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This will provide the financial position of the business entity at any point in time because in the general ledger all items are recorded separately according to nature.
General ledger trial#
It helps in the preparation of trial balance which is an essential requirement for the preparation of the financial statements.Direct expenses include a purchase account where the cost of raw material has been posted and indirect expenses include day-to-day operational expenses like rent, electricity, maintenance & other utility expenses. This ledger pertains to all expenses incurred by the entity for the business operation it may be direct expenses or indirect expenses. This includes income from sales, interest, discount received, dividend, investment (Capital Gains). This ledger pertains to the income earned by the company either from the main business of the entity or from other sources. Drawing will also fall under this ledger. This includes equity, general reserve, and retained earnings out of the profit. This ledger pertains to the money invested in the entity. This sub-ledger includes creditors, long-term borrowings, short-term borrowing. This also includes current liabilities & non-current liabilities. This ledger pertains to a financial obligation which the entity owes to outside. This ledger includes cash, bank, land & building, debtors, Plant & Machinery, Copyright, Trademark, Furniture & fixture. It may be current or non-current, tangible or intangible. AssetsĪll types of assets which are owned and used by the entity for business operations are recorded under assets.
General ledger free#
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