General Ledger

General Ledger

• A. A ledger used for tax filings
• B. An external report of market values
• C. A ledger that contains all accounts needed to prepare financial statements
• D. A ledger that contains only cash accounts

Answer: (C)

The general ledger is the set of all accounts a company uses to record its financial data, containing every asset, liability, equity, revenue, and expense account with their cumulative balances. This completeness lets you prepare the financial statements—the balance sheet and income statement—by pulling totals from each account and aggregating them. Transactions flow from the journal into the general ledger, where running balances are maintained and used to generate the trial balance, adjustments, and closing entries. Subsidiary ledgers (like accounts receivable, accounts payable, and inventory) feed detailed balances into the general ledger, and their totals roll up into the corresponding general ledger accounts. The other options describe narrower or external reporting needs and do not capture all accounts needed to produce financial statements.

The general ledger is the set of all accounts a company uses to record its financial data, containing every asset, liability, equity, revenue, and expense account with their cumulative balances. This completeness lets you prepare the financial statements—the balance sheet and income statement—by pulling totals from each account and aggregating them. Transactions flow from the journal into the general ledger, where running balances are maintained and used to generate the trial balance, adjustments, and closing entries. Subsidiary ledgers (like accounts receivable, accounts payable, and inventory) feed detailed balances into the general ledger, and their totals roll up into the corresponding general ledger accounts. The other options describe narrower or external reporting needs and do not capture all accounts needed to produce financial statements.