• general ledger is the "Books" - the financial accounting for the company
• breaks things down into categories - 5 major categories (Assets, Liabilities, Income, Capital, Expense)
• each category further broken down into sub categories, and sub sub categories etc. - example: liabilities usually broken down into current liabilities and long term liabilities (current are things to pay off in, lets say 1-3 months such as accounts payable and employee income tax withheld while long term are things like bank loans, lease agreements etc. that obligate the company over long periods of time and will be payed off over time)
• NOTE: Debit is natural side of assets and expenses - when you increase these accounts you post to debit side while Credit is natural side of liabilities, income and capital - when you increase these accounts you post to the credit side

• Order processing passes sales (income), cost of goods sold (use information from inventory to calculate), freight, tax to general ledger
• Typically as you complete order processing cycle (may be daily) information is pot on general ledger interface file - usually aren't posted (processed against general ledger) until end of month process, but could be done earlier - Note: confirmed orders posted. For example lets say you had an order for $100 and the goods cost $60 - they would look like this:

• You might break down by dept but that is as detailed as you get. If you want detail you look at the subsidiary ledgers of A/P, A/R etc.
• Post out of accounts receivable when payment is made.

• Information goes to general ledger interface file - posted, frequently at end of month
• When vendor invoice is entered into payables (confirmed at this point), credit accounts payable and debit expense accounts and/or assent accounts (inventory is assent account, payment to ship goods ie freight goes to expense)
• When you pay invoices you debit A/P and credit cash
• Both are done through a general ledger interface file and usually at end of month - can be more frequent

Transactions to General Ledger if for example you bought $500 worth of merchandise

Invoiced by vendor:

Pay invoice:

• General Ledger frequently generates reports such as:
• general ledge transaction register
• trial balance
• balance sheet (lists assets, liabilities and capital)
• income statement (lists income and expenses and shows profit or loss)