Ledger Posting: Meaning, Features and Procedure of Ledger Posting

The process of accounting contains several important steps. Firstly, we have to record all transactions in a specific format in an accounting journal. Following that, we have to transfer these individual entries to ledger accounts. Accountants refer to this process as ledger posting. Let’s take a look at what ledgers are and how we post entries in them.

Ledger Posting

Meaning of Ledgers

A ledger is basically a record in which we record transactions of a specific nature. Every ledger relates to a particular person, asset, expense or revenue. For example, most common ledgers show transactions relating to cash, bank, land, building, inventory, salary, capital, debts, etc.

The most important function of ledgers is to sort individual transactions into separate individual accounts. They make it easy for us to group all transactions of similar nature and same subject matter into individual groups.

This, in turn, enables us to carry forward the process of accounting smoothly and effectively. The process by which we can do this is called ledger posting.

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Features of Ledgers

Every ledger contains two sides: the left side shows debit entries while the right one depicts credit entries. Abbreviations of “Dr.” and “Cr.” on the top of the left and right sides respectively helps us identify them easily.

Secondly, every ledger relates to a particular person, asset, income or expense. Therefore, every transaction affects some ledger regardless of whether it is a real, personal or nominal transaction.

Thirdly, we can identify each ledger from the name of the concerned account. In order to do this, we have to write the name of each account on the top right in the middle.

Each side of a ledger contains the following columns:

i) Date: This column basically depicts the date on which that transaction took place.

ii) Particulars: This shows the name of the relevant account which the transaction effects.

iii) JF (Journal Folio): This column denotes the page number on which the journal entry was passed.

iv) Amount: This column basically shows the amount associated with every entry.

Procedure of Ledger Posting

Ledger posting means nothing but transferring debit and credit items from journal entries into their respective accounts. In order to do this, we must first ensure that every single item contains a separate account.

While posting entries, the account which has been debited in the journal entry has to be debited in the ledger as well. However, we have to mention the name of the other account.

Similarly, the account which is credited in the journal entry is recorded on the credit side of the ledger but the reference is given to the other account in the entry.

It is customary to mention the words “To” and “By” as a prefix before debited and credited accounts respectively.

Balancing Ledgers

Just like every other accounting record, the grand total of debit and credit sides of ledgers must always be equal. However, this might not always be the case. Sometimes the debit side may exceed the credit side and vice versa.

In such cases, we have to balance the ledgers by recording the difference in the deficient side to make it equal. Whenever the debit side exceeds the credit side, we have to record the balance on the credit side. This ledger is now said to have a debit balance.

Similarly, if the credit side is greater, we record the balance on the debit side. The account now has a credit balance.

Solved Example on Ledger Posting

Record the following journal entry into a ledger:

Date	Particulars	LF	Dr. Amt. (Rs)	Cr. Amt. (Rs)
	Cash A/c		5,00,000
	To Capital A/c			5,00,000

(Being capital introduced in cash)

In this transaction, the Cash A/c comes on the debit side, while Capital A/c comes on the credit side. Therefore, we will record it in the Cach A/c on the debit side but by mentioning Capital A/c.

Similarly, in the Capital A/c, we will record it on the credit side but we will mention Cash A/c.

The necessary ledgers will look like this:

**Cash A/c**
Date	Particulars	JF	Amt. (Rs)	Date	Particulars	JF	Amt. (Rs)
	To Capital A/c		5,00,000		By Balance c/f		5,00,000
	TOTAL		5,00,000		TOTAL		5,00,000

**Capital A/c**
Date	Particulars	JF	Amt. (Rs)	Date	Particulars	JF	Amt. (Rs)
	To Balance c/f		5,00,000		By Cash A/c		5,00,000
	TOTAL		5,00,000		TOTAL		5,00,000