![]() of people who are performing separate – separate responsibilities, therefore, this type of accounting method is used for recording the transactions of the entity. Now a day’s size of the business is very big and this is managed by a large no. The general ledger is just like a book where certain rules are defined to record the financial transaction of an entity so that it will give the financial position of the entity at any point in time.Step 6: After transferring all the ledger balance into the trial balance, the total debit balance of the trial balance will be equal to the total credit balance Step 5: At the end of the year balance of all the ledger will be transferred to the trial balance and all the ledger will be closed. Step 4: Similarly, all the transactions will be posted in the above manner over the period. Step 3: For every transaction, two accounts will be affected like for sales one revenue account and another one will be cash/bank account. Expenses will be debited and income will be credited.The capital account always have a credit balance.If liability will increase then it will be credited and if liability will decrease then it will be debited.If assets will increase then assets will be debited similarly if assets will decrease then it will be credited.Step 2: In double-entry accounting below are the rules for posting the entry: Step 1: Since General Ledger works on a double-entry accounting system, therefore, first needs to post a journal entries for every transaction. With the help of a general ledger amount receivable from debtors and the amount payable to creditors can be ascertained at any point in time.This also helps in preparing accounting ratio and ration analysis.In General ledger accounting, all the transactions are recorded in separate heads this helps in analysis and comparison with last year and accordingly, measures can be taken for the future.It also facilitates bank reconciliation because all the bank related transactions are posted in one place.This is prepared by using the double-entry method of accounting, therefore, chances of mistakes are very minimum.This will provide the financial position of the business entity at any point in time because in the general ledger all items are recorded separately according to nature.It helps in the preparation of trial balance which is an essential requirement for the preparation of the financial statements.Direct expenses include a purchase account where the cost of raw material has been posted and indirect expenses include day-to-day operational expenses like rent, electricity, maintenance & other utility expenses. This ledger pertains to all expenses incurred by the entity for the business operation it may be direct expenses or indirect expenses. This includes income from sales, interest, discount received, dividend, investment (Capital Gains). ![]() This ledger pertains to the income earned by the company either from the main business of the entity or from other sources. Drawing will also fall under this ledger. This includes equity, general reserve, and retained earnings out of the profit. ![]() This ledger pertains to the money invested in the entity. This sub-ledger includes creditors, long-term borrowings, short-term borrowing. This also includes current liabilities & non-current liabilities. This ledger pertains to a financial obligation which the entity owes to outside. This ledger includes cash, bank, land & building, debtors, Plant & Machinery, Copyright, Trademark, Furniture & fixture. It may be current or non-current, tangible or intangible. All types of assets which are owned and used by the entity for business operations are recorded under assets.
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