Posting to the General Ledger

Overview

• What you’ll learn: How to post journal entries to the general ledger, maintain running balances, cross-reference between journal and ledger, and understand the ledger’s role in the accounting system.
• Prerequisites: Lesson 1 — Recording Transactions: Journal Entries
• Estimated reading time: 15 minutes

Introduction

The Grand Historian records: If the journal is the chronicle — recording events in the order they occur — then the ledger is the encyclopedia, organizing those same events by subject. The journal tells you what happened on January 15th; the ledger tells you everything that has ever happened to the Cash account. Both records contain the same information; they simply arrange it differently, and both are indispensable.

Posting is the process of transferring entries from the journal to the ledger. It is the bridge between chronological history and organized knowledge.

The General Ledger

The general ledger is a collection of all accounts used by the business. Each account is a separate page (or record in a database) that accumulates all debits and credits affecting that account.

Standard Ledger Account Format

This is the Cash account ledger. The “Ref” column shows which journal page each entry came from, creating a cross-reference trail that auditors can follow.

The Posting Process

For each line in a journal entry:

1. Find the account in the general ledger.
2. Enter the date of the transaction.
3. Enter the amount in the debit or credit column.
4. Calculate the new running balance.
5. Record the journal reference (e.g., J1, J2) in the ledger’s reference column.
6. Record the ledger account number in the journal’s reference column (completing the cross-reference).

Example: Posting a Journal Entry

From the journal:

  Jan 10  Cash                    3,500
              Service Revenue              3,500
          (Performed consulting services)

Post to two ledger accounts:

Cash Account (1010):

Service Revenue Account (4010):

Cross-Referencing

The cross-reference system serves two critical purposes:

• Audit trail: Any entry in the ledger can be traced back to its original journal entry, and vice versa.
• Posting verification: If the journal reference column is empty, the entry has not yet been posted. If it contains an account number, posting is complete.

Running Balances

Unlike T-accounts (which simply list debits and credits), ledger accounts maintain a running balance after each transaction. This provides instant visibility into the current state of any account.

• For accounts with debit normal balance (assets, expenses): Balance = Previous Balance + Debits – Credits
• For accounts with credit normal balance (liabilities, equity, revenue): Balance = Previous Balance + Credits – Debits

The Ledger in Modern Systems

In manual bookkeeping, posting is a laborious, error-prone process. In modern ERP systems like iDempiere, posting is automatic — the moment a journal entry is recorded, the system updates all affected ledger accounts instantly. The cross-reference is maintained by the database, and running balances are calculated in real time.

However, understanding the manual process is essential because:

• It reveals the logic behind what the software does automatically.
• It helps you diagnose errors when the system produces unexpected results.
• It is tested extensively on professional certification exams.

Key Takeaways

• Posting transfers journal entries to the general ledger, reorganizing data from chronological to account-based.
• Each ledger account maintains a running balance updated with every posting.
• Cross-referencing between journal and ledger creates an audit trail.
• Modern ERP systems automate posting, but understanding the manual process is essential for professional competence.

What’s Next

In Lesson 3, you will learn about adjusting entries — the critical end-of-period entries that ensure revenue and expenses are recorded in the correct accounting period.