How to Understand and Set Up a General Ledger

Step-by-Step Guide

1. 1

   Step 1: Establish the type of chart of accounts you wish to use.

   This may be one of the sample charts provided with your software, or you may wish to modify an existing chart or enter a new chart from scratch.
   
   If you are not qualified to decide the best approach consult with your accountant.
   
   Remember that you can always add more chart of account codes in the future.
   
   Later on you can also remove chart codes that you have never used.
   
   In other words, the structure of the chart need not be absolutely final, but the overall structure should be in place.
2. 2

   Step 2: Once you have established the chart of accounts

   ,, Keep this for future reference. , Establish whether you will be entering balances starting from period 1 (recommended) or if you will be entering balances from the prior period only.
   
   If you will be entering balances from the previous period only, you will require a trial balance report from which to work, up to the previous period. ,,,,,,,, Make sure the columns add up correctly and that the internal calculations on your reports are correct.
   
   This is a critical point.
   
   Do not assume your reports are correct if you have modified your chart of accounts structure. , Do this by moving account codes to their correct locations if possible. , Your system should now be ready for general use.
3. 3

   Step 3: edit or delete any existing chart codes and enter your new chart codes if required.

4. 4

   Step 4: Enter your company details into the program

5. 5

   Step 5: and enter the account code for any 'special' accounts such as your retained earnings account

6. 6

   Step 6: suspense account and other accounts if required.

7. 7

   Step 7: Make a back-up.

8. 8

   Step 8: Enter your opening balances for the year.

9. 9

   Step 9: Enter and if necessary post your opening balances.

10. 10

    Step 10: Print a trial balance and check it.

11. 11

    Step 11: If necessary

12. 12

    Step 12: enter any correcting balances.

13. 13

    Step 13: Make a backup at this stage for future reference.

14. 14

    Step 14: Optionally enter your last year balances if your software allows you to.

15. 15

    Step 15: Optionally enter your budgets if you wish to print reports that compare actuals to budgets and your software allows you to.

16. 16

    Step 16: Make a backup at this stage for future reference.

17. 17

    Step 17: Carefully check your financial statements.

18. 18

    Step 18: If the financial reports are not correct

19. 19

    Step 19: edit/correct them.

20. 20

    Step 20: Make one final backup.

Detailed Guide

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