The document discusses the general ledger and the process of posting transactions from the general journal to ledger accounts. It explains that a separate ledger account is set up for each financial item of the business. Transactions are posted from the general journal to the appropriate ledger accounts, with references between the two records. A trial balance is prepared after all postings for a period to check the accuracy of the general ledger.

2. CHAPTER EIGHT
The
General
Ledger

3. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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1. Post entries from a general journal to
general ledger accounts.
2. Set up and arrange the general ledger
accounts.
3. Complete the Balance columns of the
general ledger accounts.
4. Correct errors in the general ledger.
5. Prepare a trial balance from the general
ledger accounts.
THE GENERAL LEDGER
Objectives:

4. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Posting to the Ledger
• The year, month, and day are
entered in the Date column.
• The description column is for
special notations you may want to
enter.

5. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Posting to the Ledger (continued)
• The Posting Reference column is
used to refer back to the original
entry. A “J3” entry would indicate
that the information came from the
journal on page 3.

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Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Posting to the Ledger (continued)
• If a debit appears in the journal, it
will appear as a debit in the ledger.
• If a credit appears in the journal, it
will appear as a credit in the ledger.
• A running balance appears in the
ledger.

7. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Posting to the Ledger (continued)
• The number of the ledger account
will appear in the Post Reference
column in the journal.

8. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Setting Up and Using Accounts in
the General Ledger
• To make posting as simple as
possible, a separate ledger sheet is
used for each account.
• All the accounts together make up
the general ledger.

9. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-9
Completing the Balance Columns of
the Accounts
• As each entry is posted from the
journal, the ledger account balance
is computed and recorded in either
the Debit Balance or the Credit
Balance column.

10. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-10
Correcting Errors in the Ledger
• If an amount is incorrectly posted
or posted to the wrong account, the
error is corrected by drawing a
single line through the incorrect
data and writing the correct
information above it.

11. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Correcting Errors in the Ledger
(continued)
• If the error involves a journal entry
that was incorrectly recorded and
posted to the wrong account, then
another entry is required to correct
the error.

12. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-12
Proving the Ledger
•The trial balance tests the accuracy of
the entries in the ledger.
•Account numbers are recorded in the
first column of the trial balance for
identification and reference purposes.

13. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-13
Accounting Terminology
•Balance ledger form
•General ledger
•Ledger
•Posting
•Posting reference

14. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-14
Chapter Summary
• The facts about a business’
transactions are sorted and
grouped by transferring the
information in the journal to the
ledger. This is called posting.

15. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Chapter Summary(continued)
• An account must be provided in the
ledger for each financial item in the
business.
• In the posting process, posting
references are recorded to permit
easy tracing of an entry from the
journal to the ledger or from the
ledger to the journal.

16. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-16
Chapter Summary (continued)
• Ledger accounts are arranged in an
easy-to-follow order for preparing
financial statements.
• Balance sheet accounts are first and
income statement accounts follow.

17. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Chapter Summary (continued)
• After all postings for a month
have been completed, a trial
balance is taken to prove the
accuracy of the ledger.

18. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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1. An account should be provided for
every financial item in the business.
2. The process of transferring information
from the journal to the ledger is called
posting.
3. Income accounts are generally listed
first in the general ledger.
Topic Quiz
Answer the following true/false questions:
TRUE
FALSE
TRUE

19. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Investigating on the Internet
Sources of information about ledgers and
accounts can be accessed at some web
locations of businesses.
As a research assignment, access a
website and report those sources of
information that might concern the use of
ledgers and posting in business.

20. McGraw-Hill/Irwin
Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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(Return to Topic Quiz)
3. Income accounts are generally listed first in
the general ledger.
FALSE
Balance sheet accounts appear first
in the general ledger followed by
income accounts.