What I Need to Know?
In the Opening Accounts, you opened each account in the ledger. When completing the Opening Accounts section, you only created a worksheet which relates to the account name and the account number for each account.
Why it's important?
Posting the opening entry transfers each beginning balance into the appropriate ledger account. This is similar to opening your first bank account. Not only have you opened an account but now you have put some money in it. When the business opens to the public, they will have new customers and there will be activity in each of these new accounts relating to their specific transactions. The ledger brings the activities of each account together into one place so that it is easy to see how much money is in each account.
Recall that the journal is often referred to as the book of original entry because it is the first book where business transactions are recorded. Always enter a transaction first in the journal, then post.
Using the Opening Entry and General Journal to Post
STEP 1: In the example to the right, the General Journal has been updated with the daily transactions for the month of October. You will notice that in the Posting Reference (PR) field a number of an account has been added that relates to the specific account from the Chart of Accounts section of our Ledger. [Assets, Liabilities, Owner's Equity, Revenue, Expenses//100X, 200X, 300X, 400X, 500X].
STEP 2: Balance Sheet
The example showing the company balance sheet lists all the assets, liabilities and owner's equity for the month of September. Remember, these are the statements used to update your Chart of Accounts. The Journal entry will support the daily activities of a given business.
STEP 3: Recording to the Accounts
Once the Journal has been updated with a transaction an accountant will enter the information into the Accounts ledger with a reference within the PR column. You will notice that the input for Sept. 1st has a reference to G1. [G1 refers to the General Journal Page 1.]
STEP 4: Debit and Credit
When recording the transaction as a DEBIT or a CREDIT the accountant must include the amount and the balance. When posting an Asset, place it within the DEBIT column and when recording as a Liability post within the CREDIT column. Follow these steps when posting to ensure an accurate detail of events within your business.
Steps in Posting
Step 1: Locate the account
Step 2: Record the date.
Step 3: Enter the amount
Step 4: Calculate the new balance