A Ledger template is an initial accounting record of a company that helps make a financial statement from scratch. It is a whole record of all the financial and accounting transactions a company or organization keeps.
Also, a ledger helps to prepare other financial affirmations like owner’s equity, assets, liabilities, balance sheet, expenses, and income statement, for instance.
Therefore, one should prepare a general ledger carefully and enter all details accurately, such as any particulars, date, amount, reference number, etc. Mostly, it is used in double-entry book-keeping. Every transaction is recorded twice in debit and credit columns in double-entry book-keeping.
After this, the debit column’s total will be equal to the total of the credit column. Usually, a general ledger is used to prepare the organization’s financial statements. General ledger also helps the departments assess the company’s financial situation.
Preparing a general ledger is very important for small and large-scale businesses to maintain all business affairs effectively. Therefore, this general ledger template will be of much help.
What is a General Ledger?
If we talk about the general ledger, it is a master sheet integral to all business accounting. It shows all your business’s account transactions that have been made from the start of the business to date. From these transactions, you can understand and analyze the total amount of expenses you have paid and the money you have earned.
The general ledger also shows the difference between debits and credits in the form of balance. You need to subtract the total number of debits from the total number of credits to get this balance. By getting this information, you will make more informed and authorized decisions for your business.
What is an Asset Ledger?
Asset ledgers are detailed sections containing the company’s financial records, particularly the asset section of the balance sheet, without following any of the expenses. As all the assets have already been accounted for in the asset ledger, it takes less time to create a general ledger.
What is a General Ledger Template?
A general ledger template is essential for all businesses as it records and organizes all the activities related to payments between your various business accounts. It helps you understand your business’s growth by showing you the bigger picture of the finances.
The money that your company spends and earns is organized and managed in the ledger. You can also compare the data of the excel ledger with the data of transactions you have written in the notebooks. So, we can say that you summarize every transaction detail in a master notebook which is known as the general ledger.
A few common examples of the ledger are:
- Accounts receivable is an asset account that shows how much money is owed to your company.
- Accounts payable is an expense account that reflects how much money your company owes.
- Cash is an equity account that reflects the liquid assets your company owns.
- Inventory is an asset account that reflects the sales and purchases that impact your business inventory.
What Does a General Ledger Look Like?
A general ledger must always balance the credit and the debit amounts. It holds the recorded data of your company account that you need to prepare financial statements. In addition, you can use a general ledger to accurately predict the financial health of your business.
Furthermore, the financial ledger template is the main database of the company’s financial records and information that you can use with other financial documents with the information available in the ledger. Following are the common elements that are available in the general ledger template.
You can break the ledger accounts into various categories such as:
Assets are the resources or property of a company that generates value. In assets, you can include property, cash, equipment, inventory, trademarks, and patents.
These are the current or future financial debts that your company must pay. For example, you can consider employee salaries and taxes in current liabilities. In future liabilities, you can consider mortgages, lines of credit, bank loans, or loans.
It is the difference between the value of your company’s assets and liabilities. If the value of your business’ liabilities is greater than the value of assets, your company has negative equity. In contrast, if your business’s assets’ value is more than the value of liabilities, your company has positive equity.
You can include common stock, stock options, or stocks in the equity, depending on whether shareholders or owners privately or publicly own your company.
It is the company’s income obtained from the sales of products or services. In revenue, you can include sales, interest, royalties, or any other amount that your company gets from other individuals or businesses.
It is the amount of money your company pays in exchange for a product or service. You can include travel, utilities, rent, and meals in expenses.
A typical ledger template usually contains a list of the accounts and names by which you have documented them. It is also known as the “chart of accounts,” If there is a single account in the ledger, it is known as an “Account Ledger.” These account details are typically mentioned on the front page.
These are found inside an account and provide information about the entries document in the general account ledgers. The sub-ledgers also provide information if they are debited or credited by account receivable, cash, accounts payable, and so on.
How to Make a General Ledger Template?
An essential part of any business is accounting. To determine your business’s financial health, you need to maintain concise, current records. The accounting system of any business is divided into several parts, but the system’s foundation is the general ledger, as it is the official recording of the company’s accounts.
You can create your company’s most critical financial tools from these accounts and balances, such as the balance sheet and the income statement. Therefore, it is essential to update your general ledger template. If you do not maintain and update it, the company’s essential and critical financial information will be stated incorrectly.
Thus, it can be disastrous. To create an excel ledger template for your business, you can follow these steps.
Make a Chart of the Accounts
An excel ledger template keeps a comprehensive list of all business accounts. Commonly, in most accounting systems, you can find the following sections:
- Liability accounts that start with “2”.
- Equity accounts of owner that start with “3”.
- Revenue accounts that start with “4”.
- Expense accounts that start with “5”.
For example, one of your company’s cash accounts could be with labels as 101, payable accounts with 202, retained earnings with the label as 301, and so on. In addition, if your business is small, you can start with 100. If your company is larger, you can start your account number with 1000.
For Your Each Account, Create an Entry
Every account present in the chart of accounts with your name should be assigned with a specific entry or page of transactions. When each account contains its transaction page, the process of adding or deleting an account becomes easier and faster. In addition, you should enter the account details in the ledger by following the same pattern you followed in the chart of accounts.
Assign a Value to Each of Your Accounts
Some accounts have a huge balance, and some might have zero balance. For example, if your company has an account with a local electrician but you have no idea about their services, your account will have a zero balance. However, if your company paid $900 in supplies, your general ledger will start with $900.
How to Write a Ledger Sheet?
In basic accounting, keeping a ledger is essential. It permits the company to quickly analyze all transactions of an account at once. In addition, it is very simple and easy to keep and maintain a ledger. So, you can log every data and financial transaction from your company in a general ledger or journal.
Create a journal
A journal in accounting contains a list of every transaction that a company makes. A journal keeps the records of data, details, and expenses flowing out and in your business. In addition, a journal is not specific. It means that you can record every detail in the journal no matter where your company’s cash is going. Thus, before posting your transactions in the ledger, you must post them in the journal.
Keep Copies of All Invoices, Receipts, and Debts
For creating an accurate accounting journal, it is essential to accurately document every detail. So, you need to keep and save all essential invoices, receipts, debts, and any other documents related to finances for later use.
Set Up a Journal Page
By using a computer accounting program or a spreadsheet, you can set up a new journal page and divide the page up into the following columns:
- Reference Number
Record the Date on Which the Transactions Occur
There is a date heading in a journal where you need to mark the date on which your transactions were made. You should have a specific journal for every type of transaction or interaction that you do. For instance, if you received a check of $800 for your business on June 20th, 2020, you need to begin the journal entry with the date 6/20/20.
Furthermore, you need to mark accurate dates for accurate book-keeping and records. Find a specific time to record all your journal entries at least once a week to ensure no data is lost.
Categorize the “Account” of the Transaction
Some common types of accounts in accounting are:
Cash: This account represents the money that your company has on hand. It does not mean that only hard cash; if someone signs a check for your business, it is an increase in cash.
Accounts receivable: The amount of money that your company owed.
Accounts payable: The number of expenses your company owes. For instance, you receive a check of $700 as a loan; you need to note that amount under the payable journal account of your business.
Sales: It is the revenue that your company generates by selling products.
General Journal: This journal contains all on-time or weird transactions, like inflation, bad debts, selling equipment, etc.
Equipment, Land, Wages: These three accounts contain the expanses your business needs for running.
Assign a Number to Each Account For Easy Reference
The method of assigning a number to each account is also famous as a “chart of accounts.” Most of the time, similar accounts are present near each other, so for easy reference, you can label 501 for wage costs, 521 for utility costs, and 531 for advertising costs. In this way, you can easily reference your various accounts later on.
Keep a Record of Your Transactions
Describe your transaction briefly after listing the account number, date, and reference number in the journal. It is necessary because you can easily know where the money came from and where you have spent it later on.
For example, you have received a check from your colleague. So, you record this in your journal as 6/20/20, Cash, #501, check from a colleague. Some other examples of keeping your transaction records are:
- “Loan from the bank.”
- “Check from the friend.”
- “Sale of the old refrigerator.”
- “Repairs to company floor.”
Record Whether the Transaction was a Credit or a Debit
Debits are things or assets that increase the value or worth of your business. For instance, if you earn $600, you will list it as debit. In contrast, credits are liabilities or expenses of your company, such as accounts payable or loans. Simply you have to write the amount of money received or spent under each account.
For instance, you received a check of $600; you will list it with 6/20/20, Cash, #501, check from a colleague, $600 Debit in your journal.
Common debits include accounts receivable, land, equipment, wages, cash, and personal funds. Common types of credits include accounts payable, cash spent, bills, loan payments, and mortgages.
Use Separate Lines for Multiple Accounts Transactions
In the journal, you need to use spate lines for the transactions of multiple accounts. For instance, the check you have received for your business might be a loan. So, you have to list it as both “Accounts payable” and “Cash.”
In addition, you only have to use separate lines under the same description and date to note the details of both accounts as:
- 6/20/20, Cash, #501, check from a colleague, $600 Debit
- Account Payable, #601, Loan from a colleague, $600 Credit
Keep a Record of Every Single Transaction
You need to keep a record of every single transaction that happens from any of your accounts. Keep the record in your general journal and think about it as a “story” of your finances. This document gives the details of every single economic transaction that your company made in order. So, check all your invoices and receipts against your general journal at the end of the week to ensure that nothing is missed.
Transfer Entries from Journal to Account Ledger
It is essential to keep a record on a general journal and a ledger. It is important because the accountants, executives, staff, and you can quickly check your company’s financial health.
In addition, the ledger contains the record of every transaction from each account, so your company you have a ledger for accounts receivable, cash, etc. So, don’t forget to make a record in the ledger after listing it in the journal.
Why are Ledger Entries Important?
Several reasons explain why entries into a ledger are important. These entries:
- Make it easy for you to find the transactions record
- Keep you organized
- Compartmentalize transactions
- Show you a pattern in expenses and income
- Help you understand the financial health of your company
- Help you to understand accounting mistakes in your transaction record
If you catch your accounting mistakes early, you can get an accurate picture of your company’s finances. It also helps you get rid of financial penalties and maintain your financial reports.
Key Features of Excel Ledger Template
Whether you are the only owner of your business or have numerous employees, it is important to keep track of your business process and its financial health. So, to keep a record of your business, Microsoft Excel’s ledger templates are the best to use.
In addition, the use of paper ledgers has been reduced because these ledgers are hard to read and messy. Now the excel ledgers help you to completely customize your categories and codes and reuse these forms for several years.
These excel templates of ledgers with credits and debits are often divided into the private ledger for resources and the nominal ledger for cost and revenue. Due to this reason, the excel template of the ledger comprises various columns. You will find the date, description, reference, debit, and credit in these columns.
Credits and Debits Column in Ledger
The ledger is generally a thorough review of different elements of your book-keeping. The excel ledger template with credits and debits includes the account’s total abstracts, consisting of every transaction. In addition, you can organize it by date and type of account.
These columns in the ledger reveal the status of your account or whether it is running normally or not. For example, credit can generally improve the income accounts , and debit can boost the expense accounts.
Account Ledger Template
By using this incredible accounting ledger, you can confirm that your credits and debits are in a balanced form. In addition, the setup and structure will permit you to easily choose if there are any disproportionate transactions. This excel template can also deal with multiple submissions very efficiently.
Furthermore, in a general ledger template, a column is present for account numbers. First, you can add the account numbers of all your company accounts in that column. Then, in the next column, you have to write a description of your company’s accounts. Then in the last two columns, you have to record the debits and credit details.
Importance of Ledger Template
Primarily, this accounting excel template allows you to monitor and track your records effectively. With the help of these ledger templates, you can do book-keeping in a very linear way. Of course, a general ledger template is useful, but it becomes more effective with the added credits and debits.
So, larger companies and businesses use this accounting ledger tool to track their finances because, in excel form, these templates are easy to use.
Top 5 Frequently Asked Questions
What is a Ledger Template?
A general ledger template is essential for all businesses as it records and organizes all the activities related to payments between your various business accounts. It helps you understand your business’s growth by showing you the bigger picture of the finances. The amount of money you spend and earn is organized and managed in the ledger.
Why do you need a General Ledger Template?
You need a general ledger template because it is an important document that records and arrange all financial transaction between your various business accounts. You need this template to look at the big picture of your company’s growth and financial health.
What should go in the general journal?
In a general journal, these sections are essential to fill in.
• Accounts Receivable, which is an asset account
• Accounts Payable which is a liability account
• Retained Earnings which is an equity account
• Product Sales which is a revenue account
• And the cost of items sold which is an expense account
How do you make a simple Ledger sheet?
For making a simple ledger, divide each account into two columns. The right column should contain your credits, and your left column should contain the debits. Then record your revenue, liabilities, and equity on the right columns, and your expenses and assets will go in the left column.
What are the common sections in a General Ledger?
Four sections of a general ledger template are:
• The chart of accounts
• Account balances
• Financial transactions
• Accounting periods