Ledger Posting

Ledger Posting: Introduction

Accounting is a process that consists of a few necessary steps. The first step among all these important steps is recording all the transactions in the accounting journal in a certain form. Secondly, by following the transactions, you need to transfer the personal entries to ledger accounts. This process is called ledger posting. Now, in this article, we will discuss the meaning of ledgers and the process to put entries in the ledgers.

What do you mean by Ledger Posting?

The term ‘ledge’ means ‘shelf’. The word ‘Ledger’ derives from the ‘Ledge’. The record of important transactions that take place is called a ledger. Each ledger means an individual asset, person, revenue, or expense. The process of entering all transactions from the journal to the ledger is called ledger posting. A few ledger posting examples are transactions that are related to banks, cash, building, land, salary, inventory, debts, capital, etc.

A ledger’s important function is sorting out personal transactions into separate personal accounts. Ledger makes the process of transactions easy of similar subject matter and similar nature into personal groups. Through the system of ledger posting, the accounting process can be done effectively and smoothly.

Important Characteristics of Ledger

A few important characteristics of a ledger account are:

• All accounts

A ledger consists of all accounts, for instance, sales account, purchase account, and so on. Consequently, a ledger can be said as a register or a book consisting of all accounts. At the beginning of a business or during the year, accounts are opened in the ledger.

• Classification

The order of monetary exchange is the first significant attribute of the ledger. The main focus of ledger accounts is to characterise all the exchanges into the accounts. A ledger contains various accounts, and each exchange is grouped in the ledger accounts.

• Mix-up Tracking

Optimising data is one of the important characteristics of a ledger. This mix-up tracking is used to rectify mistakes. For example, if a purchase is exaggerated at that point in a perfect world, the bookseller needs to survey all the purchasing accounts by following the slip-up.

• Significant Information

 To hold applicable data in a single spot is a significant characteristic of ledger accounting. For example, the exchange with client P can be found in a general ledger containing names like Mr P. This Mr P account will show all the exchanges of Mr P.

• General and Subsidiary Ledger

The small-scale associations utilise the general ledger, and it contains all the accounts of budgetary things. On the other hand, the subsidiary ledger is utilised by the huge association as a memorandum ledger, and it contains the client’s and creditor’s accounts. Likewise, the general ledger consists of total accounts for all these things. These are some of the characteristics of a ledger.

• Trial Balance

From the closing balance of general ledger preparation, the trial balance is removed. In such a way, to prepare for fiscal reports, the ledger plays a significant role. For the arrangements of budget reports, trial balance extraction is the first move with both ledger entry and journal entry.

Columns in a Ledger 

Transactions are posted into the ledger account from the books of original entities or journals. All the transactions are always transferred from a journal to a ledger. The following columns are there in a ledger:

1. Particulars: In particular, the right account holder’s name is shown. Here, all the transactions are also shown or reflected.
2. Date: The date when the transaction took place is depicted in this date column.
3. Amount: The amount associated with each entry is shown in this column.
4. Journal Folio (JF): This column is used to denote the page numbers once the journal entry has passed.

Process of Ledger Posting

The process of entering all transactions from the journal to the ledger is called ledger posting. In ledger posting, the credit and debit items are transferred into the appropriate accounts from the journal entries. 

In the account in which journal entry is debited, ledger entry must also be debited from that account while posting individual entries.

In the same way, the account in which journal entry is credited, ledger entry must also be credited from that account while posting individual entries.

The words ‘To’ and ‘By’ are used as a customary prefix before the credited and debited account.

Importance of Ledger

1. To figure out profit or loss: To find out the profit and loss in any type of business ledger is very helpful. As in any business without the pertinent ledgers, it is difficult to make further accounts.
2. Time Saver: In the ledger, all entries are recorded in a single place and hence it is efficient and simple for getting further accounts ready. For instance, profit and loss as well as trading accounts, etc.
3. Imperative: One main importance of a ledger is that it helps in keeping up the precision or rightness of the exchanges that are held during an organisation’s life expectancy.

Conclusion

In this article, we have learned about ledger posting. The process of entering all transactions from the journal to the ledger is called ledger posting. Ledger posting examples are transactions related to banks, cash, buildings, land, salaries, inventories, debts, capital, etc. Ledger posting consists of various features, for instance, sales accounts, purchase accounts, and so on. The order of monetary exchange is the first significant attribute of the ledger. The main focus of ledger accounts is to characterise all the exchanges into the accounts. Ledger posting is also important to figure out the profit and loss in a business. It also saves accounting time.