What does a general ledger contain?

What does a general ledger contain?

• A. Only sales transactions
• B. Financial accounts using double entry bookkeeping
• C. Only asset accounts
• D. Only liability accounts

Answer: (B)

A general ledger is a comprehensive record of all financial transactions of a business, organized by accounts, and it uses the double-entry bookkeeping method. This method ensures that every financial transaction impacts at least two accounts, fostering accuracy and balance in financial records. In a general ledger, all types of accounts are included, such as revenue, expenses, assets, liabilities, and equity. Each account within the ledger shows the changes in that account over time, allowing a complete view of the company’s financial health. The double-entry system inherent in the general ledger helps in maintaining the accounting equation (Assets = Liabilities + Equity), which is fundamental to accounting practices. This is why the option referring to financial accounts using double entry bookkeeping succinctly captures the essence of a general ledger. It encompasses all financial transactions rather than being limited to specific categories like sales, assets, or liabilities.

A general ledger is a comprehensive record of all financial transactions of a business, organized by accounts, and it uses the double-entry bookkeeping method. This method ensures that every financial transaction impacts at least two accounts, fostering accuracy and balance in financial records.

In a general ledger, all types of accounts are included, such as revenue, expenses, assets, liabilities, and equity. Each account within the ledger shows the changes in that account over time, allowing a complete view of the company’s financial health. The double-entry system inherent in the general ledger helps in maintaining the accounting equation (Assets = Liabilities + Equity), which is fundamental to accounting practices.

This is why the option referring to financial accounts using double entry bookkeeping succinctly captures the essence of a general ledger. It encompasses all financial transactions rather than being limited to specific categories like sales, assets, or liabilities.