General Ledger Accountant (GL) is responsible for keeping the records and transactions for the company's accounts. Plus, they have to manage the transfers, revenues, equity, losses, liabilities, assets, and expenses.
General ledger accounts are six digits long, and each number conveys certain information. A public ledger account starts with eight transfer funds from one UNL area to another, usually from one funding source. Revenue posting begins with 4; expense posting starts with 5. The second, third, and fourth digits depict the major, minor, and subcategories, and the fifth and sixth numbers have more detailed breakdowns. Here you will learn more about the general ledger types, duties, qualifications, etc. Let's move ahead!
Required AAT Qualification Level For A General Ledger Accountant
AAT qualification involves sales and purchases ledgers knowledge to improve your understanding of the processes. AAT accounting level 2 enables you to get deals or purchase registered jobs to initiate your bookkeeping career.
Types of General Ledger Accounts in accountancy training courses
General ledgers accountants align with the income statement and balance sheet for which they are designed. The net from public ledger accounts for cash, account receivable, and inventory are also included in the income part of the income statement.
Additionally, this is the money owed to the business and merges into departments like sales, products, and other expenses. The expense part of the income statement is ground on the general ledger accountant for advertising and interest expenses. Other available ledger accounts facilitate summarising transactions for resource categories, including plant and equipment and liabilities like notes, accounts payable, and loans.
These kinds of accounts are present in every general ledger. Other account types include tracking special categories, performing useful computations, or summarising account groups. This type of account is known as a control account.
Controlling accounts and subsidiary ledger
Larger organisations often find it difficult to perform the roles of a general ledger accountant. Companies create subsidiary ledgers to simplify the audit of accounting records or record analysis by internal stakeholders.
A subsidiary ledger, also known as a sub-ledger, is a sub-account of a general ledger account that tracks the transactions related to a specific organisation, property, and purchase. The public ledger accounts, including the subsidiary ledger, are known as controlling funds. For instance, A, B, and C are clients of Company Z. So; company Z will create three subsidiary accounts for each client under account receivables or controlling accounts for accounting purposes. Holding accounts will help track each client's sales, payments, allowances, and returns.
Decentralisation ledger- Blockchain Technology
Blockchain technology has attracted distributed or decentralised general ledger accountant. It allows the distribution of registers across various users worldwide where each user is part of the whole network, decreasing the centralised role of a single entity.
Thus, it facilitates every entity part of the company network to access the ledger whenever they desire and print a personal copy of it to self-regulate the system. Plus, it decreases the risks of having a single source of leger that is a centralised general ledger and increases the participation of everyone.
Working of General ledger in AAT Qualification.
A general ledger is the base of the system activated by accountants for storing and organising financial data to create the company's financial statements. Transactions are forwarded on individual sub-ledger accounts as determined by the chart of versions of the company.
These transactions are closed out to the general ledger, and accountants generate trial balances that serve as each ledger accounts balance report. In addition, the trial balance is assessed for errors and regulated by adding further necessary entries. Then, the adjusted trial balance is utilised for generating the financial statements.
Working of the general ledger with double-entry accounting
Businesses employing the double-entry aat bookkeeping method also use a public general ledger accountant, which means that all financial transactions impact at least two sub-ledger accounts. Moreover, it depicts that each entry contains at least one debit transaction and one credit transaction.
Journal entries
Before recording anything in a general ledger, accountants need to enter a record into the register first. These journal entries offer a detailed overview of specific accounting areas, whilst the public ledger provides a holistic overview of financial performance.
Journal entries, also known as double-entry transactions, are posted in two columns: credit entries on the right and debit entries on the left. Also, the net credit and debit should balance. The balance sheet also follows the general ledger format and depicts detailed account-level information. The balance sheet demonstrates multiple asset accounts, including cash and account receivables under section' short-term assets.
Journal entries are divided into seven types, as listed below.
- Cash receipts journal showing all cash inflows in business.
- Cash payment or disbursement journal that shows any cash flowing out of business.
- The sales journal shows that the business makes all credit sales.
- Purchase journal depicts the purchases made on credit by the business.
- Sales return journal
- Purchase a return journal that shows the return transactions of products purchased by the supplier.
- General Journal
These seven journal entry types are essential for the finance team to record the various incoming and outgoing transactions. The accounting equation for double-entry accounting is shown below.
Assets = Liabilities + owners’ equity
The balance sheet also follows the general ledger format and depicts detailed account-level information. The balance sheet demonstrates multiple asset accounts, including cash and account receivables under the section' short-term assets.
The double-entry accounting functions depend upon accounting equations' requirements. The requirement says that the transaction posted to the accounts on the left of the = sign in the formula must equal the net transaction number posted on the right. The different presentation of the equation does impact the balancing rules, and it always applies.
What does the general ledger gather?
The transaction details provided in the general ledger are collected and summarised at various levels for creating trial balance, balance sheet, income statement, statement of cash flow, and other financial reports. It facilitates accountants, analysts, company management, investors, and other stakeholders to assess the company's performance on an everyday basis.
When expenses increase in a given time or a company accounts for other transactions that impact its net income, revenues, and other important financial metrics, the financial statement is often misleading and incomplete. In case numerous accounting errors appear, it is necessary to consult the general ledger and explore the details of all recorded transactions to find the issue.
It can sometimes involve a review of various journal entries; however, it is crucial to maintain error-free and accurate company financial statements. Here general ledger performs its role to offer a reliable and credible financial record of a company.
Purpose of general ledger accountant
In accounting, the general ledger accountant records all financial transactions of the company. Transactional data is arranged into liabilities, assets, expenses, revenues, and owner's equity within the public ledger.
After closing up all sub-ledgers, the accountants produce the trial balance. The data from the trial balance is then utilised for creating the company's financial statement, including its income statements, balance sheet, statement of cash flows and related financial reports.
General Ledger Reconciliation
General ledger reconciliation is the process of ensuring the balancing of the public ledger. Reconciliation of all transactions guarantees the accuracy of all entered entries and balances your books. A qualified CPA and a certified public accountant perform the general ledger reconciliation process.
Bookkeeping and balancing are crucial for two reasons, as detailed below.
General Ledger Accountant Depicts The Entire Records Of Financial Activity
The general ledger accountant has a record of each transaction made by the company, and manual recording of these transactions is a difficult process. Choosing the right amount of accounting software makes it easier for accountants to collect financial information for each penny. It also facilitates to make strong audit trials and provides high visibility of financial performance.
A balanced book also offers the foundation for assessing each financial statement. If the records do not balance, it triggers an investigation in certain economic, and organisational areas.
It can also stimulate the need to use more innovative and smarter technologies for bookkeeping.
Regular book balancing helps spot the missing information that protects against unseen and large financial losses. However, you need efficient accounting software to access and assess transactions in real-time. The automated approach allows instant alerts to identify wrong entries and ensure information accuracy.
Enhances Speed Management & Guarantees Strong Financial Position
A general ledger accountant uses a general ledger which is a strong tool that supports accurate financial records and reporting on expenditure and revenues. More than that, it clarifies which item generates the biggest capital share and allows the economic team to make informed and strategic decisions. It helps to enhance operational efficiency and reduce costs and ensure healthy cash flow to increase investor attraction.
Why do businesses need a general ledger account?
Using a public register for bookkeeping is dependent upon business needs and functions. For many smaller businesses, using a public register is more expensive than its benefits for financial records, and thus these business owners choose not to use such scrutinised bookkeeping.
However, large businesses utilise general ledger for exploring the truth of their financial records and other reasons. Below are the reasons:
Tax Reporting
The general ledger accountant merges all income and expenses in one place, making tax computations easier and more convenient. Furthermore, utilising the right type of accounting software, you can customise it to auto-generate tax reports. It will allow you to reduce the risk of human errors, save time, and increase compliance with business.
Eases checking and preventing fraud.
You need to document all your financial transactions to clarify all cash flow in and out of the company. It facilitates identifying the incidences of fraudulent purchases made on an organisation's behalf that help prevent heavy business losses before they cause any trouble.
Depicts Financial Picture Of Classified Accounts
Businesses need a general ledger to track their sensitive financial transactions. Additionally, the public register can show credible financial information from personal accounts without probing into more details.
In simple words, the general ledger accountant forms the basis for the cash flow statement, income statement, and balance sheet and shows key measurements such as profitability, liquidity, and business financial health.
Builds End-To-End Financial Reporting
Before internet and accounting software development, accountants had an extremely difficult job in bookkeeping and accounting tasks. Thus, the general ledger accountant became a great saviour for accountants in executing major accounting tasks such as invoicing, transactions, data analysis, and strategic decision-making.
Moreover, performing pre-accounting, accounting, and payment processes using a single tool was nearly impossible for accountants. However, the general ledger has made it easier for the finance team to manage and control activities, including procurement conveniently, and then add the data into accounting tools. It helps to ensure an accurate and reliable general ledger and bookkeeping process.
General Ledger Accounting Software In AAT Courses
Every business aspect is evolving with the changing trends in accountancy training courses such as AAT qualification and accounting clerk practice. Similarly, the general ledger is moving from paper-based bookkeeping to more advanced and automated processes. In fact, now accounting software is suitable for public logs, such as enterprise accounting software or ERP.
ERP combines the main accounting functions with modules for management-related business processes. Besides that, these processes include human resource management and order management. General ledgers accountant are also part of enterprise asset management software. The public ledger works as a central storehouse for accounting information and data in this software.
FAQs
Q.1. What Is The Role Of The General Ledger Accountant In Creating Balance Sheets And Income Statements?
The general ledger accountant records all transactions that impact the company's finances, including the accounting elements such as assets, liabilities, expenses, equity, and revenues. That is, the data source enables the formation of income statements and balance sheets.
Q.2. What Are The Names Of The Five Types Of General Ledger Accounts?
General ledger accountant accounts are classified into five categories: equity, assets, liabilities, expenses, and revenues. These are important account types in the automated accounting system.
Q.3.What Are Four Sections In General Ledger?
General ledgers consist of four sections: financial transactions, the chart of accounts, accounting period, and accounts balances.