QuickBooks® General Ledger Feature 2-15-16

QuickBooks® General Ledger Feature

For QuickBooks® users with limited accounting background, the General Ledger feature – referred to as General Journal Entries from the Company drop-down in the main QuickBooks® home screen – can appear to be the most foreign part of the software; as most other functions are easily demonstrated with fillable forms similar to paper copy use (e.g. checks, invoices, bills etc.), the general ledger is unique from the rest of the program. The history of accounting software shows a progression from exclusive use of ledgers to create and record transactions to the distinguishable forms for data entry. While the majority of a business’s day to day accounting entry may be recorded through form-based screens, the general ledger still serves a purpose for traditional accounting entry and adjusting entries.

Behind-The-Scenes of the General Ledger

Referring to the ‘general ledger’ actually includes all aspects of the accounting record and based in double-entry bookkeeping: in order for an amount to be presented in one account, it must also be present in another account, hence the use of debits and credits. For instance, when cash leaves a business to pay for office expenses (of, say, $20.00), both accounts must reflect this economic change. If this were recorded in a traditional ledger system, it would appear like two parallel lines of information:

Account                                                             Debit                              Credit

Office Expenses                                                 20.00

        Cash                                                                                                 20.00

Instead of entering lines of information demanding knowledge of the use of debits and credits (and normal balances for accounts), QuickBooks® allows for quick processing of accounting information, even with limited information of the ‘behind the scenes’ general ledger. Using the form-based approach, the previous example may instead be recorded by the Write Checks screen and determining which bank account the cash flowed from to pay for the office expenses.

The general ledger activities of a business (referring to any exchange of goods and services for a quantitative amount to be recorded in the accounting records) are all captured in QuickBooks® , through the summation of all form-based transactions as well as those put into the record through the general journal. The amounts shown in the generated financials statements make up a sum of these transactions, and can be further distinguished by viewing a detail report or Quick Report for any account or set of accounts and paying attention to the ‘Type’ column. Checks, Bills, and even General Journal titles will be presented here based on their original entry.

Using the General Journal

While the majority of business transactions are likely entered in form-based screens, some entries can only be made in the general journal screen or other specialized ledger screens. Often, accountants will determine adjusting entries during the end of period closing, reflecting net or determined amounts based on account information. Depreciation and accrued expenses and revenues entries are often best entered in the general journal screen. General journal entry often requires rudimentary knowledge of accounting in order for successful and meaningful entry to the general ledger.