Companies need to organize their transactions from various accounts to know where their money is
coming from and where it is going, whether it’s a profit, loss or liability.
Posting in an accounting system allows companies to organize this data in an accounting system to help track their money to create financial statements or budgets.
Posting refers to moving a transaction entry from a journal to a general ledger containing all of a company’s financial account. Accountants must keep accurate reports of the company’s monetary transactions to create an organized general ledger.
USE BOTH DEBIT AND CREDIT
An accountant records transactions with debits and credits. The rule of posting is that both credited and debited entries must be equal when an accountant posts them in the general ledger. You can create two different columns to denote credit versus debit.
The double entry records two entries for every transaction: one in the credit column and one in the debit column. When money exits an account, it enters another account which the accountants referred to as a double entry. An accountant knows where the transaction came from and where it should go. Double-entry booking can help accountants detect an error.
Double-entry follows accounting
The debits and credits must be equal for the system to remain balanced. For example, If a business pays its electricity bill for $1200, it will record an increase in utilities and a decrease in cash.
An accounting equation recognizes three main accounts: assets, liabilities and equity.
- Assets account: record an increase with a debit and a decrease with a credit
- Liability account: record an increase with a credit and a decrease with a debit.
- Equity: records an increase in equity ( revenue) with a credit and a decrease in equity (expenses) with a debit.
How to post in accounting
A. Enter the Account Information: Name, type, and number. We should also include reports from a balance sheet and income statement report.
- A balance sheet records what a company owns, such as
- Cash and cash equivalent
- Account receivable
- Prepaid expenses
- Long and short–term investment
- The income statement records a company’s earnings, which comprises the cost and expenses needed to make a profit. This will include
- Gross profit
- Cost of goods sold
- Interest and taxes
- Selling expenses
2. Create unique journal entries
- The dates and description of each transaction in every account per accounting period.
- Enter the debits and credits: according to the double-entry method, each transaction should have at least two entries.
- Move entries into a general ledger: Information must be kept the same. This reduces confusion, resulting in a clear and correct ledger.
- Calculate account balances: to calculate asset and expense accounts, subtract your credit from your debit for liability and revenue. Subtract debits from credit.
- Calculate balance errors: check for mistakes and errors. Mistakes can lead to balance inaccuracy resulting in an incorrect financial statement.