General ledger (GL)
The master record of every financial transaction a company posts, organized by account, from which its financial statements are produced.
Each invoice debits accounts receivable and credits revenue in the general ledger; each applied payment clears the receivable against cash. The AR balance in the GL should always equal the total of open items in the AR subledger.
When the two don't agree, usually because of unapplied cash, manual journal entries or timing differences, finance has to reconcile them before closing the books.
Related terms
- AR subledgerThe customer-by-customer record of open invoices, credits and payments that rolls up to the accounts receivable balance in the general ledger.
- AR reconciliationConfirming that the AR subledger total matches the accounts receivable balance in the general ledger, and explaining any difference.
- Month-end closeThe work finance completes after each month to reconcile accounts and finalize the books. For AR, that means applying cash, reconciling the subledger and reviewing reserves.