Every account from the chart of accounts is included in the general ledger. It is made up of all of the transactions recorded into the accounts. An important component of any general ledger is source documents. Some common examples of source documents are checks, deposit tickets, customer invoices, payroll reports, and vendor invoices. Source documents are critical in that they provide the information to input into the general ledger and they provide an audit trail to back up the information in your system.

The basic principle of the general ledger is double-entry accounting. All entries are entered into two accounts. Think of this as the money moving from one account to another. When you write a check to pay the phone bill, the money moves from your bank account (cash) to the telephone company (an expense account).

The system used in recording entries on a general ledger is called a system of debits and credits. In fact, if you can gain even a basic understanding of debits and credits, you will be well on your way to understanding your entire accounting system. For every debit, there is an equal and offsetting credit. An advantage of the computerized accounting system is that it will ensure that all of your debit and credit entries are equal, making your books balance.

An example of a debit and credit entry is paying rent for the organization's office. The check decreases the cash in your bank account (credits the account) while increasing the rent expense (debits the account). Another example is depositing money given to you by a foundation. The deposit increases your cash in the bank (debits the account) while increasing the revenue from foundations (credits the account).

Entries into the general ledger normally include the date, the person where the money comes from or goes to, a good description of the transaction, and the amount of the transaction. The entries are accumulated over time in the general ledger accounts which tell you how much money comes in and goes out for each type of revenue and expense and how much money you currently have.