Friday, December 13, 2013
An accounting system can do many things for a small business. Businesses can use it to keep track of money owed and invoices due, track inventory, enter orders, manage purchase orders, and so much more. All established businesses must have an accounting system in place and it's important to have. But of all the benefits offered, one of the most important is the financial information available within the general ledger. A general ledger is used as an account that sorts and stores balance sheet information and income statement transactions. Examples of general ledgers are asset accounts such as, Inventory, Equipment, Cash, etc.… On the flip side of this is the general ledger liability accounts that include Accounts Payable, Notes Payable, Customer Deposits, etc.….
General ledger accounting with a double entry system is a system whereby a transaction is posted using debits and credits. Each transaction must be recorded so the details can be referred back to. Each entry is recorded within a ‘journal'. Transactions are recorded into the ledgers, and the journal transactions are recorded chronologically. Each business sets up its own set of accounts based on its needs, so the organization of a company's general ledger can vary greatly. It's important that your company keeps track of this information from the start; otherwise you'll have an accounting mess.
The purpose of the general ledger is to let you know where you stand financially. What can be more important for your business? Knowing where you stand financially will allow your investors and employees have peace of mind knowing where the company stands financially. People have used the general ledger for many years to analyze business transactions. The main difference these days is that where entries may have previously been recorded in a paper journal, today they can be recorded in a computerized accounting system. This is a much more efficient way of recording and analyzing information. Finding the right accounting software for your small business is the first step in creating a general ledger.
A general ledger accounting system can provide extremely useful information for a growing small business. The organization of information in such a way allows managers and business owners to make decisions based on solid information, rather than hunches, guessing or emotions. Making sure that your accounting system has an easy to use general ledger that will allow your employees to keep track of this information easily.
Susie Bowman is an author and expert in the field of accounting. She has provided organizations with tips on how to improve their accounting process by utilizing the gernal ledger and information from Red Wing Software. Feel free to follow her on Google+.