General Ledger

Definition

The general ledger (GL) is the master record of every account the corporation uses, with running debit and credit activity for each. Where the journal captures transactions in date order, the ledger captures them in account order. Each GL account holds an opening balance, every movement during the period, and a closing balance that flows into the trial balance and the financial statements.

Key rules

• The set of accounts in the ledger is defined by the chart of accounts. A Canadian corporation typically aligns its GL to CRA's General Index of Financial Information (GIFI) so that T2 schedules populate cleanly.
• Each posting carries the date, amount, debit or credit side, source reference, and a description.
• A subsidiary ledger (accounts receivable by customer, accounts payable by vendor, fixed assets by item) rolls up to a single control account in the GL. The subsidiary total must always equal the control.
• The GL must be preserved for six years from the end of the tax year it relates to, and two years after dissolution. See six-year retention.
• Period-end close locks the GL. Any correction after close is made by a new journal entry, not by overwriting.

Example

A cash account page in the general ledger after the first three weeks of April:

Account: 1000 Cash. Business Chequing
Date      Ref     Description                      Debit      Credit    Balance
Apr 1     Bal     Opening balance                                      10,000.00
Apr 3     JE-17   SaaS subscription payment                 1,200.00    8,800.00
Apr 10    JE-19   Client payment, invoice #102    5,250.00              14,050.00
Apr 15    JE-22   Payroll, April 1-15                       3,200.00   10,850.00
Apr 20    JE-24   GST instalment remittance                   540.00   10,310.00

Each line ties to a journal entry reference, and the running balance can be reconciled to the bank statement.

Common mistakes

• Letting the subsidiary ledger drift from the control account. If customer statements total $12,450 but the A/R control reads $11,900, there is a posting error somewhere.
• Treating the bank statement as the ledger. The bank records cleared transactions only; the GL records economic events when they occur.
• Deleting posted entries. CRA expects a complete audit trail. Reversing entries and correcting entries preserve history; deletions destroy it.
• Overloading a single account with mixed activity (for example, lumping all professional fees, legal fees, and bookkeeping into "Office Admin"), which makes later analysis and T2 preparation painful.
• Closing the period without reconciling control accounts to supporting schedules.

Related concepts

The ledger is where journal entries live after posting. Its summary becomes the trial balance, which then feeds the balance sheet and income statement. The ledger is the central artifact of the accounting cycle.