numbered accounts for the purpose of accounting records of an entity. It stores a complete record of financial transactions throughout the life of the organization. Usually, the information related to accounts for assets, liabilities, equity, expenses, and revenue which are needed to prepare the financial statement. This means that it is a basic document that holds all the information required to formulate or draft the other financial instruments like an income statement and balance sheet.
This tool is used by accountants all over the globe. Transactions done by the organization throughout the specified period are recorded in these ledgers under the specified heads of accounts and then by using this information trial balance is generated by them. A trial balance is a list or listed report in which all the accounts and its balances corresponding to it are mentioned. This trial balance then becomes the basis of the financial statement. By this, we can understand those general ledgers are the foundation of all the financial instruments to come.
The general ledgers include information related to assets, liabilities, revenues, expenses and the owner’s equity of the organization. Apart from all the above-mentioned uses or benefits of general ledgers, it proves to be the most helpful tool while reviewing the financial statements.
Whenever generating or reviewing the financial statements, accountants come across any fluctuation or out of balance condition, they simply refer to the general ledgers and identify the problem in no time. As it is said earlier that through general ledgers income statements are generated, it is easier to pinpoint the problem at first step. Similarly, in the process of auditing of the financial statements, whether internal or external, the general ledger is considered as a vital document.
Auditors use this tool to get a detailed explanation of income and expenditure of the company and that everything has been recorded perfectly or not. Auditors usually compare the total general ledger movement for each head to the total activity drafted on the income statement. The balance mentioned on the income statement or balance sheet should be the same as it is in the general ledgers.