General ledgers used to be documented in physical records, but digital documents are becoming more common. Because each entry you post to the ledger shows up in both debits and credits, it should be easy to balance the accounts and make sure everything adds up later. The recording you do for each transaction is called a journal entry. Every time you make a sale or a purchase, that transaction should be recorded as debit and credit. Each exchange affects two subsidiary ledgers in your chart. You’ll use a general ledger most often for double-entry bookkeeping, which means making two entries for every financial transaction you record. Wherever the money goes, you can keep track of it here. Every time money changes hands, there should be a record of it here.Ĭentral to the general ledger is the chart of accounts, which organizes together every one of the different accounts for your business. The general ledger is the master record of every financial transaction you make as part of your business. When it comes to maintaining accurate financial records, one of the most critical tools you have is the general ledger. You have to spend money to make money, so you need to keep track of where your money goes.Įnter the habit of proper bookkeeping. Maintaining healthy cash flow is essential for the financial health of your business. You’re managing staff, trying to set your company apart, and making sure there’s money when you need it. Running a successful business means staying in control of a hundred different variables at a time.
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