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Ledger Posting and Balancing

"The Ledger is the principal book of accounts - the heart of the accounting system."

After recording transactions in journals and subsidiary books, the next step is to transfer (post) them to individual accounts in the Ledger.

What is a Ledger?

Definition: A book containing all accounts (personal, real, nominal) where transactions are classified and summarized.

Format: Each account has a separate page with two sides:

  • Left side: Debit (Dr.)
  • Right side: Credit (Cr.)

Format of a Ledger Account

Dr.                  [Account Name]                  Cr.
------------------------------------------------------------
Date|Particulars  |J.F.|Amount||Date|Particulars  |J.F.|Amount
----|-------------|----| -----||----|-----------  |----|------
    |             |    |      ||    |             |    |

Columns:

  • Date: Transaction date
  • Particulars: Details (source account)
  • J.F. (Journal Folio): Page number of journal
  • Amount: Transaction amount

Posting from Journal

Example Transaction:

Journal Entry:

Jan 5: Cash A/c                Dr.    ₹50,000
           To Capital A/c                   ₹50,000
(Being capital introduced)

Posting to Ledger:

Cash Account:

Dr.                     Cash A/c                     Cr.
------------------------------------------------------------
Date  |Particulars    |J.F.|Amount||Date|Particulars|J.F.|Amount
------|---------------|----| -----||----|-----------|----|------
Jan 5 |To Capital A/c | 1  |50,000||    |           |    |

Capital Account:

Dr.                   Capital A/c                   Cr.
------------------------------------------------------------
Date  |Particulars  |J.F.|Amount||Date  |Particulars |J.F.|Amount
------|-------------|----| -----||------|-----------|----| ------
      |             |    |      ||Jan 5 |By Cash A/c| 1  |50,000

Note: "To" is used on Debit side, "By" is used on Credit side.

Balancing a Ledger Account

Steps to Balance:

  1. Total the Debit side
  2. Total the Credit side
  3. Find the difference
  4. Place "Balance c/d" (carried down) on the lighter side
  5. Total both sides—they should now match
  6. Bring down balance on the opposite side as "Balance b/d"

Example: Balancing Cash Account

Before Balancing:

Dr.                    Cash A/c                     Cr.
------------------------------------------------------------
Date  |Particulars    |Amount||Date  |Particulars  |Amount
------|---------------|------||------|-------------|------
Jan 1 |To Capital     |50,000||Jan 5 |By Rent      |10,000
Jan 10|To Sales       |20,000||Jan 8 |By Salary    |15,000

Calculation:

  • Debit Total: ₹70,000
  • Credit Total: ₹25,000
  • Difference: ₹45,000 (Debit side is heavier)

After Balancing:

Dr.                    Cash A/c                     Cr.
------------------------------------------------------------
Date  |Particulars    |Amount||Date  |Particulars   |Amount
------|---------------|------||------|------------- |------
Jan 1 |To Capital     |50,000||Jan 5 |By Rent       |10,000
Jan 10|To Sales       |20,000||Jan 8 |By Salary     |15,000
      |               |      ||Jan 31|By Balance c/d|45,000
------|---------------|------||------|--------------|------
      |Total          |70,000||      |Total         |70,000
======|===============|======||======|==============|======
Feb 1 |To Balance b/d |45,000||      |              |

Types of Balances

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Posting from Subsidiary Books

From Purchases Book:

Monthly Total:

Purchases A/c                 Dr.    ₹2,00,000
    To Sundry Creditors A/c              ₹2,00,000

Individual Creditor Accounts:

  • Each supplier is credited individually throughout the month.

From Sales Book:

Monthly Total:

Sundry Debtors A/c            Dr.    ₹3,00,000
    To Sales A/c                         ₹3,00,000

Individual Debtor Accounts:

  • Each customer is debited individually.

Self-Balancing Ledgers

In large organizations, separate ledgers are maintained:

  • Debtors Ledger (Sales Ledger)
  • Creditors Ledger (Purchase Ledger)
  • General Ledger (all other accounts)

Control Accounts: Summary accounts that balance each subsidiary ledger.

Common Posting Errors

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Real-World Application

How TCS Maintains Ledgers:

With thousands of employees and clients, TCS uses:

  • ERP Systems (SAP, Oracle) for automated posting
  • Separate ledgers for each department
  • Control accounts to summarize
  • Reconciliation at month-end to ensure accuracy

Even with automation, accountants must verify ledger balances!

Quiz: Ledger Posting

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