A general ledger is the master record of every account a business uses, holding each account’s running balance once the journal entries have been posted into it. It is the record the financial statements are built from. General ledger and GL are two names for one record, and ledger on its own usually means it, though a subsidiary ledger is a ledger too.
In a double-entry system, transactions are first entered in a journal and then posted to ledger accounts (IRS Publication 583, Starting a Business and Keeping Records, Rev. December 2024), the recording rule set out in double-entry bookkeeping. The Internal Revenue Manual states the structure and the abbreviation in one line, defining the general ledger, GL, as a database which contains all the government agency accounts, with each account maintained separately (Internal Revenue Manual 3.17.64.1.6, Terms/Definitions).
Ledger, GL and General Ledger Name the Same Record
Ledger on its own and GL both name the same record in ordinary firm use, and the general in the name marks it as the record covering every account the business has rather than the detail behind one of them.
That detail is the one narrower use of the word. A subsidiary ledger holds the rows behind a single general ledger account, and that general ledger account is the control account its total has to agree with, set out in subsidiary ledger. Ledgers in the plural usually means the general ledger together with the subsidiary ledgers standing behind it.
The Account Classes a General Ledger Is Organized Into
Every account in the ledger belongs to one of five classes: assets, liabilities, equity, revenue and expenses. Federal recordkeeping guidance names the same five and glosses three of them as it goes, saying the accounts show income, expenses, assets, meaning property a business owns, liabilities, meaning debts of a business, and net worth, meaning the excess of assets over liabilities (IRS Publication 583, Rev. December 2024). Net worth and equity name one class, income and revenue name another, and the class an account belongs to is what fixes the side its balance sits on, derived in debit vs credit.
The classes are not all treated alike at the period end. Some accounts are emptied by the closing entries and some carry their balances forward, a split set out in temporary accounting accounts and performed by the closing step of the accounting cycle.
How One Ledger Account Reads
Say a firm carries a cash balance into August, collects an invoice it had already billed, and pays the month’s rent. The cash account in its ledger reads like this:
Cash, general ledger account
Date Description Debit Credit Balance
Aug 1 Balance forward 52,000
Aug 9 Invoice 1042 collected 8,500 60,500
Aug 15 August rent 3,200 57,300The balance column is what a journal does not have, and it is the reason the ledger can answer what an account’s balance is today. The collection and the rent payment each land in a second account as well, accounts receivable and rent expense, on the opposite side. Which side increases which account is set out in debit vs credit.
Where the General Ledger Sits in a Firm’s Work
The trial balance is pulled straight off it, one line per account and only the net balance, and that listing is what the rest of the close works from.
An audit reaches the ledger directly. Agreeing or reconciling information in the financial statements with the underlying accounting records is one of the substantive procedures the auditing standards set out for the financial statement closing process, alongside examining material journal entries and other adjustments made while the statements are being prepared (AICPA, AU-C 330, .21).
Under the same section, the auditor’s documentation should demonstrate that information in the financial statements agrees or reconciles with the underlying accounting records, including agreeing or reconciling disclosures, whether that information is obtained from within or outside the general and subsidiary ledgers (AICPA, AU-C 330, .33). So the tie between the ledger and the statements is tested, not assumed, and what a single posting into the ledger has to carry is in journal entry.
A client’s accounting software usually labels the same record the GL, and its general ledger detail report is the export a preparer asks for when a balance needs explaining. Every line on it should trace back to an entry, and that entry back to a document, which is the audit trail.
What the General Ledger Is Not
A journal. The journal is the source for recording all debits and credits into the general ledger account (Internal Revenue Manual 3.17.64.1.6, Terms/Definitions), and it keeps transactions in the order they happened rather than by account. So you read a journal to find out what happened on a date, and the ledger to find out where an account stands. What an entry has to contain is in journal entry.
A chart of accounts. The chart of accounts is the numbered list of accounts the business has opened, account number against account name, of the kind the IRS publishes for its own revenue accounting (Internal Revenue Manual 3.17.64.2.3, Submission Processing Chart of Accounts). The chart names the accounts. The general ledger carries what is in them.
Common Questions
They are halves of one term rather than two records. Ledger names the book of accounts, and general marks it as the one holding every account in the business. Written out in full it is the general ledger, and shortened it is the GL.
Assets, liabilities, equity, revenue and expenses. The federal recordkeeping guidance lists the same five as income, expenses, assets, liabilities and net worth (IRS Publication 583, Rev. December 2024), which is the same set under two of the older labels.
A single account is the clearest one: a cash account with a balance brought forward, a debit for each receipt, a credit for each payment and a running balance beside every line. A whole general ledger is that shape repeated for every account the business has opened.
Posted journal entries, and nothing that has not been journalized first. Every debit and credit reaches the ledger from a journal (Internal Revenue Manual 3.17.64.1.6, Terms/Definitions), so a ledger balance always has an entry behind it, and that entry has a source document behind it.
Accountably places trained offshore accountants inside US CPA and EA firms, and a firm can put a block of its own bookkeeping through a trial task and have its own reviewer read the ledger that comes back.
