BASIC ACCOUNTING

TOPIC: POSTING TO THE LEDGER

T- Account- simplest form of an account used to analyze the effects of the
transactions on the accounts, hence it has two sides: one side is for recording
increases and the other side is for recording decreases. At the center of the T
account is the title of the item. To illustrate:

Accounting Cycle
Phase 1. Recording
a. Analyzing
b. Journalizing
c. Posting- transferring the debits and credits from the journal to the ledger
T- Account vs General Ledger
T- Account Form is used in the classroom for preliminary analysis of transactions.
In actual practice, a formal book of accounts is used containing not only the account
title, date and amount but also the page reference (to identify the entry source),
the account number and the balance of the account. All accounts are compiled
in one book called the general ledger wherein a separate page is maintained for
each account. Each page is called a ledger.
Ledger vs Journal
The journal does not replace the ledger. The journal provides a complete recording
of a transaction in chronological order while a ledger shows in one particular
account all the changes (increases or decreases) that took place.
General ledger- book of final entry

POSTING PROCEDURE
A. Based on the first debit entry in the journal, look for the account in the
general ledger.
B. On the debit side date column, copy the date.
C. Copy the amount in the debit column.
D. Insert the journal page number in the folio column or posting reference
column of the ledger.
E. Insert the ledger account number in the folio column or posting reference of
the journal.
F. Repeat steps A to E for the next account.
Steps D and E, called cross reference, facilitates the tracing of an entry to and from
the journal and leger. Also, if the F columns of the journal and the ledger are both
filled up, it signifies that an entry has already been posted. The folio column in the
journal will be gradually filled up as the postings are made.
LEDGER BALANCES
Balances of each account in the general ledger should be determined at least
at the end of each month. Observe the following rules:
1. Total the debit column and record it in small figures in pencil directly
underneath the last debit amount. This is called pencil footing. It is done in
pencil and in small figure only to distinguish it from the regular entry and to
permit erasures if the figure is not correct.
2. Total the credit column and record it in small pencil figures directly under the
last credit amount.
3. Extract the balance: if a debit balance, place it in the explanation column
debit side in line with the last debit posting in small pencil figure and if a
credit balance, place it in the explanation column credit side in line with the
last credit posting
4. You need not pencil foot if there is a single debit or credit amount only. You
need not extract the balance nor place it in the explanation column if the
postings are on one side only.