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Lesson 08 Posting Transactions in The Ledger

Lesson 8 focuses on posting transactions in the ledger, which is a critical step in the accounting cycle. It covers the definition of a ledger, the classification of accounts, and the process of transferring journal entries to the ledger. Additionally, it includes examples of financial and non-financial transactions, as well as practice exercises to reinforce learning.

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7 views37 pages

Lesson 08 Posting Transactions in The Ledger

Lesson 8 focuses on posting transactions in the ledger, which is a critical step in the accounting cycle. It covers the definition of a ledger, the classification of accounts, and the process of transferring journal entries to the ledger. Additionally, it includes examples of financial and non-financial transactions, as well as practice exercises to reinforce learning.

Uploaded by

johncyrusss488
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lesson 8 Posting Transactions in the Ledger

(Accounting Cycle Step #3)


Subject Fundamentals of Accountancy, Business, and Management 01
Learning Objectives

At the end of this lesson, we should be able to:


• Identify the parts of a Ledger
• Transfer debit & credit amounts to the ledger
account; and
• Compute for the balance of each account
after posting entries to the ledger.
What is an Ledger?
• The ledger is also called the ‘Book of Final Entry’ because
all the balances in the ledger are used in the preparation of
financial statements.
• A general ledger is the ‘Reference Book’ of the accounting
system and is used to summarize transactions, and to
prepare data for basic financial statements.
• Posting means transferring the amounts from the journal to
the appropriate accounts in the ledger.
Classification of accounts in the GL:

1. Balance Sheet or Permanent Accounts (Assets,


Liabilities, and Owner’s Equity)
2. Income Statement or Temporary Accounts (Income
and Expenses)
The Accounting Cycle

1. Analysis of Business 3. Posting to the


2. Journal Entries 4. Trial Balance
Transactions Ledger

7. Financial 6. Adjusting Journal


8. Closing the Books 5. Worksheets
Statements Entries
Examples of financial transactions:
• Payment of salaries of employees
• Payment of electric, water, and telecommunication bills
• Received payment from customers
• Received payment from customers on account
• Payment for purchasing furniture, equipment, and supplies

Examples of non-financial transactions:


• Orientation of newly-hired employees
• Posting of advertisements in the city
• Awarding of recognition to the business
• Hiring and terminating of employees
• After recording transactions in the journal, the next step is
to transfer them to the general ledger. Every transaction
must be posted from your journal into the ledger (Posting).
• Calculate the running balance of each transaction in the
ledger account by adding if the amounts are in the same
column and subtracting if the amounts are in different
columns.
• • After all the transactions have been posted, the last
running balance will be the ending balance.
Let’s practice…
Mr. Yu opened a barber shop on Nov. 01, 20xx
by investing cash, P500,000.
Nov. 01 Cash 500,000
Yu, Capital 500,000
Page 1
Account: Cash Acct. No. 101
Date Description JR Debit Credit Balance
Nov. 01 1 500,000 500,000

Account: Capital Acct. No. 301


Date Description JR Debit Credit Balance
Nov. 01 1 500,000 500,000
Let’s try some more!
Practice Test: Identification
1. The book of original entry

Journal
2. The book of final entry

Ledger
3. The process of recording business
transactions in the journal in chronological
order before posting them to the ledger. It
is the 2nd step in the accounting cycle.

Journalization
4. The process of transferring journal entries
from the general journal to the general
ledger; the 3 step in the accounting
rd

cycle.

Posting
5. A visual representation of a ledger
account, shaped like the letter "T." It is
used to track increases and decreases in
an account’s balance, helping in the
posting process.

T-Account
6. An index or listing of all the accounts used
by a business.

Chart of Accounts
7. Journal Entries : Journal
Posting : ____________

Ledger
8. A type of journal entry that involves
only one debit entry and one credit entry.

Simple entry
9. A type of journal entry that involves
multiple debits or credits.

Compound entry
10. This column in the ledger is used to
record the page number of the journal
where the entry was originally recorded.

JR, or Journal Reference


11. This is the term used to describe the
difference between the total debits and
total credits in a ledger account.

Account Balance
12. This type of ledger is used to record
detailed transactions of a specific account,
such as accounts receivable or accounts
payable.

Subsidiary Ledger
13. This is the process of verifying the
accuracy of the ledger by ensuring that the
total debits equal the total credits.

Trial Balance
End of lesson 8…

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