A general ledger is a double-entry form of accounting. Each transaction records an entry to a debit and credit account. One side of the general ledger is the sum of debits, while the other side is the sum of credits. The sum of all debits and credits should be equal. The debit side includes entries for assets, expenses, losses, and dividends. The credit side includes liabilities, gains, income, revenues, and equity. As an example of how the ledger works, when paying utilities, a debit is recorded to utilities expense while a credit is recorded to cash. The general ledger is what the company’s financial statements (income statement and balance sheet) derive from.