What Is a Ledger in Accounting?

Most businesses refer to:

• The general ledger (GL): the master set of all accounts
• Subledgers: detailed ledgers feeding totals into the GL

General ledger vs subledgers

General ledger (GL) includes every account needed for reporting, such as:

• Revenue and expense accounts (P&L)
• Asset, liability, and equity accounts (balance sheet)

Subledgers store transaction-level detail in focused areas, such as:

• Sales ledger (accounts receivable): invoices, receipts, credit notes by customer
• Purchase ledger (accounts payable): bills, payments, credits by supplier
• Fixed asset register: assets, depreciation, disposals
• Inventory records (depending on system)

The GL should reconcile to subledgers where control accounts are used.

How ledger postings work

Ledgers operate using double-entry accounting. Each transaction affects at least two accounts so the accounting equation remains balanced. This is why ledger accuracy matters: a single mis-coded entry can distort multiple reports.

Why the ledger matters

A clean ledger supports:

• Accurate and timely month-end reporting
• Reliable cash and working capital visibility
• Easier audits with traceable postings
• Better forecasting and decision-making

A messy ledger creates:

• Slow closes and lots of manual corrections
• Control account mismatches
• Unreliable KPIs and management reporting

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1. Is the ledger the same as a chart of accounts?
   No. The chart of accounts is the list of accounts. The ledger contains the actual transactions posted to those accounts.
2. What’s the difference between a ledger and a journal?
   A journal entry is a posting. The ledger is where postings accumulate by account to form balances and movements.
3. Why do ledger balances change after month-end?
   Late postings, corrections, or backdated entries can alter balances unless the period is locked and controlled.

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