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Accounting

General Ledger

The complete record of all financial transactions of a business, organised by account, from which the financial statements are produced.

The general ledger (GL) is the master record that holds every transaction, grouped by ledger account — cash, sales, purchases, a particular customer, and so on. In double-entry accounting, each posting updates the GL, and the financial statements are derived from it.

A “posted” general ledger means transactions are committed to the books rather than left as drafts, giving an auditable, reliable trail.

Transactions reach the ledger through day books: the sales register, purchase register, cash and bank books each capture their own class of documents, and every entry is posted from there to the ledger accounts it touches. Each account then shows an opening balance, the period's debits and credits, and a closing balance. Larger books add control accounts — a single sundry debtors account whose balance must equal the sum of all individual customer ledgers.

Follow one transaction through. A credit sale of ₹10,000 debits the customer's ledger account and credits sales; when the customer pays, bank is debited and the customer's account credited, returning it to nil. At any moment, that account tells the full story — what was billed, what was received, what remains due. Multiply this by every account and the ledger becomes the single place where any figure in any report can be traced to its source.

Ledger discipline is mostly hygiene. Postings drift into near-duplicate accounts, suspense balances sit unresolved for months, and entries get backdated into periods whose GST returns are already filed — each of these erodes the audit trail. The working habit that prevents it is monthly ledger scrutiny: scanning each account for odd balances, wrong-side entries and misclassifications before returns are filed, rather than reconstructing the year at closing time.

Common questions

What is the difference between a journal and a ledger?

The journal records transactions chronologically as they occur, each entry showing the accounts debited and credited. The ledger reorganises the same information by account, so all activity in cash, or in a particular customer's account, sits together. The journal answers what happened on a date; the ledger answers what happened in an account.

What is a control account in the general ledger?

A control account summarises a set of subsidiary ledgers in a single balance — sundry debtors control equals the total of all customer accounts, sundry creditors control the total of supplier accounts. It keeps the main ledger compact and provides a built-in check: if the control balance disagrees with the subsidiary total, a posting error exists.

What does the balance of a ledger account mean?

It is the net of all debits and credits posted to that account, starting from the year's opening balance. A debit balance on a customer's account is money owed to you; a credit balance on a supplier's account is money you owe. These balances flow into the trial balance and from there into the financial statements.

How often should ledgers be reviewed?

Monthly is the working standard for a GST-registered business, because returns are filed monthly or quarterly and errors become harder to fix once a period is reported. A short scrutiny — unusual balances, wrong-side entries, suspense items, tax ledgers against returns — before each filing keeps year-end closing routine instead of forensic.

Put it into practice with LekhaPro

Offline-first GST accounting and billing for Indian businesses — correct GST by construction, real double-entry books and return filing in one place.