A ledger is a book or digital record containing accounts where transactions are classified. The general ledger contains all accounts; subsidiary ledgers provide detail for specific accounts.
In accounting, a ledger is the principal book (or database) of record where transactions are posted after being initially recorded in journals. The general ledger contains every account in your chart of accounts and shows the complete transaction history and running balance for each. Subsidiary ledgers provide detailed breakdowns of specific general ledger accounts - for example, the accounts receivable subsidiary ledger shows the balance owed by each individual customer, while the general ledger shows only the total accounts receivable balance. Other common subsidiary ledgers include accounts payable (by supplier), inventory (by product) and fixed assets (by asset). In modern cloud accounting with Xero, the ledger system is maintained digitally and automatically. Every transaction posted through invoices, bills, bank feeds, manual journals or other modules updates the relevant ledger accounts in real-time. SortBooks ensures the integrity of your ledgers by accurately categorising every transaction to the correct account.
SortBooks helps with the bookkeeping behind ledger by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing ledger by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
The general ledger is the master record of all financial transactions in a business, organised by account. It forms the basis for preparing financial statements.
The chart of accounts is a structured list of all accounts used in your accounting system to categorise transactions. It defines the categories for your income, expenses, assets, liabilities and equity.
A journal entry is a record of a financial transaction in the accounting system. It includes the date, accounts affected, amounts and a description of the transaction.
A subsidiary ledger provides detailed breakdowns of a general ledger account. The accounts receivable subsidiary ledger shows individual customer balances; the AP subsidiary ledger shows supplier balances.
Double-entry bookkeeping is a system where every transaction is recorded in at least two accounts - a debit and a credit - ensuring the accounting equation always balances.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.