Watch here video on Basic Accounting topic - General Ledger.
General Ledger is a principal ledger used in the accounting and including the list of all Balance Sheet and Income Statement accounts and their balances. This principal ledger is used to:
record separately all items to be presented in the financial statements, i.e. categorize them and group impact of transactions on the financial position of the business in accordance with these categories;
post General Journal entries into separate accounts, which are grouped into categories.
Grouping is made since it is not possible to present all the details about transactions in the financial statements, therefore certain accounting information categories are being used.
In the video below you can see an example how General Journal entries are transferred to the General Ledger accounts. This action is called posting. Each item posted to the General Ledger must have a reference number, which is a number of transaction. This number is used if it is necessary to track back data of the original transaction.
Watch Basic Accounting - General Ledger video below:
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