INTRODUCING THE LEDGER CONCEPT: As you just saw, the general journal is, in essence, a notebook that contains page after page of detailed accounting transactions. In contrast, the general ledger is, in essence, another notebook that contains a page for each and every account in use by a company. The ledger account for America would include the Cash page as illustrated below.
America's transactions utilized all of the following accounts:
Therefore, America Corporation's general ledger will include a separate page for each of these nine accounts.
POSTING: Before diving into the details of each account,
let's consider what we are about to do. We are going to determine
the balance of each specific account by posting. To do this, we will
copy ("post") the entries listed in the journal into their respective
ledger accounts. In other words, the debits and credits in the
journal will be accumulated ("transferred"/"sorted") into the
appropriate debit and credit columns of each ledger page. Here is
an illustration of posting to the Cash account. A similar process
would occur for each of the other accounts:
Below are all of the ledger pages for America that would result after posting all of the journal entries:
TO REVIEW: Thus far you should have grasped the following accounting "steps":
- Step 1: Each transaction is analyzed to determine the accounts involved.
- Step 2: A journal entry is entered into the general journal for each transaction.
- Step 3: Periodically, the journal entries are posted to the appropriate general ledger pages.
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