Is GL Same as Chart of Accounts?
In bookkeeping, it is easy to confuse the general ledger and the chart of accounts. They are closely related but serve very different purposes. Understanding how they work together helps you keep your records accurate and your business tax ready.
The chart of accounts (COA) is a list of categories used to classify transactions. The general ledger (GL) is where those transactions are actually recorded. In simple terms, the chart of accounts is the structure, and the general ledger is the data.
What Is the Chart of Accounts?
The chart of accounts is like a map of your business’s finances. It is a list of all the accounts used to track different types of transactions.
Typical categories include:
- Assets (Cash, Accounts Receivable, Equipment)
- Liabilities (Loans, Credit Cards, Accounts Payable)
- Equity (Owner’s Draw, Retained Earnings)
- Revenue (Sales, Service Income)
- Expenses (Rent, Marketing, Utilities, Payroll)
Each account in the COA is assigned a code and grouped by type. These categories help your bookkeeper or accountant organize financial activity and generate reports.
What Is the General Ledger?
The general ledger is the actual record of every financial transaction. It shows the date, account category, description, and amounts for each entry. When you pay a bill, make a sale, or run payroll, those transactions are posted to the GL.
Each entry is tied to an account in the chart of accounts. The GL provides the raw data behind your income statement, balance sheet, and cash flow report.
Key Differences Between GL and COA
| Feature | Chart of Accounts | General Ledger |
|---|---|---|
| Purpose | Lists the categories/accounts | Records actual financial transactions |
| Structure | Organized by account type | Chronological record |
| Level of detail | High-level categories | Line-by-line transaction details |
| Used for | Report formatting, classification | Audit trail, reporting, tax prep |
| Editable frequency | Rarely changes | Updated regularly |
Test Case Example
A small online store set up a QuickBooks account and added transactions but never customized their chart of accounts. The general ledger was cluttered with vague categories like “Misc Expense” and “General Income,” making reports useless.
RemoteBooksOnline stepped in, cleaned up the chart of accounts, and reclassified six months of GL entries. The store owner received clear, actionable financial reports for the first time and saved $600 on CPA cleanup costs.
Why Both Matter
- A clean chart of accounts ensures consistent classification
- A well-maintained general ledger ensures accurate reporting
- Errors in either can lead to wrong tax filings, audit risks, or misleading financials
FAQs
Can I edit my chart of accounts?
Yes, but it should be done carefully. Changing account names or codes may impact past reports. A bookkeeper can help restructure without losing data.
Do I need to review the general ledger?
Yes. While the chart of accounts stays fairly consistent, your GL should be reviewed monthly to catch errors or duplicates.
Do I need both if I use software like QuickBooks?
Absolutely. The software uses your chart of accounts to organize the GL. You still need both to generate accurate financials.
What happens if I ignore the GL or COA?
You risk messy books, poor reports, and higher costs at tax time due to cleanup work by your CPA.
Final Thoughts
The chart of accounts and general ledger are the foundation of accurate bookkeeping. One defines your financial categories, and the other tracks every transaction. Keeping both in order ensures clean, reliable records that make tax filing easier and business decisions smarter.
Need help cleaning up your chart of accounts or general ledger?
Start your free month with RemoteBooksOnline and let our experts handle it for you.
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