What is the main function of the general ledger?

The main function of the general ledger is to provide a complete record of all financial transactions for a business. It serves as the central repository where all financial data is organized and recorded systematically, encompassing all accounts such as assets, liabilities, equity, revenues, and expenses. Every transaction that a business undertakes is reflected in some form in the general ledger, which not only ensures accuracy in financial reporting but also aids in the preparation of financial statements such as the balance sheet and income statement. This comprehensive documentation helps accountants and financial managers track and review the financial health of the organization, and it supports audits and compliance with financial regulations.

In contrast, recording employee payrolls and benefits pertains specifically to human resources and payroll systems rather than the general ledger. Summarizing investment performance would involve performance reports and analysis, focusing on specific assets or portfolios, not the broad functions of the general ledger. Archiving historical financial reports relates to record-keeping practices rather than the active role of the general ledger in current accounting and financial management.