What is the general ledger? Learn about how general ledgers work and how general ledgers can be used in Excel to make accounting tasks easier for you.
- [Instructor] For larger organizations, the general ledger is a key tool. And Excel gives us the ability and the flexibility to be as detailed or as high level as we'd like. So while large organizations often use purpose built tools like those from Oracle as part of their GL, Excel can be either a substitute or a complement for those existing purpose built software packages. Let me show you what I mean. I'm in the 03_01_Begin Excel exercise file.
Now, we're in the Itemized Expenses tab. And what we see here is that we have different itemized expenses based on transactions undertook by this particular company. So there's two sample transactions we have. The first is for GL code 1000, requested by John Smith where $750.75 was paid to Consolidated Mailings for a mailer that was sent out. And this was filed with the company's ledger on January 4th, 2018.
We have a second transaction here under GL code 7000, requested by George Jones where $2500 was spent for two computers from Dell. Now, a good GL whether in Excel or whether in a purpose built software should integrate to other aspects of the financial statements for the company. So if we come over here to the monthly expenses summary tab, what we see is that our GL autopopulates for each month throughout the year based on the GL code in question.
We spent $750.75 on advertising, that's autopopulated in January 2018. Similarly, if we come to the year to date summary, what we see is that the monthly expenses and itemized expenses fill into the year to date versus actual overall budget summary. So we have a total budget for the year of $100,000 to be spent on advertising.
As we see, the GL links to this sheet, so it shows that we've spent $750.75 of our budget with $99,249 remaining. Now let's try just adding an additional item under our itemized expenses tab. So perhaps we want to add another marketing expense. And we're going to use GL code 1000 for that again. Maybe this is invoice 110.
And perhaps it occurs on say January 20th, 2018. And in this case maybe it's for $1500 and maybe it's paid to say, the ad agency. And it's for advertising time. And maybe this is paid for on credit and it's filed say, January 25th, 2018.
And again, perhaps it's requested by John Smith. So we've now added a very basic additional transaction into our general ledger. Let's see what happened to the monthly expenses and year to date summaries. Under monthly expenses, now our advertising section has been updated. It was $750 that we'd spent before, now it's $22.50. We didn't have to change the Excel sheet on this particular page. It auto-populated based on our general ledger under itemized expenses.
Similarly, under the budget tab, we see that our new actual amount spent for the year has updated and it's now changed the amount that we have remaining on our budget. Now you have an understanding of how we can use the flexibility of Excel to our advantage with the general ledger and why Excel is a great tool in this case once you're comfortable with it.
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