The Journal and Ledger Records Differentiated—Posting.—When a correct and complete record of business transactions has been made in the various journals, practically all the current information needed by the business has been secured. However, because this information is recorded in chronological order, it is not available for use. It requires sorting, grouping, and indexing. To meet this requirement the original chronological record must be transferred to other records which provide for the desired grouping. The separation of the general journal into journals for different classes of transactions such as sales, purchases, and cash, results in making certain kinds of information somewhat more available, but more than this is required for business management. The original records must be grouped and summarized under proper account titles, so that the total results for the period may be had under review at one time. The book containing these account titles is called the ledger, and the transfer of the original record to the ledger is called posting.

Time of Posting.—Where subsidiary journals are used, it is not customary to post all entries at the same time. The entries affecting personal accounts, i.e., those of customers and creditors, should be posted daily. Inquiries from customers as to their balances are received every day, and in order that this information may be given promptly and correctly, customers ledger accounts should be kept up to date in every respect. This is a matter of great importance because, if the information desired by the customer is not given promptly, or if an error is made in giving it, thus calling for correction at a later date, the customer’s good-will may be lost and his trade transferred to others. For this reason personal accounts, especially those with customers, should be posted daily, and great care should be exercised in doing the work.

All other accounts may have their postings made periodically—once a week or once a month—the frequency depending upon the need of the business for the information furnished by the accounts. The flow of cash—always of importance—is shown daily by the cash book record; the volume of sales each day can be had from the sales journal; but information as to expenses can usually be had only from the ledger after completing the weekly or monthly postings.

Methods of Posting.—Knowing that errors in posting are easily made and that when made they may cause great confusion, it is important for the bookkeeper to know what kinds of errors occur most frequently, and to study means of avoiding them. Certain methods of posting have been found to produce a minimum of error. Some points in connection therewith will be considered here.

One of the chief errors in posting is to make entry on the wrong side of the account, i.e., to post a debit as a credit, or vice versa. The use of subsidiary journals has done away with a large part of errors of this kind, yet it is advisable to keep the following points constantly in mind when posting:

1. The sales journal is a “charge” journal, i.e., the individual items represent debits and must therefore be posted to the debit side of the proper ledger accounts. The sales summaries, however, are credits and must be posted as such.

2. The purchase journal is a “credit” record and all postings, except summaries, are made to the credit side of the respective accounts.

3. In the cash receipts journal, each individual item represents a credit, as explained in a previous chapter, and each individual item in the cash disbursements journal represents a debit. Hence, postings of the individual items on the debit side of the cash book must be made to the credit side of the ledger account, and postings of items on the credit side of the cash book must be made to the debit side of the ledger accounts. The posting of the summary entries of the cash book follows the debit and credit designation made at the time of summarization. The principles here involved were fully discussed in Chapter XIX.

4. In the Journal the debits and credits of each entry are fully expressed, i.e., neither element is suppressed. In posting from this record it is best to transfer all the debits consecutively and then all the credits. The possibility of posting a debit item as a credit is thereby greatly reduced.

Cross-Indexing the Entries.—An essential part of posting, in addition to recording the date and the amount, is to cross-index every entry, i.e., to index it both in the book of original entry and in the ledger. The “folio” column in each book is used for this purpose. The index in the ledger consists of the first letter of the book of original entry followed by the page number, and the index in the book of original entry shows the number of the ledger page to which the item is posted. (See Form 22.)

In this way, when the indexing in both books is completed it is possible without loss of time to trace the entry from the journal to the ledger, and vice versa. Usually the ledger folio is entered in the book of original entry immediately after each item is posted. When this is done the absence of a reference number in the journal indicates that the item has been omitted in posting. This check is frequently helpful in tracing errors. Some bookkeepers, however, before doing any posting, go through the book of original entry and from the account index of the ledger enter in the ledger folio column of that particular journal the ledger page numbers. By this method, much time is saved in finding the account in the ledger, but a check mark should be placed after each item as soon as it is posted, to indicate the fact. Then the absence of the check mark indicates an unposted item.

Explanatory Matter in the Ledger.—In posting personal accounts it is customary to show the terms of credit in the explanation column of the account. In this way the face of the account shows whether the customer pays promptly or not, and affords a basis for his credit rating.

Notes Payable and Notes Receivable accounts in the ledger should show essential data, such as due date, interest rate, etc. However, when a separate note or bill book is used, these data are given therein and may be omitted from the account in the ledger.

With all other accounts, except sometimes the Profit and Loss account, little or no explanatory matter is carried. However, when a posting is made that is at all unusual, it is well to enter explanatory matter in the ledger. From the business man’s point of view, the ledger is the most important book of account, and if its record can be so made as to require a minimum of reference to original books, it serves its purpose so much the better. Where possible, the Profit and Loss account should carry the names of the accounts closed into it; in fact all transfers, whether made on the face of the ledger or by journal entry, should carry the account title and the ledger folio to which and from which the item is transferred. It is a fundamental principle that every entry must be indexed in such a way as to render reference to it easy at any time.