Hello,
I'm struggling to grasp the concept of general ledgers and I've been coping so far by memorising the templates and not actually understanding the reason for it. I'm often confused with what entries must be made and ensuring that everything is included. I have a sac this week so hoping someone could help me understand ledgers better.
Thank you!
a ledger is just like a little report for each account or item
Eg Vehicle
It has its own ledger which tells us everything that happened to the vehicle.
Best way to understand it is to realize EVERY single line in the ledger is telling us something happened.
So BANK - 600 on the DR side is telling us a vehicle was probably bought for 600!
Like try and keep track of the story if that makes sense
ALSO, look at DR and CR as an increase/decrease rather then credit and debit
So like that will give you and indication of what is going on or where something must go.
Obviously is you spend money to buy stock, your stock control will need to increase and since it is about swapping money for stock its cross reference is bank! Hence DR BANK!
Try and split the transactions up into their individual accounts as well so it beocmes much more clear!
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