What Are General Ledger Codes? - Small Business - Chron.com

What Are General Ledger Codes?. General ledger codes are numerals you assign to different debit or credit entries to make accounting easier and more ... CultureMusicSportsFood&DrinkEntertainmentLifeHomesNewsWeatherShoppingJobsCarsHearstNewspapersparticipatesinvariousaffiliatemarketingprograms,whichmeanswemaygetpaidcommissionsoneditoriallychosenproductspurchasedthroughourlinkstoretailersites.WhatAreGeneralLedgerCodes?SmallBusiness|Accounting&Bookkeeping|GeneralLedgerBySteveMilanoUpdatedMarch08,2019DifferencesBetweenForecasting&BudgetingHowtoCreateanAccountsPayableSpreadsheetHowtoSetUpaChartofAccountsforaServiceBusinessLLCBasicBookkeepingPrinciplesTheBestWaystoDetermineIncome&ExpensesforaSmallBusinessGeneralledgercodesarenumeralsyouassigntodifferentdebitorcreditentriestomakeaccountingeasierandmorefunctional.Byassigningnumeralstodifferenttypesofpayablesorreceivables,youcanspendlesstimeenteringdata,quicklysortyourinformationandpreparesimplereportsyoumightuseonetimeorfrequently.TheGeneralLedgerAgeneralledgerisasimplelistingofyouractualincomeandexpenses.Unlikeabudgetsheetthatlistsyourexpectedincomeandexpenses,orareceivablesorpayablesreportthatshowswhatyouoweorareowed,aledgerrecordstransactionsonlyastheyhappen.Evenifyouhaveonlyonebankaccountyouuseforyourbusiness,it’sagoodideatokeepageneralledgertospotanymistakesyouoryourbankmightmake.Dothisbyperformingamonthlyreconciliation,orcomparisonofyourledgertoyourbankstatement.Ifyouuseacheckingaccount,credit-cardandlineofcredittopayyourbusiness'sbills,ageneralledgerletsyoukeepallofyourexpensesinonedocument.UsingLedgerCodesLedgercodesarenumeralsyouusetodesignateapayableorreceivablebytype.Forexample,youmightdesignateyourphonepaymentswithacodeof100.Yourelectricitypaymentsmightbe101.Atanytime,youcansortyourdocumentbyledgercodetoseehowmuchyou’vepaidforphonesorutilities.AssigningLedgerCodesThesimplestwaytoassigngeneralledgercodesistostartwithanumeral,suchas100,assigningeachsubsequentcreditordebitcategoryanumeralsthataddsonemorenumeraltothenumber.Inthisinstance,yourfirstfivecodeswouldbe100,101,102,103and104.Tomakeyourcodesmorehelpful,assignnumeralsaspecificmeaningforeasiersorting.Forexample,beginalldebitcategorieswiththenumeral1andallcreditcategorieswiththenumeral2.Yourfirsttwodebitcodesmightbe100and101,andyourfirsttwocreditcodeswouldbe200and201.Thiswillhelpyouquicklyfindallofyourdebitsorcredits.Addadditionalnumeralsforgroupingotherincomeandexpensecategories.ExamplesofCodinginUseIfyousellmagazineprintads,bannersonyourwebsitesandyourentyourcirculationlist,youcandesignateallprintincomewiththenumeral2afteryourfirstcreditcodenumeral,yourbannerincomewitha3andyourlistnumberwitha4.Inthiscase,yourentryforprintadvertisingwouldbe120,forbanneradvertising130,andforlistrental140.Youcancontinuetoextendthis.Forexample,ifyousellcolorandblack-and-whiteprintads,youcandesignatethethirdnumeralofyourcodetobe1forcoloradsand2forblackandwhiteads.Ifyouusedfour-numeralcodes,yourcodeforcolorprintadswouldbe1210andyourcodeforblack-and-whiteadswouldbe1220.Thisletsyouquicklydetermineyourtotalprintsalesandbreakouthowmuchcamefromcolorads.NamesVs.NumeralsRatherthansubstituteledgercodesfordescriptivewords,includeboth.Evenifyouknowthatledgercode130meansbanneradvertisingrevenue,aneworsubstitutebookkeeperortaxpreparermightnotknowyourcodes.Ifyouoratemporarybookkeeperaccidentallymiscodeyourentries,havingwordsnexttoeachonecanhelpyouquicklyrectifymistakes.Sorting/Totaling/AveragingInadditiontousingledgercodestorunone-timereports,usethemtocreatetotalsandaveragesforincomeandexpensecategories.Thiscreatesreal-timeupdateseachtimeyoumakeanentry.Forexample,trackingyourtotalphonespendingoraveragemonthlyofficesuppliesexpenseswith“Total”and“Average”cellsletsyoucompareyourcurrentperformancetoyourbudgetwithouthavingtorunseparatereports.SampleChartofAccountsWhenindoubtaboutyourabilitytosetupaledgercodesystem,considerhiringabookkeeperoraccountantonatemporarybasistosetupyourbookkeepingsystemorsoftware.Maintenanceofanexistingsystemisgenerallyeasierthanbuildingfromthegroundup.ExamplesofCashAccounts:1110CashinBank1120PettyCashExamplesofRevenueAccounts:2110AccruedRevenues2120CashRevenues2130NoncashRevenues2140OtherFinancingSourcesExamplesofShort-termPayables:3110AccountsPayable3120InterestPayable3130ClaimsandJudgmentsPayable3140ContractsPayableReferencesAccountingCoach:GeneralLedgerAccountsOfficeofFinancialManagement:GeneralLedgerAccountCodesAccountingCoach:SampleChartofAccountsforaSmallCompanyWriterBioSamAshe-Edmundshasbeenwritingandlecturingfordecades.HehasworkedinthecorporateandnonprofitarenasasaC-Suiteexecutive,servingonseveralnonprofitboards.Heisaninternationallytraveledsportsciencewriterandlecturer.HehasbeenpublishedinprintpublicationssuchasEntrepreneur,Tennis,SIforKids,ChicagoTribune,SacramentoBee,andonwebsitessuchSmart-Healthy-Living.net,SmartyCentsandYouthletic.Edmundshasabachelor'sdegreeinjournalism.RelatedArticlesWhatIsthePostReferenceonaLedger?WhatIstheDifferenceBetweenGeneralLedger&TransactionDetailsbyanAccountinQuickBooks?TipsonWritingBusinessChecksFromaSingle-MemberLLCBusinessAccountAccountingforFleaMarketVendorsHowtoMakeaTrialBalanceEntryonExcelHowtoMakeaSpreadsheetThatKeeps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