Introduction

The General Ledger module is a double entry accounting system that follows generally 

accepted accounting procedures, GAAP.   The chart of accounts uses account 

numbers and can be divided up into departments for reporting purposes.  Because 

the other accounting modules are integrated with the general ledger, book keeping is 

much easier.   Before you can start using the general ledger module you will need to 

setup your chart of accounts and if necessary setup departments.

Proper accounting practice requires a double entry accounting system.  This means 

that each value input into the system is a credit to one general ledger account and a 

debit (+) to another.  Since each entry affects two accounts by the same amount, 

debiting one and crediting another, the accounts are always in balance.  Another way 

to look at accounting is to view the chart of accounts as a row of jars lined up along a

 wall with a label on each jar.  The first jar might be labeled "Bank Account".  One 

further down the line might be labeled "Phone Expenses".  If a phone bill is paid the 

accounting system takes an amount of money out of the "Bank Account" jar and puts 

it into the "Phone Expenses" jar.  Thus it can be seen that the sum of the credits will 

always be equal to the sum of the debits meaning the books will be in balance or the 

sum of the debits and credits together will be zero.

One might wonder where the money comes from to be transferred between jars.  The 

point is that the jars (or accounts) start out empty and they stay empty to the extent

 that the sum of the money in the jars is always zero.  A credit to one account is 

offset by a debit to another so that we have +1-1=0.

In general 

  Asset accounts carry a debit balance (+)

  Liability accounts and owner's equity accounts carry a credit balance (-)

  Revenue accounts carry a credit balance (-)

  Expense accounts carry a debit balance (+)

Credits=-Debits

Assets=-(liabilities+owner's equity)

Owner’s equity=capital input+profit

Profit=revenues+expenses 

     (revenues are negative and expenses are positive)

assets+liabilities+capital input+revenues+expenses=zero

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