 Hello in this presentation we will discuss the discussion question of compare general ledger and chart of accounts. If we have an essay question such as this such as a comparison between two items one way to approach this type of essay question would be to first define the two items and then go through and list the similarities and the differences between those two items. So we're considering the general ledger and the chart of accounts. These are two items that can often be confused when first learning the process and so we want to keep them different or differentiated in our minds. When we're considering I'll look at the chart of accounts first because it's pretty much self-explanatory when we look at the chart of accounts we have a chart of accounts so we're going to list the accounts that will be involved. Now notice that that's different the chart of accounts is different than just saying assets liabilities equity and possibly income and expense. We're going to have to list the actual accounts within within those categories but in essence if we were just to define it we're going to have a list of accounts that are going to be used within the accounting process for the business. The general ledger then is going to be a bit different in that we're still going to have those accounts but we're going to use the general ledger in order to record the transactions to those specific accounts. So the GL will show the detail of the accounts. We're going to have all the accounts and they will then be used in order to list the detail. So if we got into a bit more detail and we tried to compare and contrast these two the chart of accounts and the general ledger note that the chart of accounts does not necessarily have any balances with it. We're just going to have a list of the accounts possibly I know possibly have account numbers depending on whether the whether the company uses account numbers that doesn't mean the balance in the account when I say account numbers we're talking about numbers that would then be assigned to the account so that we can list the account not by name but by number. If the balances were included then we basically have a trial balance which is something different. So we're not talking about a trial balance meaning we're not including basically the balances when we're just having the list of accounts. The main purpose of the chart of accounts is that we can have this list of accounts in order to help us record journal entries. So many times if you're looking at accounting problems they're going to give you just a list of accounts and that's going to be used in order to construct whatever journal entries that we are making. Note in real life unlike many problems however the chart of accounts will always be in the same order and that all the general ledger will be in the same order the trial balance will be in the same order that order then is the assets first and then the liabilities and then the equity and then the income and then the expenses. It's always going to be it's always going to be in that order even if you have account numbers it's always going to be in that order first if they if something asks whether it's going to be in the chart of accounts is in order of alphabetical order no is it in order of chart of account number no the account numbers should be structured in such a way that they follow the order of assets liabilities equity income and expenses but if they are not if the account numbers are put in incorrectly then they will be out of order because most software will put the chart of accounts first and primarily in order by account type asset liability equity income and expense. That list of accounts then can be used in order to construct any types of journal entries that we have now if the company does have account numbers note that the account numbers will typically be somewhat different as they go from category to category meaning assets might start with a one have like four numbers so you might start with 10 or 1 0 0 0 and and then 1 1 0 0 0 and we're typically going to leave some space between the account numbers in case we have some other accounts that we want to later on put in between them and we don't want to have the account numbers be out of order then that the 200s then I mean the liabilities then we might go from starting from a 1000 to the 2000s 2000 2020 2030 or something like that then the equity being the 3000s the the revenue being the 4000s and so on and expenses being the 5000s and that would be that would be one way to construct the account numbers so that we can then easily look at the account number and know what type of account it is just by whether it starts with a one two three four or five within the account number the general ledger by contrast will have the same order it'll have the same account numbers but it'll be generally a lot larger and a lot more difficult to look at because the general ledger is typically going to have all the detail of the of each transactions within the account so we're kind of skipping over from the chart of accounts you might want you might compare that to like a trial balance which basically adds the balances we're going to the general ledger which adds not only the ending balances but also the detail so whatever time period we are looking at if it's a if it's a month or a year then we'll have the detail the debits and credits the increases and decreases to each individual account within the general ledger those ending balances then in each individual account are those amounts that will then be used to construct the trial balance so we're going to have the accounts in there if we were to add up the debits and credits for all the general ledger accounts the ending balances they would be in balance we typically do this but we do this by constructing a trial balance to do that and list out those accounts and make sure they are in balance so in recap then the chart of accounts is just basically going to be a list of accounts may have account numbers but it's just going to be a list it will be in order typically and then the general ledger will have the same order it will have the same accounts but it's going to give a lot more detail it's going to give the it's going to give the detail of the transactions for whatever time period we ran the report for and it will have the ending balances the sum of all the debits and credits from the ending balances that is what you is used to create the trial balance the trial balance then having an equal number of debits and credits