What is a General Ledger? Simply Explained

Where the ledger fits
Control accounts and subsidiary ledgers

A general ledger is the set of all a business's accounts, each with its own running balance. Transactions are recorded in a journal first and then posted to the ledger. The trial balance and the financial statements are prepared from the ledger. Large balances such as accounts receivable can have a subsidiary ledger behind them, with one account per customer or supplier, and its total has to match the ledger account.

This page covers the ledger itself and how subsidiary ledgers tie to it. For the step before the ledger, see what is a journal entry. For posting and T-accounts, see double-entry bookkeeping. For the list of accounts, see what is a chart of accounts. For bookkeeping as a whole, see what is bookkeeping.

Billed publishes this page. Definitions are quoted from the open textbook OpenStax Principles of Accounting, Volume 1: Financial Accounting (published April 11, 2019; pages revised April 23, 2026), opened on October 30, 2026.

Where the ledger fits

OpenStax describes an accounting information system as "a system or set of processes for collecting data about accounting transactions; recording, organizing, and summarizing the data; and culminating with the preparation of financial statements and other reports for internal and external users."

The ledger is where the data is organized by account. In OpenStax's words: "Note that each account used by the company has its own account section in the general ledger."

Every entry starts from a source document, which OpenStax defines as a "paper document or electronic record that provides evidence that a transaction has occurred and includes details about the transaction". Keeping the trail from that document to the ledger gives an audit trail: a "step-by-step trail of evidence documenting the history of a transaction from its inception and all the steps it went through until its completion".

Control accounts and subsidiary ledgers

Some ledger accounts summarize a set of smaller accounts. OpenStax defines the accounts receivable control as the "accounts receivable account in the general ledger". Behind it sits a subsidiary ledger:

Accounts receivable subsidiary ledger: a "special ledger that contains information about all customers and the amounts they owe; the total of all accounts in the accounts receivable subsidiary ledger must equal the total of accounts receivable control account in the general ledger"
Accounts payable subsidiary ledger: a "special ledger that contains information about all vendors and the amounts we owe them; the total of all accounts in the accounts payable subsidiary ledger must equal the total of accounts payable control account in the general ledger"

On why, OpenStax says: "The purpose of keeping subsidiary ledgers is for accuracy and efficiency." It adds: "Since the total of the accounts receivable subsidiary ledger must agree with the balance shown in the accounts receivable general ledger account, the system helps us find mistakes."

Sample: one month of receivables, ledger and subsidiary ledger

The figures here are a sample, invented for this example. A design studio's accounts receivable starts June at $0.

Journal entries, posted to the general ledger:

June 4, invoice to Client A: debit Accounts Receivable $900, credit Service Revenue $900.
June 10, invoice to Client B: debit Accounts Receivable $600, credit Service Revenue $600.
June 25, Client A pays part: debit Cash $400, credit Accounts Receivable $400.

Each entry balances, and so do the totals: debits $900 + $600 + $400 = $1,900, and credits $900 + $600 + $400 = $1,900.

Accounts Receivable control account (general ledger): $900 + $600 − $400 = a debit balance of $1,100.

Accounts receivable subsidiary ledger:

Client A: $900 − $400 = $500
Client B: $600
Total: $500 + $600 = $1,100

The subsidiary ledger total, $1,100, equals the control account, $1,100, so the two agree.

Where Billed fits

Billed's invoice software page says: "Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder." Its financial reporting page says: "All reports in Billed can be exported for use with your accountant, bookkeeper, or tax software." Billed's invoice software, financial reporting, features and mobile app pages don't describe a general ledger. Ask your accountant or bookkeeper which ledger system your books should use.

Frequently Asked Questions

What is a general ledger?

It's the set of all a business's accounts, each with its own balance. OpenStax says: "Note that each account used by the company has its own account section in the general ledger."

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

A journal records transactions in date order as they happen. The general ledger then holds the same amounts sorted by account, so each account shows its own balance.

What is a subsidiary ledger?

It's a ledger behind one general ledger account. OpenStax defines the accounts receivable subsidiary ledger as a "special ledger that contains information about all customers and the amounts they owe".

Why must a subsidiary ledger match the general ledger?

OpenStax says: "Since the total of the accounts receivable subsidiary ledger must agree with the balance shown in the accounts receivable general ledger account, the system helps us find mistakes."

Does Billed have a general ledger?

Billed's invoice software, financial reporting, features and mobile app pages don't describe a general ledger. Its financial reporting page says: "All reports in Billed can be exported for use with your accountant, bookkeeper, or tax software."

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