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LEDGER POSTING

The process of transferring debits and credits from the journal to the ledger account …

Prof. Madhu Iyengar

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Lesson Plan

1. Steps in ledger posting2. Balancing the ledger3. Cash Book- Three types4. Petty Cash book5. Subsidiary Books6. Journal Proper7. Caveats

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Steps in ledger posting

• If the account is real or personal , then opening balance has to be posted.

• For assets, on the debit side “To balance b/f” in the particulars column

• For liabilities an the credit side “By balance b/f should be written against the amount.

• Date should be entered • The title of the account should be entered in the particulars

column.• The corresponding number of the journal should be entered in

JF column• Amount should be mentioned in the amount column against the

title of the account.

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Ledger---Format

An example:26/05/09 Rs 1000 Cash received from Vinay

Cash A/c

Dr. Cr.

Date Particulars JF Amount(Rs)

Date

Particulars JF Amount(Rs)

26.05.09 To Vinay 1000

Vinay’s A/c

Date Particulars

JF Amount(Rs)

Date Particulars JF Amount(Rs)

26.05.09 By cash A/c 1000

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Balancing of ledger

• Balancing of an account is an important step towards preparation of final accounts.

• The debit and credit column of all accounts are made equal by balancing.

• If debit is greater than credit then the difference is placed on the credit side

• If credit is greater that debit then the difference is placed on the debit side

• The real and personal accounts are balanced and the balance is carried forward in the next accounting year

• Nominal accounts are not balanced, the total is transferred to trading and profit and loss account at the end of the year

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Cash Book

Cash book serves as a primary book as well as ledger.

Various types of cash book:

Single column

Double column

Three column

Multiple Column

Petty Cash book

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Subsidiary books

Purchases Sales Book Purchase Returns Sales Returns Bills Receivable Bills Payable Journal Proper

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Caveats

Books of business not of individual is written The business’ name shall never appear as account in

its books In the ledger accounts, the name of the same

account never appears The transaction is always to be looked from our

(business) perspective