General Ledger

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After the financial transaction is recorded in the General Journal in the form of accounting entries, these entries are later posted to their respective accounts in the General Ledger.

General ledger:

it is the record that contains all the company's accounts, so that each account has its own page called General Ledger's page, and on which the financial transactions that affected it, whether debit or credit movements, are recorded according to the entries that were recorded in the General Journal. There are two forms for the account page in the General Ledger:

1 Standard form of account

This form is used by companies in practice, and it is called the three-column form, because it has three columns, debit,credit, and balance, and the account balance is determined after each transaction.

The cash account in the general ledger
Balance	Credit	Debit	Descriptions	Journal page No.	Date
10000		10000	Previous balance	1	01/01
6000	4000		Deposit into bank account	1	01/10
5000	1000		Rent expense	1	01/11
7000		2000	Revenue received	2	01/15

2 T-account

This form is used for the purpose of teaching and learning, so that the General Ledger's page appears in the form of the letter "T" in the English language, so that the left-hand side is the Debit (Dr), and the right-hand side of the account is the Credit (Cr).

The cash account in the General Ledger
Debit			Credit
01/01	Previous balance	10000	01/10	bank A/C	4000
01/15	revenue A/C	2000	01/11	rent expense A/C	1000
				Debit balance	7000

Subsidiary Ledger:

It is another ledger branching out from the General Ledger, It is opened depending on the need of the company. For example, the company may open a Subsidiary Ledger for the accounts receivable, so that each of account receivable or customers is assigned an independent page, to which the debit and credit transactions are transferred, in order to identify the balance of each customer’s account easily and smoothly. Also, a Subsidiary Ledger might be opened for expenses account, so that each expense has its own page, and so on.

Posting:

The posting process means that the financial transactions recorded in the General Journal are transferred to their respective accounts in the General Ledger, so that each debit amount recorded in the General Journal is posted to the debit side of the account page (General Ledger's Page), and every credit amount recorded in the General Journal is posted to the credit side of the account page in the General Ledger.

Example

These are some of the entries recorded in the General Journal of Al Salam Enterprise in February.

Credit	Debit	Description	Date
	2500	the cash A/C	02/01
2500		To the bank A/C
		Withdrawing the amount from the bank and depositing it into the cash
	500	electricity expenses A/C	02/03
500		To the cash A/C
		Payment of January's electricity bill

Required:

Posting the entries from the General Journal to their General Ledger's respective accounts.

Answer:

First entry:

In the first entry, you will notice that the accounts that were affected by the financial transactions are the cash account and the bank account. The cash account is recorded on the debit side of the journal. As for the bank account, it was recorded on the credit side. And In order to post the financial transactions to the General Ledger, the debit amount of the cash account shown in the Journal should be posted to the debit side of the cash account in the General Ledger, and the credit amount of the bank account is posted from the journal to the credit side of the bank account in the ledger, as follows::

The cash account
Debit			Credit
02/01	To the bank A/C	2500

The bank account
Debit			Credit
			02/01	the cash A/C	2500

Second entry:

In the second entry, you will notice that the accounts that were affected by the financial transactions are the electricity expenses account and the cash account. The electricity expenses account is recorded in the journal on the debit side, while the cash account is recorded on the credit side. In order to post the financial transactions to the ledger, the debit amount of the electricity expense account shown in the Journal should be transferred to the debit side of the electricity expenses account in the ledger, and the credit amount of the cash account of the journal should be transferred to the side of the cash account in the Ledger, as follows:

The electricity expenses A/C
Debit			Credit
02/03	To the cash A/C	500

The cash account
Debit			Credit
02/01	To the bank A/C	2500	02/03	electricity expenses A/C	500

Note: You can note how the cash account changed when posting the second entry. When the first entry was posted, it was debit with $ 2,500, then, and upon adding the second entry, it became a debit with $ 2,500 and a credit with $ 500, and the difference between the value of the debit and the credit represents the balance of the cash account.

Balancing

It refers to figuring out the difference between the debit amounts and the credit amounts for each of the accounts recorded on both the General Ledger and the Subsidiary Ledgers. This difference represents the account balance. If the sum of the debit amounts is greater than the sum of the cridet amounts, the balance would be a debit balance, while, in contrast, if the sum of the credit amounts is greater than the sum of the debit amounts, the account balance would be credit balance, and if the debits are equal to the credits, then the balance would be zeroed out. For example, if total debit movements in the cash account during the fiscal year is equal to $100,000, and the total credit movements for the same account is $ 70,000, the difference would be $ 30,000, which represents the balance of the Cash account at the end of the fiscal year. In this case, the cash balance would be debited with $ 30,000, and each account would be balanced according to (T) Form through the following steps:

Total of both the debit and credit sides of the ledger account.
Then the larger sum on both sides is recorded at the bottom of the Ledger page.
Next, the difference is recorded on the lower side. This difference is referred to as the balance carried down or balance c/d. If the difference is recorded on the debit side of the account, the balance would be credit, but if the difference is recorded on the credit side, the balance would be debit.
The Balance c / d transfer on the opposite side below the total, this balance is referred to as the balance brought down or the balance b / d.

Example

Further to the previous example, if it is required to make the posting and balancing of the cash account from the Journal to the Ledger, then the cash account would appear as follows:

Cash account
Debit			Credit
02/01	To the bank A/C	2500	02/03	electricity expenses A/C	500

				Debit balance (Balance c / d)	2000
		2500			2500
Debit balance (Balance b / d)		2000

The cash account balance as shown in the Ledger is $ 2,000 debit.

Note: Accounts of a debit nature, such as asset accounts as well as expenses and owner's withdrawals accounts, their balance is mostly debit. But the accounts of a credit nature, such as liabilities accounts, revenue and capital accounts, they are mostly credit.

The use of accounting software on the computer has largely helped the accountant perform alot of accounting operations easily, accurately and quickly. For example, the accountant is able, once the entry is recorded on the accounting software, to make the program itself perform the posting and balancing operation, quite contrary to the manual system which requires the accountant to personally perform the posting and then the balancing operation and to ensure their validity.

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