How to Set Up a General Ledger for a Woodworking Business
Woodworking businesses create furnishings for homes and businesses. These furnishings include cabinetry, doors or framework. Woodworking companies create both standard furnishings and custom furnishings. Standard furnishings follow the same pattern allowing the company to build these in bulk. The company builds custom furnishings based on the needs of the customer. In order to maintain the financial records for a woodworking business, the company needs to create a general ledger that considers the specific needs of the business.
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Instructions
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Create a General Ledger
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1
Identify which accounts the business needs. The first step to designing a general ledger involves knowing what accounts the business needs to track. Include the five categories of financial accounts: assets, liabilities, equity, revenue and expenses.
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2
Identify the specific accounts, within each category, needed for the woodworking business. For example, asset accounts might include oak inventory, cedar inventory and pine inventory. Revenue accounts might include custom sales and standard sales.
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3
Create a general ledger account template. The general ledger account template sets the format for recording each financial transaction into individual accounts. Include the account title across the top and five columns in the template. Label the five columns as "Date," "Description," "Debit," "Credit" and "Balance."
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4
Copy the template for each account. This works well if each account appears on a separate page. If you create the general ledger in a spreadsheet program, use a separate worksheet for each account.
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5
Enter the account titles on each template. Start with the asset accounts and enter the account title at the top of each template. Then enter the account specifics for the liability, equity, revenue and expense accounts in that order.
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6
Enter beginning balances. On the first line of each account, enter the current date. Enter "Beginning balance" as a description. Enter the balance.
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Tips & Warnings
Leave space in between each account. As the business grows, management might see a need to add a new account to the general ledger. By leaving space in between each account, you can insert the new account with others in the same category.
