A general ledger (GL) contains 5 sections: assets, liabilities, owner’s equity, revenue, and expenses. every of those sections could be a separate accounting ledger or book, therefore the GL is what’s observed once talking regarding your company’s books. every ledger book contains many accounts, therefore your expense ledger can contain these accounts: rent, telephone, electrical utilities, workplace provides, and every one the opposite individual classes of expenses you may have in your business.
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Organizing Your Ledger System
- Examine your bank statements and compile a listing of standard monthly expenses, quarterly and annual expenses, and another list of variable expenses like workplace provides, marketing, diversion, and travel. Use these lists in fixing your chart of accounts.
- Establish your chart of accounts. the various ledgers in your COA square measure historically numbered as follows: 1000-1999 assets, 2000-2999 liabilities, 3000-3999 owner’s equity, 4000-4999 revenue, 5000-5999 value of products sold , 6000-6999 selling & intangibles expense, 7000-7999 alternative revenues, 8000-8999 body, travel, personnel & miscellaneous business expenses.
- The selling & intangibles expense ledger might embrace 6000-6099 general expenses, 6100 advertising, 6200 monetary fees, 6300 charitable donations, 6400 depreciation, 6500 worker edges, 6600 taxes, 6700 insurance. every class are any divided into numbered subcategories like officers’ and directors’ insurance, errors & omissions insurance, insurance, vehicle insurance, and the other insurance you carry.
- the executive, travel, personnel & miscellaneous expense ledger might embrace subcategories like 8120 rent, 8250 electric utilities, 8400 net, 8470 phone to phone, 8500 legal, accounting & consultants, 8650 salaries & wages, 8600 payroll taxes, 8700 workplace provides, 8800 repair & maintenance, and alternative expenses of doing business.
- Take one in all your current bills, a utility bill. Mark your ledger account variety on it. Look below the executive, travel, personnel & miscellaneous category of your COA and find the 8200 electric utilities category. If you filtrate utilities in your warehouse from those for the workplace and people for the sales room, you ought to create account numbers for every of these categories so your warehouse utility bill could also be 8220, the workplace 8230 and also the sales room 8240.