#general-ledger
Learn how to organize and maintain your general ledger for accurate financial records
Triple-entry accounting adds a shared, signed receipt both parties books reference, so balances agree by construction instead of monthly reconciliation.
Every balance sheet balance is a claim — reconciliation proves it against an independent schedule. The five-step monthly routine, per account.
Contra accounts offset their parents without erasing them: lenders underwrite net receivables, net equipment value, and net sales — not gross.
Net income flows into retained earnings and opens operating cash flow; ending cash must tie to the balance sheet to the dollar.
Adjusting entries record what timing left out; correcting entries fix prior errors. Reverse only accruals — reversing a correction resurrects the error.
The AR control balance must equal every customer balance added up — when it doesn't, a posting went to the wrong place. How the tie-out works.
Assets, expenses, and dividends grow with debits; liabilities, equity, and revenue with credits — which side of the ledger each account increases on.
Flux analysis compares each account to last period and demands a reason for every material move — catching misposts, stale accruals, and fraud before the close.
After closing entries, only assets, liabilities, and equity carry balances forward — the post-closing trial balance proves the close worked.
Sales, purchases, cash receipts, and cash disbursements journals group repeating transactions so you post monthly totals, not hundreds of entries.
A T-account puts debits on the left and credits on the right of one ledger account — sketch one to check any journal entry before you post it.
Assets and expenses increase with debits; liabilities, equity, and revenue increase with credits — the accounting equation sets every account's normal side.
