How to Record the General Ledger Using the General Journal and Journal-Ledger Forms per Circular 200

Vu Khoi

Author at Wotech Electronics Blog

Recording the general ledger can be divided into 4 forms, depending on the purpose and structure of the business. In this article, learn how to keep the journal-ledger, the general-journal ledger, the voucher-journal ledger, as well as how to prepare an account ledger and how to build a ledger in Excel.

What Is the General Ledger?

The general ledger is a type of summary accounting book that records daily transactions related to each of a business's accounting accounts. The general ledger can be described as a summary and classification of daily financial transactions. For example, the ledger tracks expenditures on materials and suppliers, revenue reflecting the value of goods, or debts.

In the past, the general ledger was kept manually, but in the information age, businesses have applied computers and accounting software to help prepare it. However, the accounting principles applied to keeping the ledger remain the same and have not changed.

Benefits of Keeping the General Ledger

The general ledger lets a business track the balance in a given account, from which it can assess whether the business is profitable or losing money. Because the ledger reflects daily transactions one by one, the business can easily compare and cross-check information and promptly detect unusual income and expenses. In addition, the figures in the general ledger are the basis for preparing financial statements and help the business make plans for future activities.

General Ledger Forms

There are currently many types of ledger forms serving the different purposes of businesses. Based on the accounting forms in widespread use, the general ledger is divided into 4 forms as follows:

• General journal accounting form.

• Journal-ledger accounting form.

• Voucher-journal accounting form.

• Computer-based accounting form.

Each form has its own requirements for sequence, book templates, and recording methods. The way the ledger is recorded is adjusted accordingly to fit each form. Businesses need to base their choice of accounting form on their purpose, scale, management requirements, and technical computing conditions.

Guide to Recording the General Ledger

The general ledger, like other accounting books, must comply with accounting principles. Businesses need to ensure the ledger is presented in a scientific, organized way and provides complete, accurate information. Below, the article provides a guide to recording the general ledger according to Circular 200.

Guide to Recording the General Ledger Using the General Journal Form

The principle of the general journal accounting form is chronological order. The voucher information is first recorded in the general journal, and the ledger is then recorded based on it. The way to record the general-journal ledger is regulated as follows:

• Column A: Enter the date (day and month) numerically.

• Columns B and C: Enter the number and date of the recorded voucher.

• Column D: Enter a summary of the transaction's content.

• Column E: Enter the page number of the general journal where the transaction is recorded.

• Column F: Enter the line number of the general journal where the transaction is recorded.

• Column H: Enter the account number that corresponds to (offsets) the transaction in the ledger.

• Columns 1 and 2: Enter the amount on the Debit or Credit side for each economic transaction. At the beginning of the period, the business records the account balance on the first line, then cumulatively adds the balance arising during the period to the opening balance.

Each accounting account is recorded separately in the ledger, and accountants need to be clear about the content required of each account. For example, account 111 only reflects receipts and disbursements of cash, foreign currency, and monetary gold. Although the content differs, the way each account is entered in the ledger is the same and follows accounting principles. Recording account 111 in the ledger — like all other accounts — includes Debit and Credit sides along with date and voucher number information. The Debit side reflects cash, foreign currency, and monetary gold surpluses in the treasury, foreign exchange rate differences when the foreign currency rate rises against the Vietnamese Dong, and increases in the price of monetary gold. The Credit side reflects cash, foreign currency, and monetary gold shortfalls in the treasury, foreign exchange rate differences when the foreign currency rate falls against the Vietnamese Dong, and decreases in the price of monetary gold.

Guide to Recording the General Ledger Using the Journal-Ledger Form

The journal-ledger consists of two parts: the journal and the ledger. The journal part contains the columns "Line number," "Date of recording," "Number," and "Date." The second part consists of multiple account columns. Each column has two sections: Debit and Credit. The number of columns, more or fewer, depends on the number of accounting accounts the business has.

The journal-ledger recording method, while simple and easy to do, is only suitable for small businesses with little business activity. For large businesses with many accounting accounts, this form of ledger recording is prone to errors and difficult to track.

Guide to Recording the General Ledger Using the Voucher-Journal Form

With the voucher-journal accounting form, the ledger is recorded only once, at the end of the month or quarter, after reconciliation with the journal-vouchers. The Debit or Credit amounts reflected in the ledger are taken from the Debit or Credit accounts in the journal-voucher book. Accordingly, preparing the ledger under the voucher-journal form differs somewhat from the two accounting forms above. The ledger under the voucher-journal form consists of 2 tables. The first table reflects the opening Debit or Credit balances for the year. The second table reflects the figures arising in each month.

Guide to Recording the General Ledger Using the Computer-Based Accounting Form

The computer-based accounting form uses computer software to assist in preparing the ledger. Building the ledger on a computer follows the principles of one of the 3 accounting forms above, or a combination of them. In essence, software designed under a particular accounting form will present the ledger the same way as that form.

Typically, Excel is a powerful tool for preparing the ledger. As for how to build the ledger in Excel, first the business needs to create a ledger template in Excel by identifying the accounting form and the components of the ledger under that form. For the general journal form, the business will need to pull information from the general journal into the ledger. To ensure the information is transferred accurately, the accountant must follow a few principles:

• The data conditions in the ledger must be clear.

• The number of lines in the ledger and the general journal must match, to ensure all content is captured.

• If a ledger account belongs to the Debit account column in the general journal, the corresponding account will be in the Credit account column in the general journal on the same line.

• The figures in the ledger, whether Debit or Credit, must be recorded to correspond with the general journal.

The next step is building the formulas for the ledger. The account balance in the ledger is retrieved using the VLOOKUP function. Then the IF function is used to extract the detailed report lines, and finally the MAX function is used to calculate the closing Debit or Credit balance.

Should You Do Accounting in Excel or Use Accounting Software?

Keeping the ledger in Excel has become very popular with businesses because it's easy to access and inexpensive. However, building the ledger in Excel still has many shortcomings. First, preparing the ledger in Excel is error-prone — inserting or deleting rows — and somewhat complicated because you have to build cross-checking formulas. In addition, businesses will have difficulty storing information over many years when using Excel. Therefore, Excel is only suitable for small businesses. For large corporations, the best way to keep the general ledger is through accounting software.

Built on the accounting module of Odoo ERP, SimERP accounting software is favored by many businesses for the following benefits:

• The software is designed to be easy to use and user-friendly.

• The software provides a complete set of books according to Vietnamese accounting standards. Newcomers to the profession no longer find recording the general ledger difficult, because the software lists all the items that need to be completed.

• Information stays consistent end to end, since everyone works on a single system.

• The software supports automatic report generation and data analysis, making accounting work more convenient and minimizing avoidable errors when reconciling data.

Conclusion

This article has presented the fundamentals of recording the general ledger. Businesses should take care to choose the accounting form that fits their purpose and structure. As for recording the ledger, each different accounting form has its own recording method. The general-journal ledger only reflects the transactions recorded in the general journal, while the journal-ledger includes both the journal part and the recorded transactions. The ledger under the voucher-journal form reflects the Debit and Credit amounts arising each month. Along with choosing a suitable accounting form, businesses should also consider using accounting software such as SimERP to streamline the accounting process.

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