General Ledger Example and Free Template

General Ledger Example

A general ledger organizes financial transactions by account, and each account shows its activity as a running balance. When I set up a ledger, I post each transaction from the general journal to the account it affects. Below, one month of activity plays out across two accounts: cash (an asset) and accounts payable (a liability).

The debit and credit rules flip depending on the account type. Cash is an asset, so debits increase it and credits decrease it. Accounts payable is a liability account, so it works in reverse: credits raise the balance and debits pay it down. With double-entry accounting, every transaction hits at least two accounts, and total debits always equal total credits.

Cash (asset account)

Accounts payable (liability account)

What a General Ledger Includes

Each posted entry carries the same handful of fields, whether you keep your books in a spreadsheet or accounting software:

How the General Ledger Fits the Accounting Cycle

The general ledger is the hub of the accounting cycle. Transactions start as journal entries in the general journal, then get posted to the right ledger accounts. High-volume accounts often pass through a subledger, also called a subsidiary ledger, that rolls a summary total up to the general ledger.

At the close of each period, you total every account into a trial balance to confirm that debits equal credits, then use those account balances to build your income statement, balance sheet, and cash flow statement. Reconciling accounts against your bank statements and recording accruals along the way keeps the ledger accurate, audit-ready, and reliable for financial reporting.

Key Accounts To Track

Every account in your ledger falls into one of five categories that together make up your chart of accounts. Tracking them cleanly is what keeps the accounting equation, assets equal liabilities plus equity, in balance:

Assets

What the business owns, like cash, accounts receivable, inventory, and fixed assets such as equipment

Liabilities

What it owes, tracked in liability accounts like accounts payable, loans, and accrued expenses

Equity

The value left after liabilities, including owner's equity and retained earnings

Revenue

Income the business earns, tracked in a revenue account like sales revenue

Expenses

The operating expenses of running the business, like rent, payroll, and utilities, plus cost of goods sold, which covers the direct costs of the goods or services you sell

Assets and liabilities land on your balance sheet, while revenue and expenses flow to your income statement. Fixed assets like equipment also carry over to a depreciation schedule as they lose value over time. In my experience, the business owners who tag every transaction to the right category here have a far easier time when a lender asks to see financials.

Free General Ledger Template

You don't need accounting software to keep a clean ledger. The free general ledger template I use with business owners opens in Google Sheets (also free), with columns for the date, account, description, reference, debit, credit, and running balance, plus example entries you can swap out for your own.

• Open the free general ledger template

How to use the general ledger template:

1. Make your own copy: Open the template and choose File, then Make a copy, to save an editable version to your own Google Drive.

2. Set up your chart of accounts: List every account your business uses so each transaction has a home.

3. Enter each transaction: Record the date, account, description, and the debit or credit amount as money moves.

4. Let the balance update: The running balance column totals each account for you.

5. Review monthly: Reconcile against your bank statements and confirm total debits equal total credits.

If your books outgrow a spreadsheet, a CPA firm can set up and maintain your ledger for you. And if you're still getting off the ground, pair your ledger with a free business plan template to project the numbers before they hit the books.

Your ledger is also an early-warning system for cash. When the balances show more going out than coming in, financing can close the gap. At Clarify Capital, we help you find the right fit, whether that's a business line of credit for uneven months, working capital for day-to-day needs, or invoice factoring to turn unpaid accounts receivable into cash.

Minimum Qualifications

$10,000 in monthly revenue

Your business must earn at least $10K per month in a business bank account.

500+ credit score

You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.

Minimum six months in business

Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.

Have a business bank account

Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.

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Put Your Ledger To Work

A general ledger does more than keep your accountant happy: it shows you exactly where your cash is going and when you're ready to grow. When your books point the way, we can match you with the right financing in about two minutes. Apply today to get started with Clarify Capital without a ding to your credit.

General Ledger FAQ

These are answers to a few common questions business owners ask about general ledgers.