Posting

Transactions are first entered in the general journal or special journals, as the case may be. Later they are transferred to the ledger, a process referred to by accountant as posting. So posting is another way of saying transferring. The aim of the posting is to make classified and summarized record of an account in respect of various transactions that affect it (account). The following steps must be noted regarding the posting of general journal:

(1)    Accounts are opened in the ledger for various items with their respective names (or account titles) written in bold letters at the top generally in the middle e.g., Shweta’s Capital Account (i.e., the account of the proprietor) Ram’s Account, Building Account, Furniture Account and so on. Once a particular account is opened in the ledger, the same account, that is, with the same account title, cannot be opened again in the same accounting period. This rule has to be followed strictly, otherwise it would not be possible to obtain the summary of the business transactions affecting the same account at once and purpose of the ledger would be obviously defeated.

(2)    Each transaction in the journal is considered separately for posting purpose.

(3)    Locate in the ledger first the account(s) debited in the journal entry and make use only o the debit side of the account in the ledger.

(4)    Enter the date of the transaction on the debit side.

(5)    Record the name of the credit account(s) in the journal entry in the particulars column.

(6)    Enter the page number of the general journal in the journal folio column in the debit side of the ledger account.

Repeat the steps now for posting the credit account(s) in the journal entry on the credit side of the ledger account.
When a debit account in the journal is posted to the ledger, only the debit side of that account is affected. Similarly when credit account in the journal entry is posted, only credit side of that account is affected.
The names of the accounts in the particular column are inter-changed, that is, the name written in the debit of the journal entry is written on the credit side of the ledger account and that of the credit account on the debit side.
The name of the ledger account being posted should not appear as an entry in that account but the name of the account in the corresponding (opposite) entry should be inserted.

Transaction: Jan 1 – Goods purchased for cash $ 1,000.
The Journal entry would be:
    _____________________________________________________________________$______    $
Purchase Account    ____________________________________________Dr.         1,000
    To Cash Account            _______________________________________________________1,000
(Being the goods purchased for cash).


In the ledger two accounts – Purchases Account and Cash Account – would be opened.
First, purchases account will be opened and debited as shown below:

The left-hand side of the purchases account is complete in respect of date and amount columns. What is then to be written in the particulars column? we must not write the name of the purchases account in the purchases account, that is, the entry in the purchases account should not be described as ‘purchase’; thus in the debit side of the purchases account shall be inserted the name of the credit account in the journal entry i.e., cash account. The purchases account would be completed as under:


This completes the posting of the debit account of the journal entry.
For the credit, cash account is opened and the date and amount are placed on the credit side as shown below:

Now in the particulars column, we must not write ‘By cash’ for the reason given above. Instead the name of the debit account in the journal entry i.e., purchases account would be written as under:

Furthermore, the expression ‘paid’ for purchases etc., should not appear in the particulars column of an account in the ledger because the significance of the transaction is indicated automatically by the side of the ledger account where it appears.

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