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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1175 |
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Entries that are made on the general ledger are also prepared for the balance sheet and the income statement whether it is the single-step or the multi-step version. For example, Samuel Green has been working for XYZ Company. His payroll check was in the amount of $1500.00 dollars, the way that this would be documented in the general ledger would be a credit from XYZ Company's cash account and a debit to Samuel Green...
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In financial accounting, credits decrease cash accounts and debits increase cash accounts (in bank accounting it is the reverse). The general ledger is needed in the financial system so that it gives you the backing you need if any chance an unknown expense comes up and no one knows why it is there, you can look in your general ledger and see the documented reason for the expense...
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