General Ledger

Expanded Explanation: The general ledger is the foundation of a company’s accounting system. All transactions are recorded in the ledger as debits and credits. It’s used to create financial statements and is crucial for ensuring accurate financial reporting, compliance, and analysis.

Potential Issues: Errors in the general ledger can lead to inaccurate financial reporting, impacting decision-making and potentially leading to regulatory compliance issues.

Example: In your small coffee shop, the ledger records every transaction, including coffee sales, ingredient purchases, and rent payments.