What is a general ledger?

By Book Keeping Pros
Sources checked 15 Oct 2026

Definition

The general ledger is the main record of a business's accounts. It holds every account in the chart of accounts and the transactions posted to each one, so it shows the running balance of every asset, liability, equity, income and expense account the business uses.

Transactions reach the general ledger from journals or, in accounting software, from the invoices, bills and bank transactions entered in other screens. Detailed lists, such as each customer's or supplier's balance, add up to a single control account in the general ledger. Each line in a ledger account carries a date, a reference to its source, the amount and the running balance, so any figure on a report can be traced back to the invoice, bill or bank line that created it.

The balances in the general ledger are what a trial balance lists and what the financial statements are built from. Asset, liability and equity accounts flow into the balance sheet, while income and expense accounts flow into the profit and loss statement. Because every posting has equal debits and credits, the ledger as a whole stays in balance.

Going through the general ledger account by account is how bookkeepers catch errors before they reach the reports. Useful checks include an expense account showing a credit balance, the same amount posted twice, items left sitting in a suspense or uncategorised account, and transactions dated in the wrong period. A monthly look at each account's detail, before reports go to the owner or your accountant, is usually much quicker than untangling a whole year at once.

In Australia

Section 286 of the Corporations Act 2001 requires a company to keep written financial records that correctly record and explain its transactions and its financial position and performance, and to keep them for 7 years after the transactions are completed. The general ledger is where those transactions are brought together, so it is part of the records that rule covers.

The ATO's general rule for business records is that most records are kept for 5 years, generally counted from when they were prepared or obtained, or from when the transactions were completed, whichever is later.

Section 286 also requires that a company's records would allow financial statements giving a true and fair view to be drawn up and audited from them, and the duty covers transactions a company carries out as a trustee. The ATO's rules add that a business needs to be able to rebuild its original data after moving to a different record-keeping system, and should keep information about how its system works so that it can be checked.

Common mistakes

Leaving amounts in a suspense or uncategorised account at month end instead of working out where they belong.
Taking a ledger that balances as proof the figures are right, when an amount can still sit in the wrong account.
Coding a transfer between the business's own bank accounts as a sale or an expense, which adds income or costs that did not really occur to the profit and loss statement.
Changing accounting software without keeping a full export of the old general ledger and its transaction history.

Common questions

What is the difference between a general ledger and a general journal?

The general journal lists entries in date order, each one showing the accounts debited and credited and the reason for the entry. The general ledger takes those entries, along with postings from invoices, bills and bank transactions, and sorts them by account, so each account shows all of its activity and a running balance. Put simply, the journal answers what happened on a given day, and the ledger answers what has happened to a given account over time.

Is the general ledger the same as a trial balance?

No. The general ledger holds every transaction in every account. A trial balance is a short summary drawn from it, listing each account's closing balance on a chosen date in a debit column or a credit column. When the two columns agree, the ledger is arithmetically in balance, and the trial balance becomes the starting point for preparing the financial statements.

What is the difference between a general ledger and a subledger?

A subledger, also called a subsidiary ledger, keeps the detail for one area, such as a separate running balance for each customer or each supplier. The general ledger carries only the total of that detail. On any date the subledger listing should add up to its control account; when it does not, an entry has usually been posted straight to the control account or left out of the detail, and the gap needs tracing before the reports are used.

Related terms

Related service

Small business bookkeeping

Your books kept current, every month.

More about small business bookkeeping

Sources

Corporations Act 2001, sections 9 and 286
Federal Register of Legislation, Office of Parliamentary Counsel. Compilation No. 149, 19 September 2026, released 19 September 2026. Checked 15 October 2026.
Based on content from the Federal Register of Legislation at 15 October 2026. For the latest information on Australian Government legislation please go to https://www.legislation.gov.au. Licence: CC BY 4.0.
Overview of record-keeping rules for business
Australian Taxation Office. Current at 18 June 2026 (QC60718), released 18 June 2026. Checked 15 October 2026.
© Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).