Main ledger accounts

The general ledger is a collection of the group of accounts that supports the value items shown in the major financial statements.

There are five basic categories in which all accounts are grouped:

Assets

A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. A balance sheet item representing what a firm owns. Assets are bought to increase the value of a firm or benefit the firm's operations.

The assets are divided into three groups

Current assets

Is composed of assets that do not remain for long time in the company, can be valued in monetary terms of fast form. Some examples to current assets are:

• Banks counts: This is money which is preserved in any bank. You can have this money at the time deemed necessary.

• Accounts receivable: Sales by products or services offered by the company.

Fixed assets

Goods that acquired the company are not intended to sell, but to stay at this.

Some examples to current assets are:

• Buildings

• Transport equipment

• Furniture and office equipment

Other Assets

These are not classified in the Group of current assets and fixed assets, but are owned by the company and are used to carry out their programmes.

Some examples to current assets are:

• Software licenses

Liabilities

A company's legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

Recorded on the balance sheet (right side), liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses. Liabilities are a vital aspect of a company's operations because they are used to finance operations and pay for large expansions. They can also make transactions between businesses more efficient. For example, the outstanding money that a company owes to its suppliers would be considered a liability.

Liabilities are divided in:

1. Short-term liabilities: Obligations which must cancel with in less to a year.

Ex: Accounts payable

Taxes payable

2. Long-term liabilities: Obligations that the company must cover one period of more than one year.

Ex: Notes payables (Promissory note)

Capital - Stock holders

Capital: It is the difference between assets and liabilities of the company.

Stock holders: Contribution of the shareholders to begin the company.

It is calculated either as a firm's total assets minus its total liabilities, or as share capital plus retained earnings minus treasury shares:

Stock holder's Equity = Total Assets - Total Liabilities

OR

Stock holder's Equity = Share Capital + Retained Earnings - Treasury Shares

Revenues

They are all the funds it receives the organization. They can be generated by donations, sale or rental of products or services.

Expensives

Payments that perform the company by receive any product to service:

Example:

•  Rent
• Salaries
• Transportation
• Public services 

  
  

  
  

  
  

  The five ledger accounts should be handled as best as possible in order to know why? is being used and taking into account the whole operation should take into account specific information, with clear detail of what happened so that it can be useful for future.

Written by
Angie Rivera


Sources consulted

Author: Gerardo Guajardo
Second Edition