If you are a sole proprietor or only have a small staff, you may be the only one available for managing the ledger. The burden of managing the ledger will fall to different people depending on the size of your business. It is less likely that you will make a mistake and you are better able to understand your company’s financial situation. This bookkeeping method increases accountability and transparency. General ledgers are most often used in double-entry bookkeeping, or the process of recording credits and debits twice. An accountant should be able to open the general ledger to understand what you spend over the course of the year and how you generate profits. In a way, this book serves as a journal of every move your business makes. It covers major transactions (like investments in equipment or rent payments) and minute sources of income like credit card cash back.Įach transaction in your ledger is called a journal entry. The general ledger is a record of every single financial transaction related to your business. Use this primer to better understand the general ledger and how tracking it can help you grow your business. Today, bookkeepers use online spreadsheets and accounting software to track the expenses, which makes recording these data points significantly easier. ![]() Historically, bookkeepers had a physical ledger-a thick book filled with pages that documented each expense, the amount, and the date. Bookkeeping is the practice of managing your expenses and profits within the general ledger.
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