General ledger account

A general ledger account is a record in which is recorded a specific type of transaction. These transactions can relate to assets, liabilities, equity, sales, expenses, gains, or losses - in essence, all of the transactions that are aggergated into the balance sheet and income statement.

A separate general ledger account is set aside for each specific type of transaction. For example, within the general area of inventory assets, there may be separate general ledger accounts for raw materials inventory, work-in-process inventory, finished goods inventory, and merchandise (purchased) inventory.

Examples of other general ledger accounts that are commonly used are:

Balance sheet accounts

  • Cash
  • Accounts receivable
  • Marketable securities
  • Fixed assets
  • Accumulated depreciation
  • Accounts payable
  • Accrued liabilities
  • Sales taxes payable
  • Debt
  • Common stock
  • Retained earnings

Income statement accounts

  • Sales
  • Cost of goods sold
  • Compensation expense
  • Payroll tax expense
  • Fringe benefits expense
  • Rent expense
  • Utilities expense
  • Advertising expense
  • Travel and entertainment expense
  • Business insurance expense
  • Office supplies expense
  • Interest expense
  • Gain/loss on sale of assets

A complete list of all general ledger accounts that a company uses is contained within the chart of accounts, which is a simple listing of account numbers and account descriptions.

A few general ledger accounts are designated as control accounts. These accounts only contain summary balances that have been posted from subsidiary ledgers. This is done in order to minimize the transaction volume cluttering the general ledger. The accounts receivable and accounts payable accounts are the most likely to be control accounts.

Related Courses

Bookkeeper Education Bundle 
Bookkeeping Guidebook