A general ledger is a type of ledger that is used in bookkeeping. Accounting data are collected from journals and aggregated from sub-ledgers, such as accounts receivable, cash, fixed assets, accounts payable, purchasing, projects, etc, and posted in the general ledger. Hence, the general ledger holds financial data for a company. In this article, we will discuss general ledger examples and types of general ledger accounts.

Related: Net Profit Margin Examples and Interpretation

General ledger explained

A general ledger is a record-keeping system that is used for a company’s financial data, with debit and credit account records. It is the foundation of a system that is used by accountants to store and organize financial data in order to create a company’s financial statements. Therefore, the general ledger holds the account information that is needed to prepare the financial statements of a company. It gives a record of each financial transaction that takes place during the life of an operating company.

On the general ledger, the financial transaction data is segregated, by type, into accounts for assets, liabilities, equity, expenses, and revenues. Hence, the company’s transactions are posted to individual sub-ledger accounts, as defined by the company’s chart of accounts. The transactions are then closed out or summarized in the general ledger, and a trial balance is generated, which serves as a report of each ledger account’s balance. The trial balance that is created is then checked for errors and adjusted by posting additional necessary entries, and then the adjusted trial balance is then finally used to generate the company’s financial statements.

Furthermore, businesses that employ the double-entry bookkeeping method make use of a general ledger. Hence, each financial transaction affects at least two sub-ledger accounts, which means that each entry has at least one debit and one credit transaction. The double-entry transactions known as journal entries are posted in two columns, whereby the debit entries are posted on the left and the credit entries are posted on the right. However, the total of all debit and credit entries must balance.

In conclusion, the general ledger is very important in accounting because the transaction details contained in a company’s general ledger are compiled and summarized at various levels to produce a trial balance, income statement, statement of cash flows, statement of financial position, and many other financial reports. These financial statements help company management, accountants, analysts, investors, and other stakeholders to be able to assess a company’s performance on an ongoing basis.

See also: Deferred revenue journal entry with examples

Types of general ledger examples

1. Nominal Ledger
2. Private Ledger

There are two types of general Ledger such as the nominal ledger and the private ledger. The nominal ledger gives information on income, expenses, depreciation, insurance, etc while the private ledger is not accessible to everyone and gives private information on capital, salaries, wages, etc.

Nominal Ledger

The nominal ledger is a type of general journal or an electronic file that contains all the transactions that are related to a company’s accounts. This ledger is the main place where a business records its financial transactions. Therefore, this general ledger example contains a record of all a business’s payments, expenses, and assets as well as all the information needed to compile financial reports such as the profit & loss statement and the balance sheet.

The ‘nominal ledger’ is usually used interchangeably with the ‘general ledger’. Hence, a company’s nominal ledger also includes a chart of accounts (an index of all the accounts on the ledger that can be broken down according to different subcategories, like assets, liabilities and shareholders’ equity, etc.).

Furthermore, one of the most notable functions of the nominal ledger is to perform bank reconciliation. This is the process of checking whether a company’s bank transactions match its accounting records. It involves comparing the cash balance on a company’s balance sheet to the corresponding amount on the bank statements to ascertain that the balances available on the nominal ledger are accurate. This is done to ensure everything is accurate and there are no frauds and cash manipulations.

Below is a picture of the nominal ledger as a type of general ledger example:

Private Ledger

A private ledger is slightly different from a nominal ledger. It is a type of general ledger where accounts of confidential nature are recorded. These confidential general ledger accounts examples may include accounts such as capital, salaries, drawings, etc. That is, any general ledger account that might cause some privacy issues or the one that is crucial for the owners of the business is maintained under a private ledger.

Therefore, a private ledger may only be accessed by selected individuals. Hence, it does not contain some kind of accounts, only a few accounts that are private. Some accounts can be shifted to the private ledger to restrict access so that only the business owners can access it.

Related: Unearned revenue examples and journal entries

General ledger example (format)

The general ledger has two sides which are the debit (left side of the ledger) and the credit side (right side of the ledger). Each of these sides has four columns which contain the:

1. Date
2. Particulars or Description
3. Journal folio (which is the reference number (Ref) of the page from where the entries are taken for posting)
4. Amount

Here is a general ledger example of how the general ledger format should be:

General ledger example (format)

General ledger sheet
Account title:							Account No:
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
	Total		00		Total		00

The general ledger format example above contains the date and description of each transaction, along with a debit and credit side of a T-shaped visual depiction of the transaction. This model is known as a T-account. However, some general ledgers also appear in the format below:

General ledger example (format)

General ledger sheet
Account title:						Account No:
Date	Description	Ref	Debit Amount	Credit Amount	Balance

Having known the format of a general ledger, here are the basic steps to preparing a general ledger:

• A separate individual account is opened in the general ledger book for each account and entries should be posted to respective accounts accordingly.
• Ensure to write the name of the account at the top of the page so it will be easy to find later on.
• Add the account numbers for each account
• When recording the transactions on the general ledger, ensure to go in chronological order in order to keep the financial records organized so that finding specific items by date can be easy.
• In the description column, record the transaction involved, in order to easily keep track of all financial transactions.
• According to the debit and credit rules, some accounts should be debited and some credited. For instance, assets and expenses would increase on the debit side and decrease on the credit side of the T-account while equity, liabilities, and revenue will increase on the credit side and decrease on the debit side.
• While posting transactions in the ledger, it is a practice to use the words ‘To’ and ‘By’ and ‘Dr’ or ‘Cr’ The word ‘To’ or ‘Dr’ is used in the description column with the accounts that are written on the debit side while ‘By’ or ‘Cr’ is used with the accounts written in the description column of the credit side.
• In order to balance the general ledger, the account balances of both the debits and the credits must be equal. If the general ledger doesn’t balance, then it has to be investigated and the appropriate adjusting entries should be included.

See also: Credit Sales Journal Entry Examples

General ledger account examples and types

• Assets
• Liabilities
• Equity
• Revenue
• Expenses
• Other income accounts

A general ledger account is created for each account in the chart of accounts for an organization, which are classified into account categories, such as income, assets, expense, liabilities, and equity. Hence, the collection of all these accounts is known as the general ledger. A company’s balance sheet and income statement are both derived from the income and expense account categories in the general ledger.

The general ledger account is therefore used to sort, store and summarize a company’s transactions. These general ledger accounts are arranged in the general ledger with the balance sheet accounts appearing first followed by the income statement accounts. The accounts of the general ledger may be further subdivided into sub-ledgers such as cash, accounts receivable, accounts payable, etc. The extraction of the balance of these accounts is what is used to create a trial balance. The essence of the trial balance is to prepare a financial statement and to ensure the equality of the total debit and credit balance.

Asset accounts

The asset accounts record assets owned by the company. If assets enter the company, the asset accounts are debited and if assets leave the company, the accounts are credited. Assets are anything that provides economic benefits to the company, either now or in the future. Some examples of asset accounts in the general ledger include:

• Accounts receivable
• Prepaid rent
• Cash
• Land
• Inventory
• Investments
• Equipment
• Prepaid expense

Liability accounts

This type of general ledger account records all the company’s liabilities (that is the company’s financial obligations and debts). Whenever a company incurs more debt, these accounts are credited to increase liabilities and if a company makes a payment to settle its debt, the liability account is debited to decrease it. Examples of such general ledger accounts include:

• Accounts payable
• Notes payable
• Accrued expenses
• Customer deposits

Equity Accounts

The stockholders’ equity accounts also known as shareholders’ or owner’s equity records the remaining assets available to a company after all liabilities have been settled. It can be calculated by subtracting the company’s liabilities from its assets. General ledger accounts examples under equity include:

• Common stock
• Retained earnings
• Treasury stock
• Accumulated other comprehensive income

Revenue accounts

Revenue refers to the income that a company has earned through its business activities, from the sale of its goods or by delivering a service. For instance, if a service-oriented company delivers a service to a customer, the service revenue account will be credited because revenue accounts increase on the credit side. Examples of revenue accounts in the general ledger include:

• Sales revenue
• Service revenue

Expense accounts

The expense accounts in the general ledger report the expenses that a company has incurred. This generally includes all the money that has been spent on business activities with the expectation of generating a profit. Hence, these accounts record the cost of doing business. Examples of general ledger expense accounts include the following:

• Salaries
• Supplies expense
• Advertising
• Depreciation expense
• Cost of goods sold

Non-operating or other income accounts

The non-operating or other income accounts report the income that is unrelated to the core business operations of a company. Hence, it is the income earned outside the day-to-day operations of a business. For instance, a company might sell an asset that it has owned for years and record the revenue received from the sale of the asset in a non-operating income account. Hence, examples of general ledger accounts that are recognized as non-operating or other income accounts include:

• Gain on sale of assets
• Interest
• Loss on disposal of assets

General ledger example (for types of general ledger accounts)

Let’s look at a general ledger example to illustrate the various types of general ledger accounts. Assume ABC Inc has a business of laptops and computers. Say, on 01/04/2020, the company sold 100 laptops at $150 each for $15,000. ABC Inc received interest of $50 on 31/03/2021, incurred rent expenses of $1,500, and electricity expenses of $300. A journal entry will be passed for these transactions and then posted in the company’s general ledger:

Date	Account	Debit	Credit
01/04/2020	Cash A/c	$15,000
	To Sales A/c		$15,000

Date	Account	Debit	Credit
31/03/2021	Bank A/c	$50
	To Interest A/c		$50

Date	Account	Debit	Credit
31/03/2021	Rent A/c	$1,500
	Electricity expense A/c	$300
	To Cash A/c		$1,800

From the journal entries made above, general ledger accounts such as the asset (cash and bank), revenue, and expenses accounts will be reported in the general ledger. Here is a general ledger example of how the journal entries will reflect in these general ledger accounts:

General ledger example for a cash account

GENERAL LEDGER
Account title: Cash A/c							Account No: #
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
01/04/2020	To Sales		$15,000		By Rent		$1,500
					By Electricity expense		$300
				31/03/2021	By Balance transferred to trial balance		$13,200
	Total		$15,000		Total		$15,000

General ledger example for bank account

Account title: Bank A/c							Account No: #
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
01/04/2020	To Interest		$50	31/03/2021	By Balance transferred to trial balance		$50
	Total		$50		Total		$50

General ledger example for revenue account

Account title: Revenue A/c							Account No: #
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
31/03/2021	To Balance transferred to trial balance		$15,050		By Cash		$50
					By Interest		$50
	Total		$15,050		Total		$15,050

General ledger example for expenses account

Account title: Expense A/c							Account No: #
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
	To Cash		$1,800	31/03/2021	By balance transferred to trial balance		$1,800
	Total		$1,800		Total		$1,800

Related: Cash sales journal entry examples

General ledger examples (calculations on how to prepare a general ledger)

Mr. Peter is the sole owner of a business. The following are the business transactions for the month of August 2022:

• Aug 3- He reinvested in the form of Cash of $80,000 and Furniture of $20,000.
• Aug 5- Made sales of $10,000 cash and on-account sales of $12,000.
• Aug 6- Bought goods from ABC Ltd. worth $60,000 and paid $15,000 cash and for the remaining, issued a Note payable to pay within 30 days.
• Aug 9- Purchase office equipment from XYZ Co. worth $99,000, makes a cash down payment of $19,000 and the balance will be paid in four installments, with the first due on 30 August.
• Aug 21- Goods returned by credit customer worth $12,000.
• Aug 30- Paid first installment of $20,000 for the office equipment purchased from XYZ Co.

In order to create a general ledger for his transactions, Mr. Peter will first make a general journal which is the first place where transactions are recorded according to their dates:

Date	Description	PR	Debit	Credit
Aug 3	Cash A/c		$80,000
	Furniture A/c			$20,000
	(To record reinvestment by owner in the business)
Aug 5	Cash A/c		$10,000
	Account receivable A/c		$12,000
	Sales A/c			$22,000
	(To record cash and credit sales)
Aug 6	Purchases A/c		$60,000
	Cash A/c			$15,000
	Notes payable- ABC Ltd.			$45,000
	( To record purchases by cash and credit from ABC Ltd.)
Aug 9	Office Equipment A/c		$99,000
	Cash A/c			$19,000
	Account Payable- XYZ Co.			$80,000
	(To record purchase of equipment on payment by installment)
Aug 21	Sales return A/c		$12,000
	Account receivable A/c			$12,000
	(To record goods returns by credit customer)
Aug 30	Account payable- XYZ Co.		$20,000
	Cash A/c			$20,000
	(To record 1st installment to XYZ Co.)
	Total		$313,000	$313,000

Now, that we have our journal entries, we can now prepare the general ledger:

General ledger example for a cash account

GENERAL LEDGER
Account title: Cash A/c							Account No: # 1
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 3	Owner equity		$80,000	Aug 6	Purchases		$15,000
Aug 5	Sales		$10,000	Aug 9	Office equipment		$19,000
				Aug 30	Account payable		$20,000
					Balance c/d		$36,000
	Total		$90,000		Total		$90,000

General ledger example for a furniture account

Account title: Furniture A/c							Account No: # 2
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 3	Owner equity		$20,000
					Balance c/d		$20,000
	Total		$20,000		Total		$20,000

General ledger example for owner’s equity account

Account title: Owner’s equity A/c							Account No: # 3
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
				Aug 3	Cash		$80,000
				Aug 3	Furniture		$20,000
	Balance c/d		$100,000
	Total		$100,000		Total		$100,000

General ledger example for account receivable account

Account title: Account receivable A/c							Account No: # 4
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 5	Sales		$12,000	Aug 21	Sales return		$12,000
	Total		$12,000		Total		$12,000

General ledger example for sales account

Account title: Sales A/c							Account No: # 5
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
				Aug 5	Cash		$10,000
				Aug 5	Account receivable		$12,000
	Balance c/d		$22,000
	Total		$22,000		Total		$22,000

General ledger example for purchase account

Account title: Purchase A/c							Account No: # 6
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 5	Cash		$15,000
Aug 6	Note payable		$45,000
					Balance c/d		$60,000
	Total		$60,000		Total		$60,000

General ledger example for note payable account

Account title: Note payable A/c							Account No: # 7
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
				Aug 6	Purchases		$45,000
	Balance c/d		$45,000
	Total		$45,000		Total		$45,000

General ledger example for office equipment account

Account title: Office equipment A/c							Account No: # 8
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 9	Cash		$19,000
Aug 9	Account payable		$80,000
					Balance c/d		$99,000
	Total		$99,000		Total		$99,000

General ledger example for account payable account

Account title: Account payable A/c							Account No: # 9
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 30	Cash		$20,000	Aug 9	Office equipment		$80,000
	Balance c/d		$60,000
	Total		$60,000		Total		$60,000

General ledger example for sales return account

Account title: Sales return A/c							Account No: # 10
Date	Description	Ref	Debit Amount	Date	Description	Ref	Credit Amount
Aug 21	Account receivable		$12,000
					Balance c/d		$12,000
	Total		$12,000		Total		$12,000

Note that, the extraction of the balance c/d (balance carried down) of these accounts on the above general ledger example is what would be used to create a trial balance. Hence, the trial balance would look like this:

Trial Balance
As of August 2022

S/N	Heads of Account	Ref	Debit	Credit
1	Cash		$36,000
2	Furniture		$20,000
3	Owner Equity			$100,000
4	Account Receivable		0
5	Sales			$22,000
6	Purchases		$60,000
7	Note Payable			$45,000
8	Office Equipment		$99,000
9	Account Payable			$60,000
10	Sales Return		$12,000
	Total		$227,000	$227,000

See also: Net Profit Margin Examples and Interpretation