General Ledger Explained: T-Accounts, Posting & Examples
The general ledger (GL) is the master record of your business's finances: every account you use — cash, receivables, revenue, rent, loans — with every transaction that ever touched it and its running balance. If the journal is your business's diary (transactions in date order), the ledger is its filing cabinet (the same transactions reorganized by account). Every report you'll ever produce — trial balance, P&L, balance sheet — is assembled from the ledger, which is why "the GL" is what accountants mean when they say "the books."
Journal → ledger: how posting works
Transactions are first recorded as journal entries, then posted to each account they touch in the ledger. A $2,000 invoice to a client creates one journal entry but posts to two ledger accounts: Accounts Receivable (debit +$2,000) and Revenue (credit +$2,000). Software does the posting instantly — you enter the invoice once — but understanding the flow is what lets you trace any number on a report back to the transactions behind it. (New to the debit/credit mechanics? Start with double-entry bookkeeping, and see 14 worked journal entry examples.)
T-accounts: the ledger, visualized
A T-account is the classic way to picture one ledger account: the account name on top, debits on the left, credits on the right. Here's the Cash T-account for a week where the business collected $5,000, paid $2,400 rent, and paid a $1,100 supplier bill, starting from $10,000:
Debit (+) | Credit (−)
──────────────┼──────────────
Bal 10,000 |
(a) 5,000 | (b) 2,400
| (c) 1,100
──────────────┼──────────────
Bal 11,500 |
Cash is an asset, so debits increase it and credits decrease it. Ending balance: $10,000 + $5,000 − $2,400 − $1,100 = $11,500. The same entries simultaneously posted to Revenue, Rent Expense, and Accounts Payable T-accounts — every transaction lives in at least two.
Journal vs ledger vs trial balance vs statements
| Record | Organized by | Purpose |
|---|---|---|
| Journal | Date | Capture each transaction once, completely |
| General ledger | Account | Running history and balance of every account |
| Trial balance | Account balances listed | Prove total debits = total credits |
| Financial statements | Report format | P&L, balance sheet, cash flow for decisions |
The pipeline runs left to right: journal → ledger → trial balance → financial statements. When a report looks wrong, an accountant walks the pipeline backwards to find where reality and the records diverged.
What your ledger's account list should look like
The set of accounts in your GL is your chart of accounts — and its design determines whether reports come out clean or chaotic. Standard numbering (1000s assets → 6000s expenses), separate accounts for sales tax payable and deferred revenue, and deliberate number gaps for growth. Rather than building it from scratch, start from our free chart of accounts template — 60+ accounts, QuickBooks import-ready.
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Book a Free 30-Min CallFrequently Asked Questions
The master record of all your business's accounts — cash, receivables, revenue, expenses, loans — with every transaction posted to the accounts it affects and a running balance for each. All financial reports are built from it.
A visual sketch of one ledger account shaped like a T: account name on top, debits on the left side, credits on the right. Accountants use T-accounts to reason through how a transaction affects each account before (or instead of) formal entries.
The journal records transactions chronologically as they happen; the ledger reorganizes those same transactions by account. Software maintains both automatically from a single entry.
Cash, accounts receivable, inventory, equipment, accounts payable, sales tax payable, loans, owner's equity, revenue, cost of goods sold, rent, payroll, and marketing — the full list is your chart of accounts, typically 40–80 accounts for a small business.
No — QuickBooks, Xero, and similar software maintain the ledger automatically as you record invoices, bills, and bank transactions. The manual skill that still matters is reviewing it: miscategorized transactions in the ledger silently corrupt every report built on it.
The trial balance is simply a list of every ledger account's ending balance, with debits in one column and credits in the other. If the two columns match, the ledger is arithmetically sound — the checkpoint before producing financial statements.