A general ledger is a company’s formal ledger in which all financial accounts are kept. These transactions take place during a specific accounting period and are used in the preparation of the company’s financial statements.
Input Files and Documents
Source documents for general ledgers can be paper documents or electronic files. They are used in preparing a general ledger and include bills of sale, invoices, time cards and similar documents. Regardless of the form, the records are critical for preparing a general ledger and must be maintained. Auditors will scrutinize both kinds of documents to ensure that the general ledger is accurate. Asset, liability, revenue and expense documents all are included in a general ledger.
Asset Documents and Files
An asset is something of value. It can either be tangible, such as a plant or inventory, or intangible, such as goodwill. Current assets, such as inventory, cash, and accounts receivable are important to the daily operation of the company. The bills of sale, bank accounts and accounts receivable statements are documents needed for the general ledger.
Liability Documents and Files
Liabilities are the financial obligations of the company, which are its debts. Short-term liabilities are due within the current fiscal year. They include items such as wages, accounts payable and utilities. A long-term liability is a liability that is due in over a year. If a company purchases a building that it will pay for in 15 years, only the current year’s payment is a current liability. The balance is a long-term liability.
Revenue Documents and Files
Revenue documents represent a company’s earnings. Another term for revenue is income. If the revenue source is either from performing a service or providing a good, it is included in the general ledger. This revenue source is considered operating revenue. If the source of income was not the company’s primary activity, such as earning interest on a bank account, it is considered non-operating revenue. Whatever the source, revenue can either be cash or an accrual.
Expense Documents and Files
Expenses are the costs of doing business. Expenses are matched against a company’s revenues. If the costs are associated with the business’ main enterprise, it is an operational expense. If it is not associated with the main activity, it is a non-operational expense. As in revenues, an expense can either be a cash expenditure or an accrual.
Eileen Baylus has worked in the publishing field since the 1980s. After graduating with a Bachelor of Science from Towson University in mass communications, she has spent time as a writer for local newspapers, a proofreader for journals and an editor for book publishers.