Learn about General Ledger

1. Technofunctional Body of Knowledge
©Chartered Technofunctional Institute
Process Area – Finance
Chapter – General Ledger
Topic – Introduction to General Ledger
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Learn the concept of General
Leader and its role in any
accounting package
including ERP’s like Oracle
and SAP. Understand the key
functional areas of any
General Ledger system
Technology Independent Expertise

2. General Ledger:
• The general ledger is a collection of the group of accounts that
supports the value items shown in the major financial statements.
• It is built up by posting transactions recorded in the sales daybook,
purchases daybook, cash book and general journals daybook.
• The general ledger can be supported by one or more subsidiary
ledgers that provide details for accounts in the general ledger.
• All transactions having financial impact are recorded in General
Ledger.
• In Accounting Packages/ERP’s like Oracle/SAP “General Ledger” is
the central repository of all accounting information.
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Transactions Sub‐Ledgers General Ledger
Financial
Statements
Source: Wikipedia

3. Subsidiary Ledgers:
• A subsidiary ledger is a group of similar
accounts whose combined balances equal
the balance in a specific general ledger
account.
• Subsidiary Ledgers facilitate recording of
complete financial and other information
related to the transaction.
• The general ledger account that
summarizes a subsidiary ledger's account
balances is called a control account or
master account.
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General
Ledger
Fixed Assets
Accounts
Payable
Accounts
Receivable
Projects
Inventory
Management
 An Accounts Receivable(AR) subsidiary ledger includes a separate account for
each customer who makes credit purchases.
 The combined balance of every account in this subsidiary ledger equals the
balance of accounts receivable in the general ledger.
 Subsidiary ledgers contain supplemental accounts that provide the detail to
support the balance in a control account.
 Subsidiary Ledgers also capture details pertaining to financial transactions like
Tax Numbers, Contact Person, Telephone Number or Copy of Invoice

4. Subsidiary Ledgers - Examples:
Imagine what the size of your General Ledger would be if you have 8000
customer accounts, 4000 supplier accounts and 2000 items you trade in.
Subsidiary Ledgers help manage and store specific information regarding each of
the control accounts in your GL.
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• Manage Suppliers and PaymentsAccounts Payable
• Manage Customers and ReceiptsAccounts Receivable
• Manage Item Prices and MovementsInventory
• Manage Fixed Assets and DepreciationFixed Assets
• Manage various projects with their costing and billingProjects
• Manage Cash and its reconciliation with BankCash Management
• Manage Salaries and Wages – Calculations & PaymentPayroll

5. GL in Accounting Software:
• General Ledger is central repository for
all financial activity.
• The main purpose of a general ledger
system is to record financial activity of a
company and to produce financial and
management reports to help stakeholders
make decisions.
• In an ERP/Accounting Package all other
subsidiary ledgers sends financial data to
GL.
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 Enables Companies to manage their financial processes in an
integrated manner by allowing greater flexibility and control over
the journal entry process.
 Improves transaction processing and control.
 Allows for detailed report generation according to multiple report
types and report parameters - facilitates better and faster
decision making.

6. Accounting Cycle:
• Manage Accounting
Periods/Calendars
• Manage Currency
• Import Transactions
• Record Transactions
• Review Transactions
• Edit Transactions
• Transaction Approval
• Analyze and Manipulate
• Statutory Reporting
• Management Reporting
• Manage Consolidation
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Manage
Periods
Record
Review
Edit
ApprovePost
Analyze
Revalue/
Translate
Consolidate
GENERAL
LEDGER

7. GL Process Flow:
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Create Journal
Sub‐Ledger
Import
Journals
Review
Journals
Approve
Journals
Post Journals
Balances
Updated
Run Reports
Create Journal
Manual

8. Inquiry & Drilldown:
1. Inquire Online Account Balances
2. View Accounting Information
3. Drill Down to Sub Ledger
4. Further Drill Down to Sub Ledger Transaction
5. Review all transactional details at Sub Ledger
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DetailsTransactionSub Ledger
Accounted
Journal
GL Balances

9. GL Concepts:
1. Accounting Periods/Calendars
2. Adjustment Period
3. Currency – Functional/Foreign
4. Chart of Accounts
5. Journals – Entry and Import
6. Posting & Balances
7. Review and Approval
8. Accruals and Reversals
9. Recurring Journals
10. Allocations
11. Intercompany
12. Consolidation
13. Trial Balance
14. Statutory Reporting
15. Management Reporting
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In the next part of this series
we will focus on GL Concepts
in detail to build strong
conceptual foundation.

10. TECHNOFUNC
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Next in Series
Process Area – Finance
Chapter – General Ledger
Topic –General Ledger Concepts
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