Bookkeeping is a vital component of most firms, and establishing a general ledger can assist businesses in better organizing their financial records and accounting data. General ledgers enable businesses to keep track of their profits, compare these to their expenditures and current assets, and guarantee that their transactions are in line with their profits.
Learning regarding general ledger templates as well as how to design them can assist you in developing a transaction monitoring system that is appropriate for your company’s specific needs. In this post, we explain what a general ledger is, discuss the advantages of developing a general ledger template, then walk you through the process of creating your own general ledger template using stages and an example.
Table of Contents
What is a general ledger, and how does it work?
When it comes to accounting, a general ledger is a financial record that companies use to keep track of their assets & expenses. This document contains a comprehensive list of a company’s financial transactions, which are organized into financial statement & operating income categories in a formal statement that is simple to read and understand.
The balance sheet accounts of a ledger contains information on a company’s equity, assets, & liabilities, whereas the statement of income account contains information about the company’s gains, losses, revenues, and expenses, among other things.
The general ledger makes use of a form of accounting known as double-entry accounting. As a result, for every entry a company makes in one of its categories, the company makes an equal entry in another account.
A double-entry financial reporting system ensures that each and every debit in one account is matched by a credit in the other, making it easier for the company to keep track of its transactions & identify mistakes.
Double-entry accounting systems are used in both public and private organizations. Modern computer software, such as spreadsheets and accounting systems, makes this process much simpler by incorporating embedded codes that automatically generate the numbers.
What is the purpose of creating a general ledger template?
A general ledger template is essential for standardizing the financial record-keeping system, which may be accomplished by creating one. A template gives your company with a well-structured document that you can easily fill in as transactions are completed in your company. It assists you in organizing your financial information, keeping track of your transaction history, and quickly identifying problems. Here are some other justifications for creating a general ledger template:
Application for a loan:
If you submit an application for a loan, the bank may request to examine certain financial documents, such as your paystub, which is a valid proof of your income and can be easily generated using a paystub generator. The general ledger makes it simple and quick for a lender to locate the data that are needed for the loan.
Book balancing consists of the following steps:
General ledgers aid you in balancing your books by guiding you through the middle of the journey at a trial balance. A adjusted trial balance of the finale balances for every one of your general ledger accounts that allows you to see because all of your debit dollar amounts are equal. It is used to determine when all of your card payment dollar amounts are equal.
Preparation for the audit:
A general ledger is a database that contains all of your financial documents in one location. If the Internal Review Service investigates your company, they will be easy to find and review as a result of this.
Detection of fraud:
Because a general ledger consolidates all of the information in one location, it is simple to check for fraud or other irregularities.
Messages to the general public:
Sharing the financial data with others is made simple with the use of general ledgers. Your internal stakeholders, such as managers as well as your accounting staff, as well as external stakeholders, such as consumers and investors, can all benefit from it.
Conclusion
General ledgers are useful tools for many firms because they allow them to keep track of their financial activity across various accounts. While a simple, tiny business with only one worker and a limited number of accounts to track may not require a general ledger system, most companies with more than one person who maintain inventory or have a large number of accounts do so in order to keep track of their financial data.
Even if you intend to use a digital ledger system, understanding the components of a ledger as well as the methods involved in producing a template will assist you in adapting a current template or establishing a new one to match the specific needs of your company.
In fact, you can also use receipt scanning technology to scan and save all your receipts in a cloud database for future use. This ensures you have all the documents without the fear of receipts becoming completely unreadable.