Posting to the General Ledger Accounting 101

Tax accounts balance compliance with reporting rules while also attempting to minimize a company’s tax liability through thoughtful strategic decision-making. By choosing a consistent approach and sticking to it, you can ensure that your books are accurate and up-to-date, and that you’re able what does posting mean in accounting to make informed business decisions based on your financial data. In some cases, it may make sense to use the payment date as the posting date for a transaction. This is particularly true for businesses that operate on a cash basis, where revenue is recognized when payment is received.

How to Know What to Debit and What to Credit in Accounting

It also allows businesses to generate accurate financial statements quickly. When it comes to bookkeeping, posting dates are essential in ensuring accurate records of financial transactions. Posting dates determine when transactions are recorded in the books, which affects the financial statements and reports generated by the system. There are different types of posting dates in bookkeeping, each with its own purpose and significance.

How to determine the correct posting date for transactions?

The financial statements of most companies are audited annually by an external CPA firm. They ensure that financial statements are reliable and consistent, which is essential for making informed decisions. Inaccurate posting dates can cause confusion and errors in financial reporting, leading to incorrect financial statements and potential legal consequences. In this section, we will dive deeper into the importance of accurate posting dates in financial reporting and explore different perspectives on this topic.

Posting Compound Entry

As a business owner or bookkeeper, it is important to understand the significance of posting dates in bookkeeping. Posting dates help in accurately recording financial transactions and keeping track of the financial position of the business. However, determining the posting dates is not always straightforward, and it is easy to make mistakes that can lead to incorrect financial records.

• By recording transactions on the correct date, businesses can easily track their financial activities and identify any errors or discrepancies in their records.
• There was a debit to Taxes and Licenses so we posted that in the left side (debit side) of the account.
• It can also be useful when dealing with transactions that occur over a longer period of time, such as a project that spans several months.
• Its use in organizing business transactions and meeting regulatory requirements makes it a field that requires extensive knowledge and study.
• Total WIP Costs are calculated as a sum of WIP Inventory + Direct Labor Costs + Overhead costs.
• After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career.

Create a Free Account and Ask Any Financial Question

The video provides a clear description of where in the accounting cycle posting occurs. As stated earlier, posting is recording in the ledger accounts the information contained in the journal. The good news is you have already done the hard part — you have analyzed the transactions and created the journal entries. If you debit an account in a journal entry, you will debit the same account in posting. If you credit an account in a journal entry, you will credit the same account in posting. After transactions are journalized, they can be posted either to a T-account or a general ledger.

For information pertaining to the registration status of 11 Financial, please contact the state securities regulators for those states in which 11 Financial maintains a registration filing. At the end of the year, it is left with unfinished inventory (or inventory that was left over from its planning stage) worth $150,000. ABC already has $100,000 worth of raw material inventory left over from the previous year and makes additional purchases of $300,000 to manufacture new television sets for this year. Too many items classified as WIP and not as many items in the finished goods stage is a sign of inefficiency on the production floor. Thus, managers can tamp down or increase production based on the availability of materials in bins on the factory floor.

The posting date may be the same as the transaction date, or it may be a later date depending on the accounting system being used. Posting dates are important because they determine the period in which the transaction is recorded. For example, if a transaction is posted in the wrong period, it can affect the accuracy of financial reporting and tax calculations. As business transactions occur during the year, they are recorded by the bookkeeper with journal entries.

What is your current financial priority?

Posting refers to the process of transferring entries in the journal into the accounts in the ledger. At the end of the accounting period, these items would be consolidated and posted into one line item in the general ledger. WIP accounting does not include costs for items that have not entered the production assembly line. For example, raw materials that are still placed in factory stores are not included in WIP costs. Financial accounts have two different sets of rules they can choose to follow.

• Recording and posting in accounting are part of this cycle, and though they sound similar, their functions are completely different.
• It is the actual date when the money changed hands or the services were rendered.
• By using these practices and completing their backlog of WIP items, some companies regularly move all their WIP goods to the finished goods stage before accounting.
• When account numbers are assigned in the Chart of Accounts, the numbers assigned are based on the account type.
• However, the rule of posting is the same in this case too, but care should be taken while posting the amounts.
• Accurate financial statements provide investors, creditors, and other stakeholders with reliable information for making informed decisions.

• For example, if a transaction is recorded on the wrong date, it can be corrected immediately.
• The manufactured good moves through the production process in a relatively short amount of time before it is presented to the client or customer.
• Using automated accounting software can help maintain accurate posting dates.
• She has written for Barron’s, The New York Times, Newsweek Japan, Wealth Manager, and the International Monetary Fund.
• Accurate financial information helps management to make informed decisions about the company’s operations.
• If you would like to see what it looks like to move journal postings into a general ledger in Excel, watch this additional video.