Procedure for Posting in Ledger

WHAT IS A LEDGER ?

Ledger is a book containing accounts to which debits and credits are posted from books of original entry. All the transactions are first recorded in an accounting journal after which these entries are transferred to ledger accounts.

The process of transferring the debit and credit items from the journal to the ledger accounts is called posting. 

PROCESS OF POSTING IN LEDGER :

The following procedure is followed for posting in the ledger book-

For Account debited in the Journal Entry –

  1. Locate in the ledger, the account to be debited and enter the date of the transaction in the date column on the debit side.
  2. Record the date of the transaction in the date column on the debit side of that account.
  3. Record the name of the account credited in the journal with the prefix ‘To’ in particulars column.
  4. Enter the relevant amount in the amount column on the debit side.

For Account credited in the Journal Entry –

  1. Locate in the ledger the account to be credited and enter the date of the transaction in the date column on the credit side.
  2. Record the date of the transaction in the date column.
  3. Record the name of the account debited in the journal entry in the particulars column with the prefix ‘By’ and write the amount in the amount column.
  4. Enter the relevant amount in the amount column on the credit side.

BALANCING OF LEDGER

Just like every other accounting record, the grand total of debit and credit sides of ledgers must always be equal.

In some cases the debit side and credit side may not be equal. In this case , the ledger is balanced by recording the difference in the deficient side.

If the debit side is more than credit side , the balance is recorded in credit side. It is known as debit balance .

Similarly, if the credit side is more than debit side, the balance is recorded on the debit side. The ledger is said to have credit balance.

 

Thus, in simple words all the business transactions are first recorded in Journal or Subsidiary books in a chronological order when they actually take place and from there the transactions of similar nature are transferred to Ledger and this process of transferring is called as Ledger Posting.

Accounting & Finance for Banking

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