Journalizing and Posting of Transaction
Journalizing and posting are two fundamental steps in the process of accounting that involve recording financial transactions in a company’s accounting records. Here’s a breakdown of these two steps:
- Journalizing Transactions: Journalizing is the process of recording financial transactions in a journal. A journal is a chronological record of all financial transactions of a company. There are different types of journals, such as the general journal, cash receipts journal, cash disbursements journal, and sales journal. The following are the steps involved in journalizing transactions:
- Identify the accounts affected by the transaction
- Determine the amount of the transaction and the account to be debited and credited
- Record the transaction in the appropriate journal, including the date and a brief description of the transaction
- Post the transaction to the general ledger
- Posting Transactions: Posting is the process of transferring the information from the journal to the general ledger. The general ledger is a book that contains all the accounts used by a company to record its financial transactions. Posting is done for each transaction recorded in the journal, and the following are the steps involved:
- Identify the account affected by the transaction
- Locate the account in the general ledger
- Record the debit or credit amount in the appropriate column of the account
- Calculate the balance of the account after the transaction has been posted
After journalizing and posting all transactions for a given period, such as a month or a year, the company can prepare its financial statements, such as the balance sheet and income statement. The financial statements provide an overview of the company’s financial performance and position.