THE GENERAL LEDGER
INTRODUCTION
The General ledger is discussed in CHAPTER 7 in Fundamental
Accounting textbook.
The next step in the accounting cycle involves posting from the
subsidiary journals (which includes the general journal) to the
different general ledgers.
The general ledger is recorded in a T-format called an account.
An account is a formal record of the transactions of an entity
with regards to a specific item.
The assets, liabilities and equity accounts are grouped together
which we call the Real accounts section.
The income and expense accounts are grouped together which
we call the Nominal accounts section.
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THE DIFFERENT LEDGERS
There are three different ledgers; namely:
The General ledger which contains all the assets, liabilities,
owners equity, income and expense accounts of an entity;
The Debtors ledger which contains all the debtors accounts;
The Creditors ledger which contains all the creditors accounts.
FORMAT OF THE GENERAL JOURNAL
Name of the account on top of the ledger.
Reference number of the ledger on top.
The general ledger is divided into two sides. The Left side is
always the Debit side and Right side is always the Credit side.
Inside the ledger – write from right to left
Start with Amount
Subsidiary journal reference number/code (folio column).
Description: Other account involved (as there is always a Debit
and Credit account – one is at the top of the ledger and the
other is inside the ledger called the description).
Date of the transaction.
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EXAMPLE OF THE GENERAL LEDGER
The following transaction is used to illustrate an entry in the general
ledger:
I.e. On 9 March 2020 the business, ABC Traders, buy stationery for
R750 cash.
Dr + Bank (Asset) B1 - Cr
Date Description Fol Amoun Date Description Fol Amount
t
9/3 Stationery CPJ 750.00
31/3 Balance c/d 750 .00
750 .00 750.00
1/4 Balance b/d 750.00
Dr + Stationery (Expense) E1 - Cr
Date Description Fol Amoun Date Description Fol Amount
t
9/3 Bank CPJ 750.00
31/1 Profit & loss 750.00
(Balance)
750.00 750.00
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BALANCING OFF AN ACCOUNT
As accounts may have entries on both debit and credit sides, a
calculation needs to be done to determine the balance on the
account.
This is done at the end of each month in order to brought down
(forward) the balance to the following month.
The steps for balancing off an account are as follows:
Add up the debit side of the account and enter the total in
pencil.
Add up the credit side of the account and enter the total in
pencil.
Write the larger total in pen between the total lines in the
amount columns on the debit side and same amount on the
credit side.
Deduct the smaller total from the larger total and write the
difference (balance) in pen above the total lines in the amount
column on the side with the smaller total.
In the day column, write the last day of the month; in the
description column, write the word “Balance”; and in the folio
column, write “c/d” (carried down).
Now write the balance below the total lines in the amount
column on the opposite site of the account.
In the day column, write the first day of the following month; in
the description column, write the word “Balance”; and in the
folio column, write “b/d” (brought down).
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