The general ledger and posting — Accounting Module 7

The journal is chronological — every transaction in date order. The ledger is account-organised — every entry that affected the Cash account, ordered chronologically within that account. Both are needed: the journal for 'what happened on the 15th?' and the ledger for 'what's the cash balance right now?'.

Posting

Posting is the act of copying a journal entry's amounts into the relevant ledger accounts. A single journal entry affecting Cash and Sales Revenue becomes one entry in the Cash ledger (debit side) and one in the Sales Revenue ledger (credit side). In modern accounting software this is automatic and instant — but the conceptual model is unchanged from pen-and-paper days.

Subsidiary ledgers and control accounts

Some accounts hold too much detail to fit in the general ledger directly. Accounts Receivable might have 2,000 customers, each with their own running balance. The general ledger has ONE account called Accounts Receivable with the total balance; the subsidiary ledger contains one sub-account per customer. The general-ledger AR balance is the 'control account' — it must equal the sum of all subsidiary balances. Same for Accounts Payable, Inventory (by SKU), Fixed Assets (by item).

Reconciliation is the audit's tooth

Auditors test subsidiary-to-control reconciliation routinely. If your AR control account says KES 4.2m but the customer detail report adds to KES 4.1m, you have a posting error somewhere. Finding the cause is tedious but mandatory before any financial statements ship. Modern systems usually keep these in sync automatically — but old data migrations and manual journal entries can introduce divergences.

A simple ledger account in action

text

ACCOUNTS RECEIVABLE — General Ledger (control account)
──────────────────────────────────────────────────────────────────────
  Date         Description                  Debit      Credit  Balance
──────────────────────────────────────────────────────────────────────
  2026-01-01   Opening balance                                  120,000
  2026-01-05   Invoice 1001 — Acme Corp     45,000              165,000
  2026-01-08   Invoice 1002 — Beta Ltd      28,000              193,000
  2026-01-15   Payment received from Acme              45,000   148,000
  2026-01-18   Invoice 1003 — Gamma SACCO   62,000              210,000
  2026-01-22   Bad debt write-off — Delta              15,000   195,000
──────────────────────────────────────────────────────────────────────
  Closing balance at Jan 31:                                    195,000

The subsidiary ledger would show this same KES 195,000 split:
   Beta Ltd:      28,000
   Gamma SACCO:   62,000
   ...other:     105,000
   ──────────
   Total:        195,000  ✓ matches control account

A ledger account is a running tally of every journal entry that touched it.

The Trial Balance preview

If you sum all debits across every ledger account and all credits across every ledger account, the totals must equal — by the integrity property of double-entry. This sum-up exercise is the Trial Balance, covered next module.

Exercise

Take the journal entries from the SACCO exercise in the previous module and post them to the appropriate ledger accounts. Which account ends with the largest debit balance? Which with the largest credit balance? What do the balances tell you about the SACCO's week?