Remember the times when we had to keep the bookkeeper or hire an accountant for even recording the tiniest commercial transaction or activities. And all the accounting records were used to entertain people files in you have to do all the entries general ledger in QuickBooks itself. No matter what is the size of your business. It used to be a cumbersome task to manage all the records in books. Luckily Technology helped us and now we have a general ledger in QuickBooks. QuickBooks accounting software is used by millions of accountants in bookkeepers in today’s era. good books do everything for you invoicing, tracking sales, sending estimates, cash flows, reporting, payroll activities, and many more.
In this particular article, we will talk about the general ledger in QuickBooks. I will provide you all the information you need to know about the general ledger in QuickBooks. We will learn what a general ledger is? why it is important? How does it work? How to make the general ledger in QuickBooks? Where will you find general ledger reports? So let’s start there is so much to learn.
What is a General ledger?
A general ledger is a part of the accounting cycle. the accounting cycle mainly includes four-step:
- Gather source documents and papers: This includes receipts and invoices. These are used as proof of transactions. And then used further to record journal Entries. This is the base and start of accounting.
- Recording journal entries: A journal entry tells us all about the transaction which includes an account number, a date, an amount of transaction, and a description of the entry.
- Recording entries in the general ledger: After that, we record entries in the general ledger. Here we enter the entries into specified accounts. Some small businesses use Excel, accounting software is a more efficient way to maintain general ledger accounting records.
- Generate financial reporting: the main motto of accounting is to analyze the financial reports and make future decisions based on them to make the business successful. To do so you need to produce the financial statements, which mainly include the profit & loss account and balance sheet.
So basically the general ledger very important position in accounting. It is a Record-Keeping system that is used to sort, store, and summarise the company’s financial transactions. It consists of four primary components:
- A journal entry(number of each journal entry is recorded and the date of transaction.)
- A description
- Debit and credit columns
- A balance
Categories of General ledger account:
The general ledger account is basically categorized into five parts. And each has its rules of debit and credit. Assets and expenses are debited when increased and credited when reduced. Liability, equity(capital), and revenue are debited when reduced and credited when increased. The 5 categories are:
- Assets
- Liabilities
- Equity
- Revenue
- Expenses
How does a general ledger work?
This is a double-entry accounting that uses debits and credits and amounts.
- Debits and credits: Each entry must have at least one debit and one credit entry. The amount debited must be equal to the amount credited.
- Amount: The dollar amount of total debits and credits must balance.
For example, if a customer makes a purchase, its cash increase by an equal amount by which the inventory would decrease. When a company borrows funds, the cash balance increases, and the debt (liability) balance increases by the same amount. The balance sheet formula follows:
Liabilities + owner’s equity = assets
If the accounting equation is not in balance, there must be a mistake in your journal entry.
Other Useful Resources:
QuickBooks Error 6000 (Unable to Open Company File)
How can Make a general ledger in QuickBooks?
To make a general ledger entry in QuickBooks follow the steps shown below:
- Choose the “Company” drop-down menu and select “Make General Journal Entries.”
- Tap on the “Date” field and select the correct date for the ledger entry in the pop-up calendar.
- Tap on the “Entry No” field and fill in the value for the journal entry if a value doesn’t already exist. By default, entries get numbered automatically in consecutive order.
- Tap on the “Account” drop-down menu and select the account you want to use to initiate a debit.
- Fill in the value of the transaction in the Debit column. Use a debit for payment and a credit to indicate a deposit.
- Tap on the “Memo” field and type a memo, for future reference if you want.
- Select the “Name” column and choose the customer, vendor, employee, or name for the transaction. You must fill in this information for Accounts Receivable and Accounts Payable accounts.
- Enter a new transaction on the next line Enter the entries properly so that the amount debited must be equal to the amount credited. Complete the required fields for each column using the same method you used to create the debit.
- When you are done registering the transaction click on “Save & Close” when the transaction register reaches a zero balance. If the transaction doesn’t reach the zero balance, double-check all of your debits and credits. There must be any mistake you have done. Find it and rectify it and then proceed further.
Where to find a general ledger report?
A General Ledger report in QuickBooks Online displays a list of transactions from all accounts for a particular date range. You can see the general ledger report in any version of QuickBooks. To locate the general ledger report in QuickBooks follow the steps shown below:
- Reach out to the Reports from the left navigation panel and then select All.
- At the bottom of your screen look for “For My Accountant” and select it.
- Choose General Ledger.
- Select the date range and then choose between Cash or Accrual basis.
- Choose the “Run Report” to generate the report and you are done.
If you have any issues
If something is giving you a headache reach us by following these steps:
- Sign in to your QuickBooks Online Company.
- Select the Help option available in the upper right corner.
- Choose Contact US on the pop-up.
- Enter a brief description of the problem you are facing then click on Continue.
- Choose to Get a callback.
- Fill in your contact information.
- Finally, choose to Call me. And then we will assist you and help you get rid of the issue.
Ending Words:
We have learned what a general ledger is? why it is important? How does it work? How to make the general ledger in QuickBooks? Where will you find general ledger reports? And how to reach us in case of emergency via QuickBooks online app. We hope you found the article helpful and all your queries are resolved now.