The master accounting record containing all transactions organized by account, from which financial statements are derived.
The General Ledger is the central repository of all financial activity in a business. Every journal entry posted in the General Journal flows into the General Ledger, where transactions are organized by account. The GL shows the running balance of each account at any point in time, making it possible to see — at a glance — how much cash is on hand, what is owed to suppliers, or what revenue has been earned to date.
In traditional bookkeeping, the GL contains a separate "T-account" page for each account in the Chart of Accounts. Modern accounting software maintains the GL automatically as transactions are entered, so business owners can generate account-level detail reports instantly.
In practice: Habagat Marine Supply in Batangas posts 120 transactions in March. After posting, the General Ledger shows: Account 1010 (Cash) balance ₱480,000; Account 1030 (Accounts Receivable) ₱320,000; Account 4010 (Sales) ₱850,000; Account 5010 (COGS) ₱510,000. These balances are used to prepare the March income statement and balance sheet.
Why it matters: The General Ledger is what the BIR examines during an audit. Every figure on your tax return should be traceable to a GL account, which in turn traces to individual journal entries, which trace to source documents (receipts, invoices, contracts). This "audit trail" is your proof that declared figures are accurate.
If your GL does not reconcile with your bank statements at month-end, something is wrong — either transactions are missing, duplicated, or incorrectly coded. Monthly bank reconciliation (matching GL cash accounts to bank statements) is the most basic internal control for any SME.