When a transaction is recorded in the subsidiary book, it is posted to the ledger by posting individual entries to the personal accounts and the total to the relevant nominal account.

If the total of the subsidiary book is posted to the ledger but one or more of the individual entries are not posted from the subsidiary book to the ledger, the trial balance will not agree because total debits will not equal total credits.

Example

A credit note for $2,160, received from Melbourne Wholesalers, was recorded in the returns outwards book but not posted to the company’s personal account in the ledger.

It follows that the Melbourne Wholesalers Account needs to be debited by $2,160 to place the entry in that account. The corresponding credit will be placed in the suspense account.

Failure to post an entry  to ledger

Frequently Asked Questions

What is a ledger?

A ledger is a book in which all purchases and sales for the company are recorded. Also includes any other accounts that might be included in this book such as bank statements or transactions with employees.

What is the purpose of the ledger?

The purpose of the ledger is to record all transactions and show at a glance what the company owns and owes.

What will happen if you do not post an entry to the ledger?

If you do not post an entry to the ledger, then this would be classed as a mistake. The company's accounts will show that there is more money in the bank than is actually there and the Trial Balance won't balance and could potentially cause the company to go bankrupt. It will also cause problems with the taxation man because that is how he calculates your company's tax liability.

What can you do to avoid the mistake of not posting an entry to the ledger?

Always make sure that all entries from your subsidiary book are recorded in the ledger. Also, balance your books at the end of every month or as often as possible. You should also try not to make sudden transactions as these could potentially result in an error such as a bank transfer. This is because when you are transferring money, there is no information given in your books to show the transactions.

What will happen if you post an entry to the ledger but not to the personal accounts?

If you post an entry to the ledger but it is not posted to the corresponding personal account in this book, then there may be a problem with your balances.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

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