Definition: Posting is the act of moving debit and credit account balances from individual journals to their corresponding ledgers. These ledgers are later used to create a trial balance used to generate the income statement, balance sheet, and other financial statements.
What Does Posting Mean?
What is the definition of posting? In this step of the accounting cycle an accountant takes total credits and debits recorded in categorized sub-ledgers and posts them into the general ledger to be used for official accounting statements.
As business transactions occur during the year, they are recorded by the bookkeeper with journal entries. After an entry is made, the debit and credit are added to a T-account in the categorized journal. At the end of a period, the T-account balances are transferred to the ledger where the data can be used to create accounting reports.
This sounds like a lot of work, but it’s necessary to keep an accurate record of business events. You can think of this like categorizing events into specific and broader relevant groupings. For example, journals are transferred to subsidiary ledgers then transferred to the general ledger.
Let’s take a look at an example.
Example
Let’s say a company has $3,000 worth of rent expenses per month that needs to be posted for the annual general ledger. A subsidiary ledger would contain details of the rent expenses, including a line item per month debited in “Rent” and credited in “Accounts Payable”.
At the end of the accounting period, these items would be consolidated and posted into one line item in the general ledger. This way all of the information is included for the time period in the general ledger, but if there is a question about any month in particular it is possible to go back into the subsidiary ledger and see additional details.
Summary Definition
Define Posting: Posting means the step in the accounting cycle where balances from journal accounts are transferred to ledger accounts.
