The general ledger is a master accounting document that provides a complete record of your business’s financial transactions. For each account, the general ledger shows the account balance at the beginning of the period, plus all the debits and credits and the closing balance.
Using the information from Tom’s business [from The Double-Entry Accounting System article], we will prepare the general ledger using the T-account method. The T-account simply means that we draw lines in the shape of a capital letter T to separate the debit side from the credit side.
The above images show you exactly what the general ledger looks like. As you can see, it has the T-shaped lines. The left-hand side is always the debit side. The right-hand side is always the credit side. Other details that are displayed are the dates of the transaction as well as the description. So, all we have done is that we have taken the information from the accounting equation exercise and we have re-arranged it into a T-shaped general ledger.
