What is the Ledger and Posting Process?
The general ledger is the master record of every account a business uses, and posting is the process of transferring journal entries into those ledger accounts. Together, they build the account balances used to prepare the trial balance and financial statements.
Posting is the process of copying debit and credit amounts from journal entries into the corresponding accounts in the general ledger, updating each account's running balance.
- 1↓Journalize the transactionRecord the debit and credit in the general journal with date and explanation.
- 2↓Locate the ledger accountFind or open the T-account/ledger page for each account named in the entry.
- 3↓Transfer the amountsCopy the debit amount to the debit side and the credit amount to the credit side of the matching ledger accounts.
- 4↓Record date and referenceNote the journal page number (posting reference) in the ledger and the ledger account number back in the journal.
- 5Update the running balanceRecalculate each account's balance after the new entry is posted.
Step-by-step worked examples
A journal entry debits Cash $2,000 and credits Service Revenue $2,000. Post it to the ledger.
Open the Cash ledger account → enter $2,000 on the debit side, update balance Open the Service Revenue ledger account → enter $2,000 on the credit side, update balance Record the journal page number in each account's posting-reference column
The Cash ledger account starts with a $4,000 debit balance. A new entry posts a $1,500 credit. Find the new balance.
Starting balance = $4,000 debit Post $1,500 credit New balance = 4,000 − 1,500 = $2,500 debit
Accounts Payable starts with a $3,000 credit balance. A $1,000 debit is posted (payment made). Find the new balance.
Starting balance = $3,000 credit Post $1,000 debit New balance = 3,000 − 1,000 = $2,000 credit
Flashcards
Quick quiz
Q1.What is posting in accounting?
Q2.Which comes first in the accounting cycle?
Q3.A Cash account has a $6,000 debit balance. A $2,000 credit is posted. What's the new balance?
Q4.What does a posting reference in the journal typically show?
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Common mistakes
Posting to the ledger before journalizing the transaction. — Correct: The journal entry always comes first; posting only transfers what's already journalized.
Forgetting to update the posting-reference columns. — Correct: Reference numbers create an audit trail linking each journal line to its ledger account and back.
Recomputing an account's balance from scratch every time. — Correct: Just add or subtract the new posted amount from the previous running balance.
Assuming the ledger only shows totals, not individual entries. — Correct: A ledger account shows each posted debit and credit line plus the running balance.
FAQ
What is the ledger in accounting?
The general ledger is the complete set of accounts a business keeps, organizing every debit and credit by account.
What is posting in the accounting cycle?
The step where journal entries are copied into their matching ledger accounts, updating each account's balance.
What are examples of ledger posting?
Posting a $2,000 cash sale from the journal into the Cash and Service Revenue ledger accounts is a typical example.
How do you calculate a ledger account's balance after posting?
Add debits to and subtract credits from the previous balance (or vice versa, depending on the account's normal balance side).