What is the primary function of the General Ledger in an organization?

The primary function of the General Ledger is to summarize all financial transactions of an organization. This centralized record encompasses all financial data from different departments and activities, allowing the organization to have a complete view of its financial position. It provides the foundation for generating key financial statements, such as the balance sheet and income statement, which are essential for understanding the financial health of the organization.

By summarizing all transactions, the General Ledger ensures that the financial records are accurate and up-to-date. This is crucial for internal reporting and external compliance, providing stakeholders with confidence that the financial information presented reflects the organization’s actual financial status.

The other options, while important for specific aspects of organizational management, do not reflect the overarching purpose of the General Ledger. Tracking employee performance metrics focuses on human resources, managing inventory levels pertains to supply chain management, and documenting procurement processes relates to purchasing operations. None of these functions encapsulate the comprehensive financial oversight that the General Ledger provides.