Ledger Posting

Learning Outcome
► Ledger

► Advantages of Ledger

► Difference between Journal and Ledger

► Problems on Ledger

2
 LEDGER
It is the book which contains various accounts. It is necessary to gather
all transactions of a period in one place relating to a particular subject –
a person, an asset, a liability, a class of expense, an income etc

The entire group of accounts is kept together in an accounting record

called a general ledger.
Ledger is a book with various accounts (Real, Personal and Nominal
Accounts), each account on a separate page, that gives the details of the
different transactions and its summary.
i. All personal accounts would show how much money the business
enterprise owes to his creditors and the amounts it can recover
from its debtors.
ii. The real accounts would show the value of properties eg.,building,
machinery and also position of stock ,bills receivables etc.
iii. The nominal accounts would show the sources of income, eg.,
sales, commission etc and also the amount spent on various items
or heads of expenses eg. salaries, rent etc
3
“Posting” means transferring the debit and credit items from Journal to their respective
accounts in Ledger.

ADVANTAGES
•Transactions relating to a particular person, item or heading of expenditure or income are
grouped in the concerned account at one place.
•When each account is periodically balanced it reflects the net position of that account.
•Ledger is the stepping stone for preparing Trial Balance – which tests the arithmetical
accuracy of the accounting books
•Since the entries recorded in the journal are referenced in to ledger the possibility of
defalcations are reduced to the minimum
•Ledger is the destination of all entries made in journal or sub- journals
•Ledger is the "store-house" of all information which subsequently is used for preparing
final accounts and financial statements.

4
Sl. Points of
Journal Ledger
No. Distinction
Journal is a book of Ledger is a book of second
(i) Nature
primary entry entry.
In Journal, transactions
Basis of Here transaction are
(ii) are recorded on the
Recording recorded from the journal
basis of voucher
Here transactions are Here transactions are
Manner of recorded in recorded on the basis of
(iii)
Recording chronological order i.e. ‘account heads’ i.e.
date wise analytical order
Every entry in the
Posting in the Ledger is not
(iv) Narration journal is followed by a
followed by any narration
narration
It provides information in a
Format of It provides information
(v) summarized and classified
Information in scattered form
form
5
Features of Ledger accounts:
‘T’ shaped form of Ledger Account has the following features:

(a) Two sides: A Ledger Account has two sides, namely Left hand and
Right hand side. Left hand side is called the Debit side while the right hand
side is called the Credit side.

(b) Recording of two aspects: Posting is made on the debit side of the
ledger account which has been debited in the journal and the account which
has been credited in the journal is posted on the credit side of the ledger
account

(c) Balancing: Each account in the ledger is balanced independently. This

is done by ascertaining the difference between the total of the Debit side
and total of the Credit side.

6
7
 Steps in ledger posting:
❖ Separate account is to be opened in the ledger. All transactions
related to that account, debit as well as credit are to be posted in
concerned account, so that net position can be ascertained.

❖Enter the date of transaction on the debit side of the relevant

account.
❖The titles of the accounts to be credited and debited are entered in
the particulars column. The account to be credited is preceded by
the word ‘To’ and the account to be debited is preceded by the
word ‘By’.

❖In Journal Folio (J.F.) Column is meant for writing the page
number of the journal on which the journal entry is passed.

❖Amount column represents the amount mentioned in the journal

8

against the title of the account under consideration.

 Dr. Cr.
Date Particulars L.F. Amount (Rs.) Amount (Rs.)

2020 Goods Account Dr. 8 5000

April 4 To Cash Account 8 5000
(Being goods purchased for cash)

2020 Cash Account Dr. 8 3000

April 6 To Ali & Co 8 3000
(Being cash received from Ali &
Co)

2020 Cash Account Dr. 8 4000

April 8 To Goods Account 8 4000
( Being cash sales made)

2020 Praveen Dr. 9 2000 1900

April 9 To Bank Account 9 100
To Discount Account 9
(Being cheque issued for Rs. 1900
to Praveen and discount allowed
by him Rs.100) 9
 Goods Account

Date Particulars J.F. Amou Date Particulars J.F. Amount

nt (Rs.)
(Rs.)
2020 2020
Apr.4 To Cash Account 20 5000 Apr.8 By Cash 20 4000
Account

Cash Account
Date Particulars J.F. Amount Date Particulars J.F. Amount
(Rs.) (Rs.)

2020 2020
Apr.6 To Ali & Co 20 3000 Apr.8 By Goods A/c 20 5000
8 To Goods
20 4000
A/c

10
 Ali and Co.
Date Particul J.F. Amount Date Particulars J.F. Amount
ars (Rs.) (Rs.)
2020
Apr.6 By Cash 20 3000
Account

Praveen

Date Particulars J.F. Amount Date Particulars J.F. Amount

(Rs.) (Rs.)
2020
Apr.9 To Bank 20
1900
20
To Discount 100

11
 Discount Account

Date Particular J.F. Amount Date Particulars J.F. Amount

s (Rs.) (Rs.)
2020 By Praveen 20 100
Apr.9

Bank Account
Date Partic J.F. Amount Date Particulars J.F. Amount
ulars (Rs.) (Rs.)
2020
Apr.9 By Praveen 20 1900

12
Enter the following transaction in to journal and post in to ledger

Jan-1 Assets are cash in hand Rs.2200, Plant &

Machinery Rs.5000, and liability towards Mr. Amit
Rs.2000.
Jan-2 Sold goods by cash to Ram Rs.1000.
Carriage outward paid Rs 50
Jan-3 Sold goods to Shyam Rs.2000.Carriage outward paid
Rs.100
Jan-4 Goods returned by Shyam Rs.140
Jan-5 Sold goods by cash Rs.80
Jan-6 Payment received from Shyam Rs.1200
Jan-7 Paid to Mr. Amit Rs 2000.
Jan-8 New plant and machinery purchased for Rs 2000

13
Q: Mr Robert commenced business on 1st January, 2019 with a capital of
$100,000 in cash. On the same date he opened the bank account in ADCB
and deposited $20,000. During the month of January 2011 the following
transactions took place:

Jan 1 Bought goods for cash 70,000

2 Sold good to Steve Co.(Credit) 38,000
15 Sold goods for cash 9,000
21 Steve co. paid by cheque 35,000
22 Stationery bill paid by chq 2,000
22 Telephone bill by cash 500
31 Paid rent by cash 2,000
Paid salaries by cash 3,000
Withdrew cash personal use 5,000

Required:
Make journal entries for the transactions and post them to ledgers.

14
Q. Journalise the following transactions and prepare ledger accounts :
July 1 Satya commences business with cash Rs 2,00,000, Furniture
Rs1,00,000,Buildings Rs 7,00,000 and Machinery Rs
1,50,000,Liabilities Rs 3,40,000
July 2 Bought goods from Kapoor and Sons Rs 10,00,000
July 4 Deposited into Bank Rs 50,000
July 5 Sold goods to Gopal Rs 50000
July 6 Gopal paid Rs 48500 in full settlement
July 7 Received From Gaurav a fifty rupee note and gave him the change
for it.
July 8 Paid rent by cheque Rs 2800
July 9 Old furniture sold Rs 5000
July 10 Withdrawn for personal use goods Rs 3000, Cash Rs 25000

15
Objective Questions:
True/False
1. The foundation of the accounting process is ledger.(True)
2. Ledger is a book containing all the accounts of a business enterprise.(True)
3.The process of recording in the ledger is called:
(a) Journalizing (b) Posting
(c) Narrating (d) None

4.A ledger:
(a) contains only asset and liability accounts.
(b) should show accounts in alphabetical order.
(c) is a collection of the entire group of accounts maintained by a company.
(d) is a book of original entry.

5. Main objective of preparing ledger account is to _________

1 Ascertain the financial position
2 Ascertain the profit or loss
3 Ascertain the profit or loss and the financial position
4 Know the balance of each ledger account
16
6. If the total of the debit side of an account exceeds the total of its credit side,
it means
1 Credit Balance
2 Debit Balance
3 Nil Balance
4 Debit and Credit Balance

7. The ledger account is prepared in ______________ format.

1U
2T
3V
4 Vertical

8. If the owner’s equity is Rs 98,765 and total assets Rs 9,98,877 what will be
the total liabilities.(Ans.Rs 9,00,112)

17
References:

1. Maheshwari, S.N., Maheshwari, S.K., Financial Accounting, 10th

ed, Vikas Publishing House.

2. Tulsian, P.C. , Financial Accounting, S. Chand &Co Ltd , India.

3. Gopal,C,R., Accounting for Managers,1st ed, New Age

International Publishers

4. Monga,J.R., Basic Financial Accounting, 20th ed,Scholar Tech

Press,

18