Business and Personal Finance: It’s All in the Posting

Keeping Track of Transactions – It’s All in the Posting

The journals are where all the daily bookkeeping activities take place. Peri- odically, that information is transferred to the ledger to update each account. That transfer is called posting, and it’s a critical part of the full accounting process.

With computerized systems, the posting process can be performed automatically, as soon as transactions are recorded. Some programs give you the option of real-time posting or periodic posting (meaning some time later); which you would use depends on your transaction volume and computer capacity. For manual bookkeeping systems, though, periodic posting is the only way to go, even if you do it every day at closing time.

Posting manually is a pretty straightforward process. You start with the first new journal entry and see which accounts are involved. You record the debit part of the transaction on the appropriate account page in the general ledger, marking down which journal page the transaction came from. Then you go back to the journal page, and indicate the account number to which you posted the information. Repeat the process for the credit side of the entry. If there are multiple debits or credits in a single transaction, post each line item separately to the general ledger.

Posting from the Special Journals

Using special journals doesn’t only cut down your journal entry time; it also saves you a lot of posting time. Unlike posting from the general journal, where you must individually post each line item from every transaction, special journals allow for summary posting. At the end of every period or every page, you calculate the column totals, then post the totals to the appropriate general ledger accounts.

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For example, instead of posting each line in the sales journal to your sales and accounts receivable general ledger accounts, you simply post periodic lump-sum totals. That helps make your busiest accounts easier to manage. How often you make this summary post depends on your transaction volume and how often you want to know where your accounts stand. At the very least, you must post the totals at the end of the accounting period.

ALERT

Before you post column totals, make sure to crossfoot your columns. This will help you root out any errors before they hit the general ledger, where they may be much more difficult to track down. Ideally, you will foot and crossfoot every time you complete a journal page, as well as at the end of an accounting period.

Posting to the Special Ledgers

Accounts receivable and accounts payable both hold summary information for a lot of underlying accounts. Accounts receivable includes every- thing your customers owe you, and accounts payable includes everything you owe to your suppliers. Chances are, though, that you have a lot of different customers and use at least a few different suppliers. For each, you have to track the individual balance, and that would get extremely unwieldy if you tried to fit it all on the main general ledger account pages.

For that reason, both accounts receivable and accounts payable have special subledgers. Where the general ledger holds detail information for each separate account, the subledgers hold the detail data for each customer and vendor account. Rather than posting specific transaction information to the general ledger, you first post transactions involving accounts payable and accounts receivable to the special subledgers. Then you make a summary entry to the general ledger accounts.

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In addition to verifying the journal column balances before you make that summary posting to the general ledger, you must also make sure that your subledger totals agree with those general ledger account balances. For example, the total of all of your customer account balances must equal the total accounts receivable balance; likewise, the total of your individual vendor balances has to tie to the accounts payable balance.