General Ledger is the central record-keeping system in accounting that contains all the financial transactions of a company. It serves as the foundation for preparing key financial statements such as the Balance Sheet and Income Statement. Every transaction ó whether itís a sale, purchase, payment, or receipt ó is first recorded in journals and then summarized in the General Ledger under appropriate accounts.

The General Ledger is organized into various accounts known as ledger accounts, which are typically categorized into five major groups:

• Assets ñ e.g., Cash, Accounts Receivable, Inventory
• Liabilities ñ e.g., Accounts Payable, Loans Payable
• Equity ñ e.g., Capital, Retained Earnings
• Revenue ñ e.g., Sales, Service Income
• Expenses ñ e.g., Rent, Salaries, Utilities

Each ledger account maintains a debit and credit balance, following the double-entry accounting system, where every transaction affects at least two accounts. For example, when a company makes a cash sale, the Cash account (an asset) is debited, and the Sales account (revenue) is credited.

The main purpose of maintaining a General Ledger is to ensure the accuracy and completeness of financial records. It helps accountants track business performance, reconcile accounts, detect errors, and comply with regulatory and auditing requirements. Modern accounting software automates this process, making it easier to generate real-time reports and financial insights.

In summary, the General Ledger acts as the companyís financial backbone ó a comprehensive record that consolidates all accounting data and supports accurate financial reporting and decision-making.