A ledger is a record of financial transactions organized by account, as opposed to the journal, which organizes transactions chronologically. The process of transferring entries from the journal to the ledger is called posting. After posting, each account in the ledger shows all the debits and credits that have affected it, along with a running or periodic balance.
The general ledger contains all accounts in an entity’s chart of accounts. It’s the authoritative record from which financial statements are prepared. Some accounts in the general ledger are control accounts — summaries backed by a subsidiary ledger that contains the detail. Accounts receivable, for example, might appear as a single line in the general ledger, while a subsidiary ledger tracks what each individual customer owes.
The ledger makes individual account histories visible. Where the journal answers “what happened on this date,” the ledger answers “what has happened to this account.” Both records contain the same information arranged differently — the journal by time, the ledger by category. Together, they provide the two perspectives needed to verify completeness: every journal entry should appear in the appropriate ledger accounts, and every ledger balance should be traceable back to journal entries.
Related terms
- Journal — the chronological record from which ledger entries are posted
- Account — the unit of classification within the ledger
- Trial balance — the verification step that checks ledger account totals
- Chart of accounts — the structure that defines which accounts the ledger contains