General Ledger: The general ledger is the 2nd step in double entey bookeeping. A general ledger basically simplifies the entries of the analysed cash book by using the totals for each topic. E.g total sales. This is used to simplify balences more for the Trial Balence. There are two sides of a general ledger. They are...
The meanings of the sides change...
Debit Side = Records expenditure
Credit Side= Records Income
There are columns for dates, details of transactions, a folio( reference column) and an amount column
Three red lines seperate the two sides
Special note on VAT entry:
There is nearly always two entries in both sides in regards to the VAT balences.
The debit VAT entry is VAT earned feom sales whe the credit VAT entry is VAT taxed on purchases
Also the balence of the VAT is recorded on the appropuate side. E.G if debit VAT is higher than credit VAT then its recorded in the debit side
Balence of VAT= credit VAT - debit VAT