Ledger Posting and Trial Balance

Ledger Posting

Ledger posting is very important part of accounting system. As we know that to reach to any financial result, we have to go through so many process. For example, first of all, we must know to maintain proper account records. To maintain proper account records, one must know proper accounting system. And proper accounting system includes following important steps to be followed:-

1. To prepare the vouchers.
2. To enter the vouchers in to different type of day books.
3. Posting the entries from day books to ledger.
4. Totaling and balancing of ledgers.
5. To prepare the trial balance
6. To prepare Trading Account, Profit & Loss Account and Balance Sheet.

What is ledger?:- In brief, Ledger is a summary of all accounts heads maintained by the business firm.

How to post the entries from day book to ledger:- Following  are the procedures of posting of entries from day books to ledger:-

1. First of all, we have to open the accounts heads in ledger books. Ledger books contains similar type of pages having serial numbers. It also contains an index in beginning of ledger books. The name of account head is written in index of ledger and the same account head is written on any page of ledger. Then, the page number of that particular account head is written against that account head in index.

For Example:- Suppose, we want to open a Conveyance Expenses Account head in ledger. In this case, first, we shall write Conveyance Expenses Account in Index of ledger under ‘C’ alphabet and then we shall choose any page in ledger and on that page also, we shall write Conveyance Expenses Account. The page number, on which this Conveyance Expenses Account is written,  should be written in index of ledger against Conveyance Expenses Account.  So, when ever, we want to see the details of conveyance expenses account in ledger, first we shall open the index under alphabet ‘C’ then we will find out the page number of Conveyance Expenses Account and reach to particular page very easily. Same way, any number of accounts heads can be opened.

2. As we know that the ledger contains the columns like date, particulars, ledger folio, amount Dr., amount Cr. and balance Dr. or Cr. There is simple procedure of posting the entries from day book to ledger. All entries relating to the accounts heads, which are debited, should be posted to debit side of ledger account. Similarly, the credit entries of any account head should be posted in to credit side of that particular ledger account. We can understand this system easily with the following example:-

Example:- Suppose, we prepared one Cash Payment Voucher like this:-

Date: 15.07.2019

Debit: Conveyance Expenses Account    Rs.800/=

Credit:- Cash Account                                Rs.800/=

(Being cash paid to Mr. Vinod for conveyance for the m/o June,2019)

First of all, the above voucher will be written in Cash Day Book in payment side.

From the above entry, we find that the Conveyance Expenses Account is being debited. Therefore, In ledger, under Conveyance Expenses Account head, we shall write this amount in debit side. In other words, the amount of above entries will be shown in debit side of Conveyance expenses Account.

Trial Balance

A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company’s bookkeeping system are mathematically correct.

Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers. However, this does not mean there are no errors in a company’s accounting system. For example, transactions classified improperly or those simply missing from the system could still be material accounting errors that would not be detected by the trial balance procedure.