Corporatefinanceinstitute com 1 The Corporate Finance Institute Accounting For more eBooks please visit

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Prepayment of advertising,
insurance, or rent becomes used
up over time
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Utility bill received in the mail
for the month just completed
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Employees earned wages
before the month ended, to be
paid in the following month
One month of XYZ Company’s 
insurance expired in June. The 
original payment of $800 covers 
June through September.
DR Insurance Expense: 200
CR Prepaid Insurance: 200
XYZ Company’s employees 
earned $550 during June and are 
paid in July. 
DR Wages Expense: 550
CR Wages Payable: 550
DR Wages Payable: 550
CR Cash: 550
Definition
Situational examples
Adjustment Journal Entry
Deferred and accrued expenses

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corporatefinanceinstitute.com
20
The Corporate Finance Institute
Accounting
The general ledger serves as the eyes and ears of bookkeepers and 
accountants and show all financial transactions that have occurred 
within a business. Essentially, it is a huge compilation of all transactions 
within a company recorded on a specific document or accounting 
software, which is the predominant method nowadays. For example, if 
you want to see how cash has changed over the course of the business 
and all its relevant transactions, you would look at the general ledger, 
which shows all the debits and credits of cash. Although all of this was 
done on paper back in the day, 
many companies today use accounting 
software such as QuickBooks, Sage, or Simply Accounting to easily 
maintain their ledgers. 
General Ledger
To learn more, please 
check out our free online 
accounting courses
View courses

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