Posting Journal Entries to the

Ledger
• Journal is just a chronological record of all
business transactions.
• But, if we want to know the net effect of
various transactions affecting an item, we
need to go through the whole journal.
• It takes time. Y
• ou know that time is money in business.
• Therefore, to overcome this difficulty, we
maintain another book called ‘Ledger.’
• Ledger is a book which contains, in a
summarized and classified form, a complete
record of all transactions. Since it contains
complete information about various
transactions, it is called the ‘Principal Book’.
Final accounts of a business are prepared on
the basis of ledger.
The proper form of each account maintained in
ledger is given as follows:
Rules for Posting into Ledger:
• Posting into ledger is made from journal entries passed
in the journal.
• It is important to mention that every journal entry will
have to be posted into all accounts which have been
debited and credited in the journal entry.
• Going back to Illustration I, for goods purchased for
cash.
• Purchases Account is debited and Cash Account is
credited.
• While posting this entry into ledger, it will be posted
both in Purchase Account as well as in Cash Account.
Posting will be made on debit side of the
account which has been debited in the journal
entry and, similarly, on credit side of the
account which has been credited in the
journal, entry.
Remember, the postings into ledger account will
be made in chronological manner (date-wise).
In the particular column, the name of the
account (preceded by ‘To’) credited in the
journal entry will be written.
Similarly, while posting on the credit side of the
account, we shall write the name of the
account (preceded by ‘By’) debited in the
journal entry.
The amount of journal entry will be shown in
the amount columns of both accounts and
finally accounts will be balanced.
Let us again take Illustration 1 and study how
the posting of journal entries is made in the
ledger.
Balance in an account signifies the net result of
all transactions relating to it during a given
period of time.
For example, the balance in personal account
will indicate whether the business owes to the
party or the party concerned owes to the
business.
The debit balance in a personal account i.e.,
excess of debit total over its credit total,
shows that the party concerned owes to the
business.
On the contrary, in case of credit balance in
personal account, it indicates that the
business owes to the party concerned.