Question

Hello, I was wondering if you could tell me how to do a general Ledger? I just finish doing a Sales Journal, Purchase Journal, Cash Receipt Journal, Cash Disbursements Journal and a General Journal under one company Sound Bytes Electronics). What I wanted to know is do I use the General Journal to do the General Ledger? Or do I use the Special Journals and the General Journal to do the General Ledger? Can you put me in the right direction?

Answer 1

Journals (including general journal and special journals both) & General ledger are two separate books of accounts.

Business transactions are first recorded in journals. That is why journal is often called the book of original entry. Now, for convenience in recording the transactions, journals are divided into special journals and general journal.

When the work of recording the transactions in all the journals (special and general journal) is completed, general ledgers are prepared. General ledgers are prepared in the form of T account. A T shaped account is opened for all the accounts used while making the journal entries in the journals (both special and general journal). In the T shaped account, the relevant accounts are debited and credited in such a way that we can know the balance of a particular T account or general ledger account at a specific date. So, we can have the balances ready, for all the accounts that are used in the journals, in the general ledger.

To sum up, all the accounts used in making the journal entries in general journal and specific journals will have a particular general ledger or general ledger account. On the basis of these journals (specific & general journal), general ledger is prepared.