Definition
The general ledger (GL) is the complete record of every financial transaction posted by a business. It is organised by account in keeping with the chart of accounts, with each account showing every debit and credit posted to it in chronological order. The trial balance and ultimately the financial statements are derived directly from the general ledger; nothing appears in either that has not first been posted to the GL.
What the general ledger means in practice
For a bookkeeper, the general ledger is the cumulative output of every transaction processed in the period. When an invoice posts, when a payment reconciles, when a manual journal hits the books, the data lives in the general ledger. Modern accounting platforms (Xero, QuickBooks Online, Sage) maintain the GL automatically: the user enters or imports transactions, the platform updates the GL.
The GL is the document a tax authority, auditor, or due-diligence team will request first. It contains the complete audit trail: every transaction, the date, the accounts hit, the amounts, the user who posted it, and a link back to the source document (the invoice image, the bank feed line, the manual journal). A clean GL with full supporting evidence is the difference between a smooth audit and a painful one.
A practical example: an AU consultancy on Xero in their first year. By year-end they have posted 800 supplier bills, 300 customer invoices, 1,100 bank reconciliations, and 45 manual journals. The general ledger shows all 2,245 transactions, organised by account: every entry in the bank account, every line in AR, every line in AP, every revenue and expense posting. When the tax agent asks for the GL at year-end, the bookkeeper exports the Account Transactions report covering 1 July to 30 June.
How the general ledger works by country
United Kingdom
VAT-registered businesses must keep the general ledger digitally under MTD and retain it for six years per VAT Notice 700/21. Non-VAT-registered businesses must keep records for six years for HMRC enquiry purposes. Companies House requires statutory accounts derived from the GL to be filed within nine months of year-end for private companies. Director duties under the Companies Act 2006 also require directors to keep adequate accounting records.
Australia
The GL must be retained for five years from the date the transactions were completed. The ATO can extend this requirement during an active audit or where an amendment is in progress. Under Single Touch Payroll, the payroll subset of the GL is reported to the ATO in real time at each pay run, so that part of the GL has a parallel record at the tax authority.
Canada
The GL must be retained for six years after the end of the last tax year it relates to, per the Income Tax Act section 230 and the Excise Tax Act section 286. The CRA can require records to be produced earlier under audit. The gross-negligence penalty in section 163(2) of the Income Tax Act applies where the bookkeeper or director’s record-keeping is so inadequate that it amounts to neglect.
New Zealand
The GL must be retained for seven years per the Tax Administration Act section 22, the longest of our target jurisdictions. Records must be in English or Te Reo Maori, or be readily translatable on request. Inland Revenue can extend the retention period where an investigation is in progress.
Singapore
The GL must be retained for five years per ACRA section 199 of the Companies Act and IRAS section 105 of the Income Tax Act. Records must be in English; foreign-language records need certified translations for audit purposes. The penalty for inadequate records is up to SGD 5,000 plus director liability.
Related terms
The general ledger is the spine of the accounting system:
- The chart of accounts is the structure the GL is organised by.
- Every journal entry becomes a line in the GL.
- The trial balance is the periodic snapshot of every GL account’s net position.
- The balance sheet presents the GL’s asset, liability, and equity accounts.
- The income statement presents the GL’s revenue and expense accounts.
- Reconciliation confirms the GL agrees to the underlying source documents.
See also
For the practical mechanics of running an Account Transactions report in Xero or QuickBooks, see the per-software workflow guides as they ship.
FAQ
See the answered questions above for GL vs trial balance, exporting the GL, and inspection rights.