What’s the point in even having a general ledger? Why is it so important? A general ledger (GL) is the main accounting record/report for a company or an organization. It is a bookkeeping ledger that outlines accounting data, such as accounts payable, accounts receivable, cash, fixed assets, and purchases.
I’m going to be honest; I didn’t realize how important a GL was until I graduated with my bachelor’s degree in accounting and I started my position as a payroll processor. You can break down a GL very extensively to almost anything you’d like. As a payroll processor, I can break down a GL to show specific taxes, 401K match, workers’ compensation expenses, or even specific earnings.
If you keep a GL clean, it provides:
Basis to check financial statements for accuracy.
Complete record of a company/organization’s financial activity.
Spot runway spending so you can adjust or improve.
Where is the money going? Why are we paying so much in bills? Are we paying our employees too much or too little? Can we afford to expand? All the questions you have about your business can be answered or found by using a GL. A GL is a business saving grace. It lays out everything financially, and you can customize the report to pull any date range you need; weekly, monthly, quarterly, or yearly. A clean GL can also help you with audits or yearly reviews.
This article was written by Gabriella Hall, Accounting Specialist I with Baldwin CPAs. For questions or more information, please reach out to firstname.lastname@example.org.