Ledgers were once bound notebooks, and bookkeepers as well as other accounting professionals would be required to hand write new entries each time a deposit was made, payments were received, or other events happened that impacted a company’s accounts. Today, these notebooks are still used by some individuals; however, most ledgers are now implemented into accounting software programs.
If you want to pursue a career in accounting, there’s a chance you’ll be required to use a general ledger in order to keep track of various accounts and transactions. Read on to learn more about the information that’s generally included in a ledger.
Accountant School Grads Keep Asset Transactions in a Ledger
A company’s assets typically include cash, accounts receivable, and any property it owns, such as buildings and equipment. Additionally, a business can also have physical assets like land, and non-physical assets like patents or trademarks.
In accountant school, you’ll learn that asset transactions which are recorded in a ledger normally include any increases or decreases to related accounts. Some examples of typical asset transactions can include collecting cash from credit customers, property or equipment depreciation, and the purchase or sale of any assets.
Pros With Accountant Training Record Liability Transactions in a Ledger
In a general ledger, liability accounts are typically made up of accounts payable, salaries payable, and other accounts that show what a business owes in the current fiscal year. Ledger entries under liability accounts will reflect increases and decreases to these accounts.
Examples of ledger entries that fall under liability transactions include payments of accounts payable, and business expenses, such as taxes and interest, salaries, and credit purchases.
Accountant School Grads Keep Track of Equity Transactions with a Ledger
Accountant training will teach you that equity accounts reflect the capital invested in a business. For instance, if a company uses its assets to pay off its liabilities, the remaining balance would be considered the business owner’s equity or capital.
If a business owner decides to insert money into their business, this transaction would be recorded under equity accounts in the general ledger. This is because it would count as an increase to the company’s cash or capital.
Other Types of Transactions that Might be Recorded in a Ledger
Once you start your accounting career, you’ll learn that there are other transactions that go into a ledger besides increasing and decreasing account values. During tax season, for example, accounting professionals skim over the previous year’s ledger to check for any errors in payment or deposit amounts and add new entries to correct these values. Ledger entries are also used to close out any temporary accounts throughout the year, as well as any payments that were made in full. Depending on the year’s income, you may also be required to transfer items from short-term liabilities into long-term liabilities, and vice-versa.
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