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Posting Accounting Definition Process Of Posting With Example

August 29, 2023
Bill Kimball

Also termed as fictitious account relates to accounts of expenses, income and profit or losses. Many types of transactions relating to expenses( wages, salary, rent etc), discount, income and commission are carried in a business. Therefore, the rule becomes debit all expenses and losses while credit all incomes and gains. Posting accounting definition refers to the concept of posting in accounting. It explains the transfer of amount from journal to ledger or balance of various accounts to the general ledger to make it simple to understand. With an accounting software like QuickBooks, you can process more transactions in less time.

The benefit of the general ledger is that you can review every journal entry that impacted a particular account. Unfortunately, creating a general ledger using Excel is time-consuming. And a large number of data entries may increase the risk of error. Many small business owners use an Excel accounting template when they start operations. Most people are familiar with Excel, and using the application is straightforward. But keep in mind that Excel bookkeeping is not a solution for a growing business.

what is posting in accounting

The data is segregated on basis of type, into accounts for liabilities, assets, revenue, expenses and owner’s equity. The format has two sides namely debit and credit with the date of transaction, account by which it is debited or credit, the JF note and respective amounts. Net income is the net impact of all revenue and expense transactions for the month. When you post the net income balance to equity in the balance sheet, the revenue and expense accounts are adjusted to zero.

Supporting application materials

Posting only transfers the total balance in a subledger into the general ledger, not the individual transactions in the subledger. An accounting manager may elect to engage in posting relatively infrequently, such as once a month, or perhaps as frequently as once a day. Starting from the basics, Accounting refers to the procedure of recording the financial transactions related to the business. It includes summarizing, analysing, interpreting and communicating the results to regulators, agencies, stakeholders and tax collection entities.

what is posting in accounting

The consolidation of accounts may also be required in case of posting. But posts on social media misrepresent the accounting errors, falsely claiming that the Pentagon inadvertently sent an additional $6.2 billion to Ukraine. The Pentagon discovered accounting errors that overestimated how much it had spent on aid for Ukraine by $6.2 billion over two years. But social media posts misinterpreted the discovery to falsely claim the U.S. “lost” $6.2 billion or laundered money through Ukraine. The $6.2 billion will be added to future aid packages for Ukraine.

Global accounting standards

For low-volume transaction situations, entries are made directly into the general ledger, so there are no subledgers and therefore no need for posting. Also, Ledger posting segregates the nature of accounts and their balances which helps in making the financial statements i.e trial balance, profit and loss account and balance sheet. Noting the monetary transactions and passing journal entries are the first two steps of accountancy.

  • Once you have an accurate trial balance, you’re ready to generate financial statements.
  • Therefore, the total calculates by deduction of credit balance from debit, providing the figures for further analysis or financial statements.
  • Journal entries include debits and credits that determine where to post a particular dollar amount in the entry.
  • Make the switch to accounting software, so you’re ready to take on more business.

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Therefore, the total calculates by deduction of credit balance from debit, providing the figures for further analysis or financial statements. Posting accounting definition enables the company to know the balance of each account on a particular date. Also, this creates a crystal understanding of account balances and lessens the efforts made in finding from the individual ledger accounts.


When a financial transaction occurs, companies record it in the books of prime entry. As these transactions occur, companies accumulate them and post the cumulative amount in the general ledger. The next step for posting accounting definition process is the recording of credit and debit amounts. The debit amount increases the asset accounts of the balance sheet like inventory, cash, etc, and increase expense accounts like salary, marketing, etc while it goes vice-versa with liability accounts. It consists of the date, the name of accounts affected LF note (that tells the page number of the ledger), debit and credit amounts.

The next step includes calculating the overall figures of both sides ( debit and credit) for each ledger account. Postin accounting definition gives an updated status of all the ledger balances. Moreover, it aids in tracking the balances on the records of how it has changed over some time.

As your business grows, you’ll need to post more accounting transactions. And bookkeeping in Excel can lead to errors and inefficiency. Accounts payable, for example, is a liability account that increases with a credit. In entry No. 2, accounts payable decreases with a debit when Centerfield pays cash to remove a payable balance.

Definition of Posting Accounting

IFRS 15 introduced a comprehensive and robust framework for the recognition, measurement and disclosure of revenue that applies to a wide range of transactions and industries. A balance sheet formula connects the balance sheet components. A balance sheet reports your business’s assets, liabilities, and equity as of a specific date. They’re using an Excel bookkeeping template to manage the business. The first thing they’ll need to do is create a chart of accounts.

what is posting in accounting

On the first day of the next month, the income statement accounts start with zero balances. Each account lists the journal entries that posted activity to the account during a particular month. General ledgers provide the date, journal entry, and the entry description, along with the debit or credit amount and the ending balance. The balance sheet formula (or accounting equation) determines whether you use a debit or a credit for a particular account. The balance sheet is one of the three basic financial statements that every business owner should analyse to make financial decisions. Business owners also review income statements and cash flow statements.

A company’s general ledger is a record of every transaction it posts throughout its lifetime, including all journal entries. Business owners and accounting professionals use the data in the general ledger to create financial statements. Use formulas to ensure that total debits equal total credits. Add a total formula that tracks the total dollar amount of debits and credits for all journal entries. Now, you’ve created your journal entry for your general ledger. The total dollar amount you post to each debit account must equal the total dollar amount of credits.

The financial statements represent a summary of business operations, cash flows and financial position over an accounting period. Posting in accounting refers to transferring accounting records to the general ledger. Most modern accounting systems perform this process directly. However, it follows a similar step-by-step process at the base. While posting, companies must also ensure some criteria, some of which include the ones given above.