What I may already know: • Information from the analysed cash book is posted (transferred) to the general ledger.
Learning Intentions
In this chapter, I will learn: • Why a business prepares a general ledger. • The meaning of debit and credit entries in the general ledger. • How to post entries from the analysed cash book to the general ledger.
Key Words: General ledger (GL) Current assets Fixed assets
Expenses Current liability Fixed liability
Income Gains Post to
WHY DOES A BUSINESS PREPARE A GENERAL LEDGER?
The general ledger (GL) is the second step in accounting. When the analysed cash book has been completed for a given period, the individual accounts are opened in the general ledger and figures from the analysed cash book are posted to the relevant side of the account. When all transactions affecting the account are entered, the account is totalled.
Whereas an analysed cash book provides a business with a record of all of its daily transactions over a period of time, the general ledger provides totals for a given period of time.
