My learnings from the accounting class

Accounting has always been a topic I run from. A topic i usually pass the other side when i see it coming my way despite the fact that i studied Economics. When I saw the subjects we were going to offer at LBS and i realized that management accounting was part of it, i said it myself “Finally”, i cannot run anymore.

One of the topic i have fount interesting is posting into the ledger account. Let me not forget to mention that, the professor taking us this course is a great teacher. He practically started the teaching from ground zero. While some chartered accountants found that extremely boring, people like will not have coped if thought otherwise. The professor saw it fit to carry all the class along leveraging on the knowledge of the ones that know and using tactics to bring up those that are already experts. To make sure that I follow the class, I had gone on my own to learn this topic and below are some of the relevant info i came across. I will be sharing this below since it had helped me understand the concept.

After journal entries are made, the next step in the accounting cycle is to post the journal entries into the ledger. Posting refers to the process of transferring entries in the journal into the accounts in the ledger. Posting to the ledger is the classifying phase of accounting.

BOOKS OF FINAL ENTRY

While the journal is known as Books of Original Entry, the ledger is known as Books of Final Entry.

First, we posted the entry to Cash. Cash in the journal entry was debited so we placed the amount on the debit side (left side) of the account in the ledger. For Mr. Gray, Capital, it was credited so the amount is placed on the credit side (right side) of the account. And that’s it. Posting is simply transferring the amounts from the journal to the respective accounts in the ledger.

Note: The ledger accounts (or T-accounts) can also have fields for account number, description or particulars, and posting reference.

THE POSTING PROCESS

Let us illustrate how accounting ledgers and the posting process work using the transactions we had in the previous lesson.

Let’s start. Take transaction #1 first.

Now, go to the ledger and find the accounts. Post the amounts debited and credited to the appropriate side. Debits go to the left and credits to the right. After posting the amounts, the cash and capital account would look like:

Explanation: First, we posted the entry to Cash. Cash in the journal entry was debited so we placed the amount on the debit side (left side) of the account in the ledger. For Mr. Gray, Capital, it was credited so the amount is placed on the credit side (right side) of the account. And that’s it. Posting is simply transferring the amounts from the journal to the respective accounts in the ledger.