Question

which of the following describes a general ledger?

the general ledger describes all liability accounts.
the general ledger is a record of all transactions in alphabetical order.
the general ledger is a record containing all accounts used by a company.
the general ledger combines sales and expenses to determine the net income of a business.

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Explanation:

• Option 1 is incorrect: A general ledger includes all account types (assets, equity, revenue, expenses, liabilities), not just liability accounts.
• Option 2 is incorrect: General ledgers are organized by account type, not alphabetical order of transactions.
• Option 4 is incorrect: Calculating net income uses income statement accounts, not the full general ledger itself; the ledger is a repository for all accounts, not a tool for this specific calculation.
• The correct option defines the general ledger as the complete set of all a company's accounts, which is its core purpose.

Answer:

The general ledger is a record containing all accounts used by a company.