What is General ledger?

The general ledger, or GL, is the master record of a business’s finances. Every account in the chart of accounts has its own page in the ledger showing each debit and credit posted to it, with a running balance. Sales, bills, payroll, bank transactions and adjustments all end up here, either posted directly as journal entries or summarized from sub-ledgers such as accounts receivable, accounts payable and inventory.

The trial balance, balance sheet and income statement are all produced from GL balances, so the ledger is only as reliable as what flows into it. When the POS, inventory, payroll and accounting live in separate systems, the GL is often fed by end-of-day summaries or manual journals, and differences creep in. When they share one ledger, each document posts itself once, and you can drill from a report figure down to the original invoice or sale.

A ledger also has to be trustworthy over time. That means an audit trail showing who posted or changed what, reversals instead of silent edits, and period locks so that closed months cannot be altered after the accountant has reviewed them. The CRA generally expects Canadian businesses to keep their books and records, including the ledger, for six years after the end of the tax year they relate to.