The structure of a central ledger
A central ledger is the centerpiece of the accounting operations of commercial enterprises. General ledgers summarize all the financial accounts using the standard double-entry bookkeeping system.
A central ledger contains all the assets owned by the company: land, facilities, machinery and equipment, etc. Additionally, this ledger includes inventory and stock, calculated at purchase values.
The balances also include receivables (debtors) and liabilities, to recognize equity and to record liquidity. Income and expenses are recorded in individual accounts.
Working capital should be differentiated between equity and debt. All business books including asset registers, credit balances, cashbooks and VAT or sales tax form part of a central ledger. Central ledgers used to be called journals.
The value of a central ledger
This ledger allows you to create a company balance sheet and prepare a statement of financial position at any time. A business analysis reviews all profit and loss statements, to indicate whether a company is working properly.
Sources of error are easy to check. The ledger is necessary to calculate specific tax obligations and annual accounting reports. Periodic cash flow projections, including a comprehensive and meaningful P&L account, are also possible.
Holdings that are exempt from double-entry accounts do not need a centralized ledger. Instead, a simplified P&L statement will suffice, without a detailed chart of accounts.
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