General Ledger or GL, in pure financial terms, is a record-keeping system that takes into account every financial transaction that takes place in a company while it is operational. GL is usually maintained by employing a double-entry method where each transaction affects atleast two records – atleast one for debit and atleast one for credit. GL is an important component for preparing balance sheets, income statements, cashflow statement etc.
In SAP, a GL account is a part of GL Accounting where different financial transactions are duly recorded. A GL account has two parts – Chart of Accounts and Company Code. For recording any transaction, GL account can be used for a chart of accounts and company code. GL account can be created using transaction FS00.
The main function of GL Account is to ensure that the financial accounting is accurate and hence, reliable. Since there are legal and operational ramifications of financial accounting, GL Account is perceived as one of the most important concepts in SAP FI.