Rules Regarding posting

Posting in accounting is when the balances in subledgers and the general journal are shifted into the general ledger. Posting only transfers the total balance in a subledger into the general ledger, not the individual transactions in the subledger. An accounting manager may elect to engage in posting relatively infrequently, such as once a month, or perhaps as frequently as once a day.

Subledgers are only used when there is a large volume of transaction activity in a certain accounting area, such as inventory, accounts payable, or sales. Thus, posting only applies to these larger-volume situations. For low-volume transaction situations, entries are made directly into the general ledger, so there are no subledgers and therefore no need for posting.

For example, ABC International issues 20 invoices to its customers over a one-week period, for which the totals in the sales subledger are for sales of $300,000. ABC’s controller creates a posting entry to move the total of these sales into the general ledger with a $300,000 debit to the accounts receivable account and a $300,000 credit to the revenue account.

Posting is also used when a parent company maintains separate sets of books for each of its subsidiary companies. In this case, the accounting records for each subsidiary are essentially the same as subledgers, so the account totals from the subsidiaries are posted into those of the parent company. This may also be handled on a separate spreadsheet through a manual consolidation process.

Posting has been eliminated in some accounting systems, where subledgers are not used. Instead, all information is directly stored in the accounts listed in the general ledger.

When posting is employed, someone researching information in the general ledger must “drill down” from the account totals posted into the relevant general ledger accounts, and search in the detailed records listed in the relevant subledgers. This can entail a significant amount of additional research work.

From the perspective of closing the books, posting is one of the key procedural steps required before financial statements can be created. In this process, all adjusting entries to the various subledgers and general journal must be made, after which their contents are posted to the general ledger. It is customary at this point to set a lock-out flag in the accounting software, so that no additional changes to the subledgers and journals can be made for the accounting period being closed. Access to the subledgers and journals is then opened for the next accounting period.

If posting accidentally does not occur as part of the closing process, the totals in the general ledger will not be accurate, nor will the financial statements that are compiled from the general ledger.

Steps for Balancing Ledger Account

• First of all, calculate the totals of debit and credit columns separately on a rough sheet to avoid mistakes. Find out the difference between the heavier total and lighter total by subtracting the lower from higher. The difference is called a Balance amount.
• If the total of the debit side is heavier than that of the credit side, the balance is called as “Debit Balance” and is written on the credit side (the side with lower amount) of that particular account as “By Balance c/d” or “By Balance c/FD”. Here, c/d means carried down and c/FD means carried forward.
• Similarly, if the total of the credit side is more than that of debit side total, the balance is called “Credit Balance”. The difference amount is written on the debit side of the account as “To balance c/d” or “To balance c/fd”
• Once we get the heavier total it should be written in both the columns’ total. Draw double lines across the total below the amounts which indicates the account is closed and balanced.
• Last year’s closing balance is the opening balance of the current year. So, if there is debit it should be shown on the debit side of a particular account as “To Balance b/d” or “To Balance b/fd”. Here, b/d means brought down and b/fd means brought forward.

Note: Nominal accounts are not balanced; the balances are transferred to profit and loss account.

Posting the entries from day books to ledger is very important work. An accountant must keep in his mind the following rules while posting the entries:-

1. Entries must be posted from the day books or journal only.
2. Posting of the entries must be date wise.
3. Date of entry in day books must be the date of entry in ledger.
4. All amounts shown in debit side in journal must be posted in debit side of a particular account. In ‘particulars’ column of ledger, the name of the other account as shown in journal, relating to same entry, must be written and the account head must start with ‘To’.
5. All amounts shown in credit side in journal must be posted in credit side of a particular account. In ‘particulars’ column of ledger, the name of the other account as shown in journal, relating to same entry, must be written and the account head must start with ‘By’.
6. After the entry, page number of journal from where the entry is posted, must be written in L/F column of account and the page number of ledger account must be written in L/F column of journal or day book.
7. Then the balancing of the ledger should be done. Balancing is may be done as running or can be done after doing the totals of debit and credit side. If the total of debit side is more than credit side then the balance should be shown as debit balance in balance column and if the total of credit side is more than the total of debit side then balance should be shown as credit balance in balance column. If the totals of debit and credit sides are equal then the balance should be shown as ‘nil’ in balance column.