What is a general ledger?

• A. A detailed report of cash receipts.
• B. A chart showing company structure.
• C. A temporary notebook for daily transactions.
• D. A complete set of accounts used to record all company transactions and maintain the accounting data.

Answer: (D)

The general ledger is the central record that holds all the company’s accounts and their balances, showing the effects of every transaction as postings from the journals. It is the complete set of accounts used to record and maintain the company’s financial data, including assets, liabilities, equity, revenues, and expenses. From the ledger, you prepare the trial balance and financial statements, and you can see running balances for each account, including any adjustments at period end. This is why it best fits the description of a complete set of accounts used to record all company transactions and maintain the accounting data.

The other options refer to different things: a cash receipts report is just a focused record of cash inflows; an organizational chart shows company structure; a temporary notebook for daily transactions describes a daybook or journal, not the full ledger.