Ledger Posting in Accounting

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Introduction of Ledger Posting

Ledger Posting in Accounting is a very important role in maintaining accounts books or record of the transaction. At the time of preparing accounts in any organisation(business), to prepare different ledger accounts and also to find balance in each account is very important.

Meaning of Ledger

Accounting is a process of recording financial transactions of the business. The objective of the organisation is to get useful information relating to business from the recorded entries. for example, details of total sales during the financial year, details of purchase, types and amount of expenses, types & amount of income, total liabilities & assets, profit & loss suffered etc. 

In view of the above information, separate accounts are prepared for the specific information from the accounting entries. The different types of accounts are prepared in a separate book, which is known as a Ledger Book.

Meaning of Posting

From journal books, a process of recording as per the rules of accounting, either on the debit or credit side of an affected account is known as posting.

Utility or advantages of Ledger

The purpose of accounting is not only limited to recording monetary receipts and payment. On the basis of the summary of accounts, proper decisions regarding the business policy can be taken. Necessary and useful information to an organisation as wells as different summaries can be easily and quickly obtained from the ledger. Thus the fulfilment of the main objects of accounting is possible with the help of the ledger only. Therefore ledger is known as King of Books.

Ledger becomes useful to get the following information

Capital Ratio: It gives information about how much capital is employed in the business.

Assets: Different types of assets are purchased in the business. It gives information about the number of different assets at the end of the year.

Receivable & Payables: It gives information about how much is the amount of receivable & payables at the end of the year in a business.

Expenses and Incomes: It gives the information of different expenses and incomes during the accounting year and also its total and individual amount.

Purchase & Sales: It gives the information for total purchases, total sales, total purchase return, total sales return and also outflow of goods other than sales during the accounting year.

Trial Balance Preparation: It helps to prepare a trial balance to get the information about the balances of all accounts from the ledger. 

Final Account Preparation: It gives the information about the different accounts of a ledger for the preparation of final accounts of a business at the end of the year.

Policymaking Decisions: It helps an organisation by giving useful and important information from ledgers for policy-making decisions.

Statistical Information: It gives useful statistical information from accounts and also points out statistical or principal mistakes.

Indexing of Ledger

All accounts arising from business transactions are maintained in a ledger. There are numerous such accounts. At the time of the posting process too much time wasted to find out which account is on which page.

Therefore, for the sake of convenience at the beginning of the ledger itself a list of all accounts is maintained, which is known as indexing or exponent of a ledger. Such a list is prepared alphabetically. Here each page is serially numbered and therefore against each account. Its page number is shown and because of this any account can be found from the ledger quickly and easily. for example

Name of Account Ledger Page Number
Sohan’s A/c 1
Mohan’s A/c 4
State Bank of India’s  55
Telephone & Mobile Exp. A/c 65

Form of Ledger

The form in which a ledger book is to be maintained depends upon the business requirement capacity to afford the same and business facilities. There are three forms of the ledger that are in practice

  1. Bound Book Ledger: Generally most of the organisation or small businesses prefer these types of ledger. This type of ledger is the overall less expensive and easy form viewpoint of preservation. This ledger is in the form of a bound book. At the beginning of it, the index is given and thereafter each page is serially numbered. As and When required, a new page can’t be added in this type of ledger because it is a book in bound form.
  2.  Loose Leaf ledger: This type of ledger is in a filed form in between two thick paper covers or in between two metals sheets. The structure is connected with a special type of lock. As with the lock system, It ensures the facility with safety. Here each page is serially numbered. Here, a trader can increase or decrease the number of pages according to his requirements.
  3. Card Ledger: This form of a ledger is a safe form with conveniences. Here for each account instead of a page, a card is used. All these cards are arranged with a steel bar. All the cards are preserved in special steel or wooden cabinet. Of course, overall it is an expensive form. Here We can increase or decrease the number of cards as per their requirements. In this form for indexing is separate cards are required to be arranged.

But nowadays a computer is widely increasing in accounting entries and ledger.

Process for Posting

There are two types of process of posting.

(1) Posting of Journal entries 

Journal entries are passed in the book of account for the financial transaction of a business. Journal entries are classified into two parts, Simple journal entry & combined journal entry. A simple journal entry is affected only two accounts out of which one gets a debit effect and the other one gets a credit effect. In the combined entry, three or more than three accounts are affected. In this type of journal entry either on the debit or credit side, more than one affected accounts are there. Sometimes on both the debit and credit side, there are more than one affected accounts because this posting process of combined entry requires more care.

(2) Posting from Daybooks

Each one keeps the day book as per their business requirements. Generally, the following day books are used in a large business. for example, Cashbook, Purchase book, Sales book, Purchase & sales return book, Bills receivable & payable books & Journal Book. There are large scale business may keep their daybooks with different columns as per their requirements.


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