General ledger

• The General Ledger: A Complete History, Account by Account, of Everything That Happens
• It is populated based on journal entries (each transaction is recorded in two equal entries)
• Its totals are used to prepare the trial balance (a list that verifies that everything balances) and financial reports
• Keep them for six years: The CRA requires that your books and records document every income and expense
• Software like QuickBooks or Xero keeps it up to date automatically

A well-maintained general ledger is like a GPS that’s always up to date: you know exactly where your money is going at all times, instead of having to guess. A quick glance at the Sales account, for example, shows you $180,000 in receipts since January, while the Rent account shows $24,000: each entry is tracked separately and totaled for you. When your accounts are checked and corrected over the course of the months, your banker quickly gets what they need, and your accountant spends fewer hours untangling the past year in the spring, hours that you pay for. Conversely, a neglected general ledger means errors pile up and aren’t discovered until it’s too late. We encourage you to review your totals every month, even if it’s just for five minutes. The general ledger is populated based on your journal entries, sorted by your chart of accounts, and helps you track your Customer and Vendor Accounts. The CRA also reminds taxpayers that these accounting records must be kept and must document every transaction. To get your finances in order or keep everything organized, Bankeo provides you with a vetted accountant or CPA for free, and we’re here to support you every step of the way.

What exactly is the general ledger, in simple terms?

It’s the central ledger where all your transactions are organized by account. Imagine a binder with one page for each category: one page for bank accounts, one for sales, and one for rent. Every time a transaction occurs, it’s added to the appropriate page. When you look at a page, you can see the entire history and the total balance for that account.

What’s the difference between the journal and the general ledger?

The journal records transactions in the order they occur, day by day; the general ledger then reclassifies them by account. The journal answers “what” and “when,” while the general ledger answers “how much” is in each account. Accounting software performs this reclassification automatically, in real time.

I’m behind on my bookkeeping, where should I start?

We start by catching up on bank reconciliations (comparing your books with your bank statements month by month to ensure they match), then we clean up any outstanding accounts. This is a very common task, and it goes smoothly when you have support. Bankeo provides you with a vetted accountant or CPA, or a bookkeeping service, depending on the scope of the catch-up accounting work, at no cost, and we’ll be right there to support you.