What is a Posting?
An accounting posting is the transfer of entries in the subsidiary books of account or journals to the appropriate general ledger accounts and is part of the double entry bookkeeping system.
A posting is normally carried out following the preparation of a journal entry from the underlying transaction information, and is step three in the accounting cycle.
The posting references in a journal are normally to documents supporting the transaction and the general ledger account codes.
Rules of Posting in Accounting
While each entry in the ledger is different general rules of posting apply in most cases.
- Enter the date and year of the transaction in the date column.
- Debit a ledger account and make reference to the account credited.
- Credit a ledger account and make reference to the account debited.
- Enter a reference to the original book of prime entry (subsidiary book).
Computerized Accounting System Postings
Postings can be simplified by using accounting software which can automatically update the appropriate account in the general ledger.
Accounting software is usually supplied in modular format allowing a business to select the relevant accounting functions it requires to operate.
So for example a small business might operate a sales invoicing module. When an invoice is issued to a customer through the module the computerized accounting system will automatically create a posting which serves to debit the customer account in accounts receivable and credit the sales revenue account in the general ledger.
Likewise if the business operates an accounts payable module, when a purchase invoice is received from a supplier and posted as a credit to the module the system will automatically create a debit entry to the appropriate expense account in the general ledger.
Depending on the software used, similar modules exist to allow automated postings for payroll, inventory control, purchases order processing, sales order processing, fixed assets, job costing and bill of materials.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.