POSTING TO THE

LEDGER AND
THE
UNADJUSTED
TRIAL BALANCE
POSTING TO THE LEDGER
THE LEDGER
•The entire group of accounts maintained by a company is the
ledger. The ledger provides the balance in each of the accounts
as well as keeps track of changes in these balances. Companies
may use various kinds of ledgers, but every company has a
general ledger. A general ledger contains all the asset, liability,
and owner’s equity accounts.
STANDARD FORM OF
ACCOUNT
• The simple T-account form used in accounting
textbooks is often very useful for illustration
purposes. However, in practice, the account
forms used in ledgers are much more structured.
STANDARD FORM • This format is called the three-column form of account. It has three money
columns— debit, credit, and balance. The balance in the account is determined
OF ACCOUNT after each transaction. Companies use the explanation space and reference
columns to provide special information about the transaction.
POSTING

The procedure of transferring journal entries to the ledger accounts is called posting. This phase of the
recording process accumulates the effects of journalized transactions into the individual accounts. Posting
involves the following steps.
1. In the ledger, in the appropriate columns of the account(s) debited, enter the date, journal page, and debit
amount shown in the journal.
2. In the reference column of the journal, write the account number to which the debit amount was posted.
3. In the ledger, in the appropriate columns of the account(s) credited, enter the date, journal page, and
credit amount shown in the journal.
4. In the reference column of the journal, write the account number to which the credit amount was posted.
POSTING
CHART OF ACCOUNTS

• The number and type of accounts differ for each company. The number of accounts depends on the
amount of detail management desires. For example, the management of one company may want a
single account for all types of utility expense. Another may keep separate expense accounts for each
type of utility, such as gas, electricity, and water.
CHART OF
ACCOUNTS
• Most companies have a chart of
accounts. This chart lists the
accounts and the account
numbers that identify their
location in the ledger. The
numbering system that identifies
the accounts usually starts with
the balance sheet accounts and
follows with the income
statement accounts.
THE RECORDING PROCESS ILLUSTRATED

• The figures below show the basic steps in the recording process, using the October transactions of
Pioneer Advertising. Pioneer’s accounting period is a month. In these illustrations, a basic analysis,
an equation analysis, and a debit-credit analysis precede the journal entry and posting of each
transaction. For simplicity, we use the T-account form to show the posting instead of the standard
account form. The purpose of transaction analysis is first to identify the type of account
involved, and then to determine whether to make a debit or a credit to the account. You should
always perform this type of analysis before preparing a journal entry.
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SUMMARY
ILLUSTRATIO
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JOURNALIZIN
G AND
POSTING
SUMMARY
ILLUSTRATION OF
JOURNALIZING AND
POSTING
THE TRIAL BALANCE
THE TRIAL BALANCE

• A trial balance is a list of accounts and their balances at a given time. Companies usually prepare a
trial balance at the end of an accounting period. They list accounts in the order in which they appear
in the ledger. Debit balances appear in the left column and credit balances in the right column. The
totals of the two columns must equal. The trial balance proves the mathematical equality of
debits and credits after posting. Under the double-entry system, this equality occurs when the sum
of the debit account balances equals the sum of the credit account balances. A trial balance may
also uncover errors in journalizing and posting.
THE TRIAL
BALANCE
The steps for preparing a trial
balance are:
1. List the account titles and
their balances in the
appropriate debit or credit
column.
2. Total the debit and credit
columns.
3. Verify the equality of the
two columns.
LIMITATIONS OF A TRIAL BALANCE

A trial balance does not guarantee freedom from recording errors. Numerous errors may exist even
though the totals of the trial balance columns agree. For example, the trial balance may balance even
when:
1. A transaction is not journalized.
2. A correct journal entry is not posted.
3. A journal entry is posted twice.
4. Incorrect accounts are used in journalizing or posting.
5. Offsetting errors are made in recording the amount of a transaction.
LIMITATIONS OF A TRIAL BALANCE

• As long as equal debits and credits are posted, even to the wrong account or in the wrong amount,
the total debits will equal the total credits. The trial balance does not prove that the company has
recorded all transactions or that the ledger is correct.
LOCATING ERRORS
Errors in a trial balance generally result from mathematical mistakes, incorrect postings, or simply
transcribing data incorrectly. What do you do if you are faced with a trial balance that does not balance? First,
determine the amount of the difference between the two columns of the trial balance. After this amount is
known, the following steps are often helpful:
1. If the error is ₱1, ₱10, ₱100, or ₱1,000, re-add the trial balance columns and recomputed the account balances.
2. If the error is divisible by 2, scan the trial balance to see whether a balance equal to half the error has been entered in
the wrong column.
3. If the error is divisible by 9, retrace the account balances on the trial balance to see whether they are incorrectly
copied from the ledger. For example, if a balance was ₱12 and it was listed as ₱21, a ₱9 error has been made.
Reversing the order of numbers is called a transposition error.
4. If the error is not divisible by 2 or 9, scan the ledger to see whether an account balance in the amount of the error has
been omitted from the trial balance, and scan the journal to see whether a posting of that amount has been omitted.