Central ledger

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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Alexander Weipprecht is the managing partner of Provimedia GmbH. As a trained IT specialist for application development, he has been advising leading companies on the following topics for more than 10 years: online marketing, SEO and software. Cryptocurrency is becoming increasingly important to businesses and investors. Through Coin Report and Krypto Magazin Germany, Alexander wants to give all people easy access to the subject matter.