What is a General Ledger Transaction?
In accounting the general ledger is the central financial record of the business. Every transaction is recorded in the general ledger. A transaction is a typical business event which can be expressed in monetary terms and must be entered into the accounting records. The five major categories in the general ledger are assets, liabilities, owner's equity, revenue and expenses. There are many transaction types but let's look at a few of the more common ones.
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Current Assets
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Assets are divided into two categories: current assets and fixed assets. Current assets include cash, cash equivalents, accounts receivable, inventory, the portion of prepaid accounts used within a year and short-term investments.
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Fixed Assets
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Fixed assets, also known as property, plant, and equipment (PP&E), is a term used for assets and property not easily converted into cash. In most cases, only tangible assets are referred to as fixed.
Liabilities
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Current liabilities are considered obligations that are due in cash within the fiscal year. For example, accounts payable for goods and services that need to be paid within a normal period of time would be current liabilities. Longer-term bills such as loans or mortgages that are due more than a year later are long-term liabilities.
Revenue
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When a client pays a bill in either cash or by check, the amount received is recorded in the cash account and the accounts receivable for that customer is reduced.
Expenses
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When your business receives office supplies, accounts payable is increased but assets also increase.
References
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