Bookkeeping: Posting Journal Information to the Appropriate Accounts
When bookkeepers close their books at the end of the month, they summarize all the journals — that is, they total the columns and post the information to update all the accounts involved.
Posting journal pages is a four-step process in bookkeeping:
Number each journal page at the top if it isn’t already numbered.
Total any column that’s not titled General Debit or General Credit.
Any transactions recorded in the General Debit or General Credit columns need to be recorded individually in the General Ledger.
Post the entries to the General Ledger account.
Each transaction in a General Credit or General Debit column must be posted separately. You just need to post totals to the General Ledger for the other columns in which transactions for more active accounts were entered in the General journal. List the date and journal page number as well as the amount of the debit or credit, so you can quickly find the entry for the original transaction if you need more details.
The General Ledger account only shows debit or credit (whichever is appropriate to the transaction). Only the journals have both sides of a transaction.
In the PR column of the journal, record information about where the entry is posted.
If the entry to be posted to the accounts is summarized and totaled at the bottom of the page, you can just put a check mark next to the entry in the PR column. For transactions listed in the General Credit or General Debit columns, you should indicate an account number for the account into which the transaction is posted. This process helps you confirm that you’ve posted all entries in the General Ledger.
Posting to the General Ledger is done at the end of an accounting period as part of the process of closing the accounts.
The example shows a summarized journal page, specifically the Cash Receipts journal. You can see that entries that are listed in the Sales Credit and Cash Debit columns on the Cash Receipts journal are just checked. Only one entry was placed in the General Credit column, and that entry has an account number in the PR column:
Summary of Cash Receipts journal entries after the first five days.
As you can see in the figure, after summarizing the Cash Receipts journal, there are only four General Ledger accounts (General Credit, Accounts Receivable Credit, Sales Credit, and Cash Debit) and three customer accounts (S. Smith, J. Jones, and P. Perry) into which you need to post entries. Even better, the entries balance: $2,900 in debits and $2,900 in credits.
Accounting Glossary
accounting equation
The equation Assets = Liabilities + Equity, which demonstrates the two-sided nature of accounting and is useful for explaining the concept of double-entry accounting (or double-entry bookkeeping).
Accounting Glossary
accounting period
The time period for which financial information is being tracked in a business, such as monthly, quarterly, or annually.
Accounting Glossary
accounts receivable
An account that records the amounts that customers owe to a business.
Accounting Glossary
adjusting entry
A correction made to a bookkeeping account that adjusts for accounting errors or other necessary changes at the end of the accounting period.
Accounting Glossary
cash flows
Used to describe the source or sources of cash or how cash is used.
Accounting Glossary
Chart of Accounts
A list of all the accounts used by a business, including what types of transactions go into each account.
Accounting Glossary
debit
An accounting entry that increases an asset or expense account, and decreases a liability or income account.
Accounting Glossary
dividends
A portion of a company’s profits paid by share of common stock on a quarterly or annual basis.
Accounting Glossary
FASB
Financial Accounting Standards Board. FASB is the highest-ranking authority in the private (non-government) sector of the U.S. for making pronouncements on GAAP and for keeping accounting standards up-to-date.
Accounting Glossary
Federal Unemployment Tax
In the U.S., the fund that used to be known simply as Unemployment. Employers contribute to the fund, and states also collect taxes to fill their unemployment fund reserves. (The acronym FUTA means Federal Unemployment Tax Act.)
Accounting Glossary
fidelity bonds
A type of insurance — typically carried by employers for their employees — that helps guard against theft and reduce the risk of loss.
Accounting Glossary
FIFO
First-in, first-out. A method for costs of goods sold in which a business charges out product costs to cost of goods sold expense in the chronological order in which the goods were acquired.
Accounting Glossary
fungible
Describes a product that is interchangeable and virtually indistinguishable from another product.
Accounting Glossary
General Ledger
A summary of all of a business’s accounts and transactions.
Accounting Glossary
IASB
International Accounting Standards Board. The IASB (based in London) is the main authoritative accounting standards setter outside the U.S.
Accounting Glossary
Journals
The location in which bookkeepers keep records (in chronological order) of daily company transactions.
Accounting Glossary
LIFO
Last-in, first-out. A method for costs of goods sold that selects the last item you purchased first, and then works backward until you have the total cost for the total number of units sold during the period.
Accounting Glossary
LLP
Limited liability partnership. A legal structure that state laws offer to qualified professionals in which all the partners have limited liability.
Accounting Glossary
PC
Professional corporation. A legal structure that state laws offer to qualified professionals who otherwise would have to operate as an unlimited partnership liability.
Accounting Glossary
petty cash
A cash account that businesses keep on hand for unexpected expenses.
Accounting Glossary
revenue
Monies that are collected in the process of selling a company’s goods and services.
Accounting Glossary
salvage value
The amount that an asset is worth after it has been fully depreciated.
Accounting Glossary
statement of cash flows
A financial statement that summarizes a business’s cash inflows and outflows during an accounting period.
Accounting Glossary
transactions
Economic exchanges between a business or other entity and the parties with which the entity interacts and makes deals.
Accounting Glossary
worker’s compensation insurance
A type of insurance carried by employers that covers its employees in case they are injured on the job.
