General Ledger: A Comprehensive Guide

The General Ledger is a comprehensive record of all financial transactions of a business, categorized by accounts. It contains detailed information on each account's debits and credits, providing a complete picture of the company's financial status. Each account in the General Ledger corresponds to a specific item on the financial statements, such as assets, liabilities, equity, revenue, and expenses.

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How to Fill the General Ledger for BIR Compliance

To ensure BIR (Bureau of Internal Revenue) compliance, the General Ledger should be filled accurately and systematically. Here’s a step-by-step guide:

Use a Bound Ledger Book:

Use a bound and paginated ledger book to ensure records are secure and tamper-proof.

Create Separate Accounts:

Each account should have its own section in the ledger. Common accounts include Cash, Accounts Receivable, Inventory, Sales Revenue, Rent Expense, etc.

Record Entries from the General Journal:

Post entries from the General Journal to the appropriate accounts in the General Ledger.

Date and Reference:

Include the date of the transaction and a reference (e.g., journal page number or voucher number) for traceability.

Debit and Credit Columns:

Each account should have separate columns for debits and credits. The balance is updated after each transaction.

Running Balances:

Maintain running balances for each account to show the current balance after each transaction.

Consistent Format:

Use a consistent format for clarity and uniformity.

Sample General Ledger Entries

Here’s an example of how to record transactions in the General Ledger for BIR compliance, covering transactions for a fictional business, PBC, for the month of January 2024.

Cash Account

Date	Description	Ref	Credit (PHP)	Balance (PHP)
Jan 01	Beginning Balance			500,000
Jan 10	Prepaid Expenses	PRE-01	50,000	450,000
Jan 20	Rent Expense	RENT-01	50,000	400,000

Accounts Receivable

Date	Description	Ref	Debit (PHP)	Credit (PHP)	Balance (PHP)
Jan 15	Sales Revenue	AR-01	1,000,000		1,000,000
Jan 25	Sales Revenue	AR-02	400,000		1,400,000

Sales Revenue

Date	Description	Ref	Debit (PHP)	Credit (PHP)	Balance (PHP)
Jan 15	Accounts Receivable	AR-01		1,000,000	1,000,000
Jan 25	Accounts Receivable	AR-02		400,000	1,400,000

Prepaid Expenses

Date	Description	Ref	Debit (PHP)	Credit (PHP)	Balance (PHP)
Jan 10	Cash	PRE-01	50,000		50,000

Rent Expense

Date	Description	Ref	Debit (PHP)	Credit (PHP)	Balance (PHP)
Jan 20	Cash	RENT-01	50,000		50,000

Key Points for BIR Compliance:

Accuracy:

Ensure all figures are accurate and match the supporting documents.

Timeliness:

Record transactions promptly to keep the ledger up-to-date.

Completeness:

Do not leave blank spaces or lines between entries to prevent unauthorized insertions.

Legibility:

Make sure all entries are clear and legible. Corrections should be done properly with a single line strike-through and initialed by the responsible person.

Supporting Documents:

Keep all related documents (invoices, receipts, etc.) organized and easily accessible for audit purposes.

Running Balances:

Maintain accurate running balances to reflect the current financial status of each account.

Consistency:

Ensure a consistent format and methodology in recording transactions.

By following these guidelines, the General Ledger will meet BIR compliance standards and provide a reliable record of all business transactions.