How to Read a General Ledger (Without Boredom-Induced Napping)

April 9, 2025

Let’s be real: the words “general ledger” don’t exactly set your heart racing. You probably picture dry spreadsheets, endless numbers, and the sudden urge to do literally anything else. But if you’re running a business or just trying to get smarter about your finances, the general ledger is not just useful—it’s absolutely vital.

So let’s break it down in a way that doesn’t put you to sleep. Ready?

What Is a General Ledger, Anyway?

Imagine your business has a diary. Not a secret-teenager-journal kind, but a detailed log of everything that happens with your money. Every dollar that comes in or goes out is recorded here—client payments, software subscriptions, lunch receipts, all of it.

This “diary” is broken into sections called accounts: cash, expenses, sales, assets, liabilities, and so on. Each account tracks the movement of money via debits and credits. It’s like your financial GPS.

Why the General Ledger Actually Matters

Before you hit snooze, here’s why it deserves your attention:

Spot errors like double billing or missing income.

Track your spending habits across categories.

Generate key reports like income statements and balance sheets.

Stay tax-ready instead of scrambling in April.

Make informed decisions, not wild guesses.

Think of it as your business’s behind-the-scenes MVP. Quiet, but crucial.

Reading a General Ledger (Without Wanting to Cry)

1. Start With the Chart of Accounts

This is your legend—a complete list of categories your business uses to organize money. It includes:

Assets: What you own

Liabilities: What you owe

Equity: Your stake

Income: Money in

Expenses: Money out

2. Zoom In on a Specific Account

Pick one—say, “Marketing Expenses.” Here’s what you’ll find:

Dates of transactions

Descriptions (e.g., “Instagram Ad Campaign”)

Debits and credits indicating the money in/out

Debits typically reflect spending (especially for expenses/assets), while credits often mean income or owed amounts.

3. Follow the Running Balance

Each account usually shows a rolling total so you can see how much you’ve spent or earned over time in that area.

4. Spot Trends Like a Pro

Look for red flags: Are you overspending on one category? Are client payments consistently late? Your ledger doesn’t lie.

Tips to Make Ledger Time Less Painful (Maybe Even Enjoyable)

Use accounting software: QuickBooks, Xero, and others turn data into colorful, digestible dashboards.

Check in monthly: Don’t wait until tax season to uncover financial chaos.

Make it a vibe: Play music. Pour a coffee. Bribe yourself with snacks. Ledger time can be self-care… kind of.

The Bottom Line: Your Ledger = Your Business’s Life Story

Sure, reading a general ledger won’t top your weekend bucket list. But it doesn’t have to be intimidating or mind-numbing either. Once you get the hang of it, it’s like having x-ray vision for your finances.

And hey—once you see what your money’s really up to, you might even start enjoying it.

How Accredited Bookkeeping Can Support Your Business

At Accredited Bookkeeping, we understand the challenges small businesses face when it comes to managing finances. We’re here to help you streamline your bookkeeping processes, avoid unnecessary financial errors, and gain greater clarity about your financial health. Our services are designed to fit the specific needs of your business, giving you peace of mind while you focus on growth.

marianne@accreditedbookkeeping.com