For example, ABC International issues 20 invoices to its customers over a one-week period, for which the totals in the sales subledger are for sales of $300,000. ABC’s controller creates a posting entry to move the total of these sales into the general ledger with a $300,000 debit to the accounts receivable account and a $300,000 credit to the revenue account. Subledgers are only used when there is a large volume of transaction activity in a certain accounting area, such as inventory, accounts payable, or sales. For low-volume transaction situations, entries are made directly into the general ledger, so there are no subledgers and therefore no need for posting. You have been exposed to the concepts of recording and journalizing transactions previously, but this explains the rest of the accounting process. The accounting cycle is the repetitive set of steps that must occur in every business every period in order to meet reporting requirements.

• The ledger for an account is typically used in practice instead of a T-account but T-accounts are often used for demonstration because they are quicker and sometimes easier to understand.
• The accounting cycle is a seven-step process followed for the completion of the accountancy task usually by double-entry bookkeeping method.
• While the journal is known as Books of Original Entry, the ledger is known as Books of Final Entry.
• Accounting is popularly regarded as “the language of business” because it doesn’t just help you keep track of your money, but also helps you make informed decisions about your business.
• The following example of posting in accounting depicts how journal entries can be posted to the general ledger.

A posting is normally carried out following the preparation of a journal entry from the underlying transaction information, and is step three in the accounting cycle. Also, Ledger posting segregates the nature of accounts and their balances which helps in making the financial statements i.e trial balance, profit and loss account and balance posting definition in accounting sheet. In that case, a deposit account, rent account and inventory account will be made with Rs. 7000 debit balance, Rs. 2000 as credit balance and Rs. 2500 as credit balance respectively. Therefore, the total calculates by deduction of credit balance from debit, providing the figures for further analysis or financial statements.

Double Entry Bookkeeping

In the world of ERPs, posting has been automated and reduced to just a click of a button. Firstly, The profit and loss account statement includes the cost of goods sold, sales, depreciation expense, marketing and advertising expenses, taxes and interest. Whereas the balance sheet counts account receivable, bonds payable, retained earnings, cash, accounts payable, accumulated depreciation, and common stock. Therefore, it becomes necessary for the accountant to segregate the account category. Posting accounting definition enables the company to know the balance of each account on a particular date. Also, this creates a crystal understanding of account balances and lessens the efforts made in finding from the individual ledger accounts.

A general ledger explains the further step of accounting commonly called posting accounting definition. It refers to keeping records or hold information of individual accounts operations separately that are mentioned in the journal. Posting accounting definition refers to the concept of posting in accounting. It explains the transfer of amount from journal to ledger or balance of various accounts to the general ledger to make it simple to understand. Accounting is the process of keeping track of all financial transactions within a business, such as any money coming in and money going out. It’s not only important for businesses in terms of record keeping and general business management, but also for legal reasons and tax purposes.

Rules for posting

Freshbook is one of the easiest accounting software systems to use. Another easy to use option that’s perfect for self-employed entrepreneurs who need an affordable accounting solution is Neat. You can outsource your accounting work to outside professionals who specialize in bookkeeping and tax preparation. Outsourcing can offer many advantages because it allows you to take advantage of specialized skill sets that may not be available when hiring someone in-house. A general ledger contains accounts that are broad in nature such as Cash, Accounts Receivable, Supplies, and so on. It consists of accounts within accounts (i.e., specific accounts that make up a broad account).

For example, Accounts Receivable may be made up of subsidiary accounts such as Accounts Receivable – Customer A, Accounts Receivable – Customer B, Accounts Receivable – Customer C, etc. For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. While the journal is known as Books of Original Entry, the ledger is known as Books of Final Entry.

posting definition

Notice that we give an explanation for each item in the ledger accounts. Often accountants omit these explanations because each item can be traced back to the general journal for the explanation. The following are examples of Ledger cards for the some of the  accounts from the same company shown in T-accounts above (see how you get the same balance under either approach). In contrast to the two-sided T-account, the three-column ledger card format has columns for debit, credit, balance, and item description. The three-column form ledger card has the advantage of showing the balance of the account after each item has been posted.