General Ledger in Accounting Software

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The general ledger is at the core of accounting information systems and provides the hub of financial activity for companies of all sizes. It provides an audit trail and financial history that are invaluable for business and legal purposes. Today, with the almost universal use of modern automated accounting processes, the best accounting software solutions on the market are GAAP-compliant and include double-entry functionality for every transaction.

Why Do Companies Need a General Ledger

Each entry by the software in the general ledger must consist of at least one credit and one debit or the journal will become unbalanced. For years, businesses recorded transactions in the general ledger by hand and produced subsidiary journals, such as accounts payable and accounts receivable, when a balance sheet or taxes necessitated it. Today, many types of accounting software can record all journal entries with only an invoice or a purchase order keyed into the system.

Any accounting software with a general ledger will have to address complicated end-of-year entries, such as determining the depreciation method and calculating the amounts to declare on financial statements of company assets, in addition to the typical daily entries that record business activities. Companies can decide on the method to use, and then customize the software to implement that method.

Straight-line depreciation, sum of the year’s digits, group depreciation, or a number of other methods can be seamlessly integrated into the company’s accounting processes, with the result that all journal entries and adjustments to net income can be executed in real-time to make production of fiscal year-end and federal and state tax reports fast and simple.

Benefits of General Ledger

General ledger software applications provide senior management with invaluable tools for analyzing the financial condition of the company in real-time. Income statements can provide a detailed view of costs, expenditures, and profit. The balance sheet provides a look at available capital, current assets, and current liabilities. Having the best general ledger software generates these statements, reports, and more to provide management with the up-to-date information needed to make better strategic decisions.

GAAP-compliant general ledger software makes recording data into the system quick and easy. The data is keyed into a graphical user interface once and the data is then passed by the application to each function that requires it. Every time an invoice or other accounts receivable or accounts payable entry is recorded in the system, the information is automatically written into the record of the general ledger to comply with double-entry GAAP standards.

Businesses of all sizes will see a reduction in errors and more accurate information. In the unlikely case that an error does surface, the accounting software has all the tools needed to research the audit trail in-depth to find the error and determine its source.

The top accounting packages for the general ledger on the market today offer more advantages for large companies. Applications in this category give management the ability to pull ad-hoc financial reports by department, costs centers, individual products, and more for a clearer financial picture of the organization. General ledger accounting software makes comparing present performance with the past simple, and many packages allow for graphical representation of those results.

Having the right general ledger accounting software solution can help with every day operations of the business as well as facilitate its planning for the future. The applications are a critical component of a comprehensive solution for financial reporting, whether for fiscal year-end, tax time, or just to provide information to a bank for use in determining the company’s credit worthiness.

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