What the General Ledger Is (and What It Is Not)
The general ledger (GL) is the complete set of accounts where each account keeps a running balance. The journal is where entries are first recorded; the ledger is where those entries are sorted by account so you can see the balance of Cash, Accounts Receivable, and so on at any time.
Think of posting as a controlled “copy and classify” process: each line in a journal entry is copied into the correct ledger account, and the account balance is updated immediately.
What “Posting” Produces
- A dated line in the correct ledger account
- A reference back to the journal entry that created it
- An updated running balance for that account
Posting References: How You Trace Any Amount Back to Its Source
Posting references are cross-links between the journal and the ledger so you can trace in both directions:
- From journal to ledger: each journal line shows the ledger account number (or account code) it was posted to.
- From ledger to journal: each ledger line shows the journal entry ID (or journal page/line reference) it came from.
In a manual system, this might look like “JE-104” in the ledger’s reference column and “1010” (Cash) in the journal’s posting reference column. In software, the same idea exists even if you don’t see the columns explicitly.
| Reference Type | Example | Purpose |
|---|---|---|
| Journal Entry ID | JE-104 | Lets you trace a ledger line back to the exact journal entry |
| Ledger Account No. | 1010 (Cash) | Lets you confirm each journal line was posted to the intended account |
How to Post: A Practical Step-by-Step
Step 1: Start with a Balanced Journal Entry
Posting does not fix an unbalanced entry. Confirm the journal entry totals (debits = credits) before posting.
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Step 2: Post Each Line to Its Ledger Account
For each debit or credit line in the journal entry:
- Open the corresponding ledger account (e.g., Cash).
- Enter the date, description, and the amount in the correct debit/credit column.
- Enter the journal entry ID in the ledger’s reference column.
- Update the running balance for that account.
Step 3: Mark the Journal as Posted
In the journal, record the ledger account number (or code) for each line (or mark the entry as posted). This prevents double-posting and supports tracing.
Demonstration: Posting a Multi-Line Journal Entry to Multiple Ledger Accounts
Below is a single multi-line journal entry that affects several accounts. The goal is to show how one entry becomes multiple ledger postings.
Journal Entry (Example)
| Date | JE ID | Account | Acct No. | Debit | Credit |
|---|---|---|---|---|---|
| Mon | JE-201 | Accounts Receivable | 1100 | 1,200 | |
| Mon | JE-201 | Sales Revenue | 4000 | 1,200 | |
| Mon | JE-201 | Advertising Expense | 6100 | 150 | |
| Mon | JE-201 | Accounts Payable | 2000 | 150 |
This entry represents: (1) a credit sale to a customer for 1,200, and (2) an advertising bill received for 150 to be paid later. One journal entry, four ledger postings.
Posting JE-201 to the Ledger (What Changes)
- Accounts Receivable (1100): debit 1,200 increases A/R balance.
- Sales Revenue (4000): credit 1,200 increases revenue balance.
- Advertising Expense (6100): debit 150 increases expense balance.
- Accounts Payable (2000): credit 150 increases A/P balance.
Controlled Example: Post a Week of Transactions and Maintain Running Balances
Assume all beginning balances are 0 for simplicity. Account numbers used:
- 1010 Cash
- 1100 Accounts Receivable
- 2000 Accounts Payable
- 4000 Sales Revenue
- 6100 Advertising Expense
- 6200 Rent Expense
- 6300 Utilities Expense
Week of Journal Entries (Source for Posting)
| Date | JE ID | Account | Debit | Credit |
|---|---|---|---|---|
| Mon | JE-301 | Accounts Receivable | 1,200 | |
| Mon | JE-301 | Sales Revenue | 1,200 | |
| Mon | JE-301 | Advertising Expense | 150 | |
| Mon | JE-301 | Accounts Payable | 150 | |
| Tue | JE-302 | Cash | 500 | |
| Tue | JE-302 | Accounts Receivable | 500 | |
| Wed | JE-303 | Rent Expense | 700 | |
| Wed | JE-303 | Cash | 700 | |
| Thu | JE-304 | Utilities Expense | 90 | |
| Thu | JE-304 | Accounts Payable | 90 | |
| Fri | JE-305 | Accounts Payable | 120 | |
| Fri | JE-305 | Cash | 120 | |
| Sat | JE-306 | Cash | 800 | |
| Sat | JE-306 | Sales Revenue | 800 |
Posting to the General Ledger: Account-by-Account
Each ledger below shows: Date, Journal Entry reference (Ref), Debit, Credit, and the updated running Balance. For simplicity, balances are shown as positive numbers with the account’s normal balance direction implied (Cash and expenses normally debit; liabilities and revenue normally credit).
Ledger: Cash (1010)
| Date | Ref | Debit | Credit | Running Balance |
|---|---|---|---|---|
| Tue | JE-302 | 500 | 500 | |
| Wed | JE-303 | 700 | -200 | |
| Fri | JE-305 | 120 | -320 | |
| Sat | JE-306 | 800 | 480 |
Ledger: Accounts Receivable (1100)
| Date | Ref | Debit | Credit | Running Balance |
|---|---|---|---|---|
| Mon | JE-301 | 1,200 | 1,200 | |
| Tue | JE-302 | 500 | 700 |
Ledger: Accounts Payable (2000)
| Date | Ref | Debit | Credit | Running Balance |
|---|---|---|---|---|
| Mon | JE-301 | 150 | 150 | |
| Thu | JE-304 | 90 | 240 | |
| Fri | JE-305 | 120 | 120 |
Ledger: Sales Revenue (4000)
| Date | Ref | Debit | Credit | Running Balance |
|---|---|---|---|---|
| Mon | JE-301 | 1,200 | 1,200 | |
| Sat | JE-306 | 800 | 2,000 |
Ledgers: Key Expenses (6100, 6200, 6300)
| Account | Date | Ref | Debit | Credit | Running Balance |
|---|---|---|---|---|---|
| Advertising Expense (6100) | Mon | JE-301 | 150 | 150 | |
| Rent Expense (6200) | Wed | JE-303 | 700 | 700 | |
| Utilities Expense (6300) | Thu | JE-304 | 90 | 90 |
Resulting Balances After Posting the Week
After all journal entries are posted, the ledger balances for the requested accounts are:
| Account | Ending Balance | How to Interpret |
|---|---|---|
| Cash (1010) | 480 | Net cash on hand after receipts and payments |
| Accounts Receivable (1100) | 700 | Customer amounts still owed |
| Accounts Payable (2000) | 120 | Supplier bills still owed |
| Sales Revenue (4000) | 2,000 | Total sales recorded for the week |
| Key Expenses (6100/6200/6300) | 940 | 150 advertising + 700 rent + 90 utilities |
Common Posting Errors and How to Detect Them Using References
1) Transposed Digits (Right Account Type, Wrong Account Number)
What it looks like: Posting to account 1001 instead of 1010, or 2100 instead of 2000.
How to detect it:
- In the journal, scan the posting reference/account number column for unusual codes.
- In the ledger, look for a line with the correct JE ID but in an unexpected account.
- Trace: pick the suspicious ledger line, note its Ref (e.g., JE-305), and open that journal entry to confirm the intended account number.
2) Wrong Account (Correct Amount, Misclassified)
What it looks like: A utility bill posted to Advertising Expense, or a customer payment posted to Sales Revenue instead of Accounts Receivable.
How to detect it:
- Use the ledger’s running balance behavior: if Advertising Expense spikes unexpectedly, inspect the lines and trace their JE IDs back to the journal.
- Compare the journal description to the ledger account: the description should “fit” the account.
- Trace forward: from the journal entry line, confirm the posting reference points to the intended ledger account.
3) Missing Line (Incomplete Posting of a Multi-Line Entry)
What it looks like: You post the debit side of JE-301 to Accounts Receivable but forget to post the credit to Sales Revenue (or vice versa). The journal entry is balanced, but the ledger is incomplete.
How to detect it:
- For each JE ID, verify that every line in the journal has a corresponding ledger posting (using posting references).
- In the ledger, search for the JE ID: a multi-line entry should appear in multiple accounts. If JE-301 appears in A/R but not in Sales Revenue, you likely missed a line.
- Use a simple checklist per entry: count journal lines posted = count ledger postings created.
4) Reversed Debit/Credit During Posting
What it looks like: Posting a cash payment as a debit to Cash instead of a credit, causing the running balance to move the wrong direction.
How to detect it:
- Look for running balances that move opposite of expectations (e.g., Cash increases when you paid rent).
- Trace the ledger line back to the journal entry and compare the debit/credit placement.
5) Double Posting (Same Journal Entry Posted Twice)
What it looks like: JE-306 appears twice in Cash and twice in Sales Revenue.
How to detect it:
- In each ledger account, scan the Ref column for duplicate JE IDs with the same amount.
- In the journal, confirm whether the entry was marked as posted once; if not, implement a consistent posting mark or tick system.
Tracing Technique: A Fast Audit Trail You Can Do Anytime
Trace from Ledger to Journal (When a Balance Looks Wrong)
- Pick the account with the unexpected balance (e.g., Cash).
- Identify the line(s) that caused the change.
- Note the Ref (JE ID) and open that journal entry.
- Confirm: date, amount, debit/credit direction, and intended account.
Trace from Journal to Ledger (When You Want to Confirm Posting Completeness)
- Pick a JE ID (especially multi-line entries).
- For each line, confirm the ledger account number/code.
- Open each ledger account and verify the JE ID appears with the correct amount and direction.
- Confirm the running balance was updated correctly after the posting line.
