Quick Review What are the steps involved in opening an account with a balance?

Chapter 7: Section 2 The Posting Process

Section Concepts What you will learn? Why it’s important? The purpose and importance of posting How often a business posts transactions The six steps in the posting process How to compute an account balance How to show an account with a zero balance Why it’s important? Posting brings the records of the business up-to-date. If a business did not post its transactions, the balances in ledger accounts would not be current.

The Posting Process Transferring information from the general journal to individual general ledger accounts 4th step in the accounting cycle Ideally happens daily to ensure up-to-date information

Posting General Journal Utilities Repairs Revenue Salaries Posting organizes business transaction details into proper accounts Summarizes all business transactions so managers can see the cumulative effects on accounts

Posting to General Ledger Overview

Posting Steps 1. enter the date of the journal entry 2.The description column is left blank, usually 3. Record in the “Post Ref” column where this transaction was journalized A letter for the journal and the journal page # General journal—G, page 1 G1

Posting Steps 4. enter the debit amount in the debit column of the ledger account 5. Compute and record the new account balance in the appropriate balance column. Every amount posted will either increase or decrease the balance of that account

Posting Steps 6.Return to the journal and record in the “Post Ref” column the ledger account number of that account. Be sure it is entered on the same line as the debit entry 7. Repeat steps 1-6 for the credit part of the entry.

Posting Process

Computing a New Account Balance Each time you post to an account-you calculate the new balance Debits are added to debits Credits are added to credits Debits and credits are subtracted

When the existing account balance is a debit and: The amount posted is a debit, ADD the amounts The amount posted is a credit, SUBTRACT the amounts

When the existing account balance is a credit, and: The amount posted is a debit, SUBTRACT the amounts The amount posted is a credit, ADD the amounts Refer to page 163 for an example

Showing a Zero Balance in a ledger Account A line should be drawn across the center of the column where the normal balance would appear. Refer to page 163 for an example

Thinking Critically Explain the purpose for posting. Explain the process of posting from a journal to a ledger.