Hi. I have created a General Ledger report from my accounting figures to date… just 9 days so far. However, I don’t understand it! I know exactly what I’ve spent out and what’s come in but the total figures at the bottom of the report don’t make sense. They total approximately twice my current net loss.
Can someone please explain to me what they mean? Thank you.
See below…
The 1774.45 is for the want of a better words the total of the “ins” and “outs” from all accounts so the debit means all the expense accounts have increased by 819.52 and because this is double entry accounting there has to be 2 entries for each transaction and therefore other accounts have also changed e.g. as a result of this your bank has overdrawn “out” by 819.52.
Then your Cash on hand and Accounts payable have had both ins and outs, presumably because you obtained some expenses on credit or used cash and then cleared these accounts with your bank account. The total of all transactions in and out is 1774.45
So 1774.45 is the total of all ins and outs from every account
But your overall position is a loss of 819.52 and an overdraft in the bank of 819.52.
You probably need to bring in your starting balances such as bank opening balance, your investment (capital), any equipment etc, to get the complete picture of your business accounts.
General Ledger Summary report is really to prove that all transactions have been correctly accounted for and that double-entry accounting principle hasn’t been broken.
If you are not familiar with double-entry accounting principles, just use Profit & Loss Statement report and Balance Sheet report which are easier to interpret.
Thanks for the replies, I’m definitely not familiar with double-entry accounting and I don’t think I should be unduly worried. I know the position I’m in, I was more curious at how these figures are derived. Seem like a silly way of looking at figures to me but that’s why I’m not an accountant!
A post was split to a new topic: Possible to avoid double-entries?