general ledger
/ JEN-rul LEJ-er /
If the journal is a diary organized by date, the general ledger is the same information reorganized by account. It is the master collection of every account a business keeps — one page (or record) for Cash, one for Accounts Payable, one for Sales Revenue, and so on — each gathering all the activity that ever touched that account. The ledger answers the question the journal cannot: 'How much is in this account right now?'
Each ledger account has a debit side and a credit side (the formal version of a T-account). When transactions are posted from the journal, each amount is copied to the correct side of the correct ledger account. Over time, the Cash ledger account accumulates every cash debit and credit, and its running balance shows exactly how much cash the business has. The collection of all these accounts, and the list of their names, is governed by the chart of accounts.
The general ledger is the backbone of the whole accounting system. Trial balances are built by listing every ledger account's balance; financial statements are assembled from those balances. In modern accounting software the 'GL' is a database table, but the concept is unchanged: it is the single, authoritative place where each account's complete history and current balance live. Large firms also keep subsidiary ledgers (say, one record per customer) that feed summary totals into a control account in the general ledger.
After June's entries are posted, the Cash account in the general ledger shows debits of 10,000 and 800 and credits of 600 and 400, leaving a debit balance of 9,800. That single number is what flows into the trial balance and the balance sheet.
The ledger groups all activity by account so each balance can be read off directly.
The ledger is only as good as the journal feeding it. A wrong or unposted journal entry leaves a ledger balance that looks confident but is simply incorrect.