Expenses can include rent, utilities, travel, and meals. Revenue can include sales, interest, royalties, or any other fees the business collects from other individuals or businesses.Įxpenses consist of money paid by the business in exchange for a product or service. Revenue is the business' income that is derived from the sales of its products and/or services. Equity can include things like common stock, stock options, or stocks, depending on if the company is privately or publicly owned by owners and/or shareholders. If the business has more liabilities than assets, it can have negative equity. Current liabilities can include things like employee salaries and taxes, and future liabilities can include things like bank loans or lines of credit, and mortgages or leases.Įquity is the difference between the value of the assets and the liabilities of the business. Liabilities are current or future financial debts the business has to pay. Assets can include cash, inventory, property, equipment, trademarks, and patents. There are five different categories the general ledger is broken down into, and these categories are known as 'accounts.' The categories are:Īssets are any resources that are owned by the business and produce value. Let's dig into the different elements of the general ledger a little deeper: Ledger Accounts Think of the general ledger as the main database of a company's financial records and information, with other financial documents being derived from the information recorded in the general ledger. The general ledger details all financial transactions of all accounts so as to accurately account for and forecast the company's financial health. Like a personal checkbook, the general ledger must always be in balance between the credit and debit amounts, and the information recorded holds all account information about a company over the course of its lifetime that is needed to prepare the financial statements. These categories contain all accounting data derived from a company's different sub-ledgers, such as accounts payable and accounts receivable, and the general ledger records amounts of money that are credited and debited on a constant basis. It's typically divided into five main categories: assets, liabilities, equity, revenue, and expenses. The general ledger tracks all of a company's accounts and transactions and serves as the foundation of its accounting system.

Generalledger