General ledger (grootboek)
The general ledger is the system of accounts on which all entries are collected by category. It forms the basis for the trial balance.
What does general ledger mean?
The general ledger is the system of accounts on which all entries are collected by category. It forms the basis for the trial balance.
A ledger account contains debit and credit movements and a balance. That balance still has to be classified under the correct annual accounts item and assessed for measurement.
How does it work?
The general ledger is the core of double-entry bookkeeping: every journal entry is carried over to the accounts it affects, so that the history and the balance are visible per account. The law does not mention the general ledger by name. It requires records from which the rights and obligations of the legal entity can be known at any time (art. 2:10(1) DCC) and which are kept for seven years (paragraph 3). The inspector must be able to audit it within a reasonable period (art. 52(6) AWR).
Balance sheet accounts carry their closing balance into the next year; profit and loss accounts start at zero every financial year. The RGS offers a standard coding for the chart of accounts. Sub-ledgers for receivables, payables and fixed assets each specify one account and must reconcile to it.
Example
On account 1300 Accounts receivable there is € 14.000 debit at the beginning of March. In March a roofing company (BV) books three sales invoices totalling € 9.680 (debit) and two bank receipts totalling € 11.000 (credit). Balance at the end of March: 14.000 + 9.680 − 11.000 = € 12.680 debit. The open items list from the receivables ledger must come to the same € 12.680. If it differs, a payment has been matched to the wrong customer or booked outside the sub-ledger.
In the annual accounts
Administrative source, no separate publication line.
Difference from the trial balance
The general ledger contains all movements per account; the trial balance gives only the closing balance of each account on one date. For the annual accounts the trial balance is the starting point, but to explain a balance you need the underlying movements. See exporting and checking the trial balance.
Common mistakes
- Seeing the account name as proof of correct classification
- Not clearing suspense accounts
What to watch for
- Before the year-end close, empty all suspense accounts: cross items, query items, payments still to be processed. A balance there is an unprocessed transaction.
- Link every account to one annual accounts item. Even a micro entity must be able to split debts into shorter and longer than one year (art. 2:395a(4) DCC).
- Lock the financial year after adoption of the annual accounts, so that later entries do not change the adopted figures.
Legal basis and source
art. 2:10 DCC
Frequently asked questions
How long must I keep the general ledger?
Seven years. That follows from article 2:10(3) DCC and, for tax assessment, from article 52(4) of the General Taxes Act (AWR). Digital storage is allowed if the data remain complete and can be made legible within a reasonable time.
What is the difference between a ledger account and a cost centre?
The account says what kind of amount it is, for example rent or turnover. The cost centre says which department or project it belongs to. For the annual accounts only the account counts.
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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