What does posting mean?
The first step in accounting is journalizing transactions. When you put the entries into the journal, to figure out how much cash a company has or the balance in the Inventory account, you would have to go through a list of millions of these entries. To make it easier, you need a way of keeping track of it.
The way we do this is with the help of a bunch of accounts called the ledger. The general ledger summarizes all the transactions that have happened in a particular account. An example of a ledger account Electricity Expense is shown below.
So, what role does posting play here? Posting in accounting is a way of transferring entries from the journal into the general ledger accounts. To do so, the bookkeeper would summarize the journal entries for the period and post only the total for that period in the general ledger. Posting in accounting is usually done on a monthly or weekly basis or can be done as frequently as daily.
A step-by-step guide to posting in accounting
Now that you know what posting in accounting means, let’s go over the process of posting in more detail. You can transfer the entries to the general ledger using the format shown above. However, for the sake of making our explanation easier to understand, we are not going to use the formal format. Instead, we will turn to T-accounts.
Looking at the journal entry for January 15th, you can see that the company sold goods for cash. The two accounts affected by this transaction are Cash and Sales. To post this transaction to the general ledger, we would need to separately add a debit entry to the Cash account in the general ledger. Next, we will add a credit entry to the Sales account.
When using the T-accounts, we would generally just post the date and the amount debited or credited. A more formal posting in accounting would include also include a journal page reference number to make it easier to locate the original entry in the journal. Over time, each account will have more entries added to it. As you can see, posting in accounting is not a complicated process.