Posting
a. Accumulates the effects of ledger entries and transfers them to the general journal.
b. Is done only for income statement activity; activity related to the statement of financial position does not require posting.
c. Is done at least once per year.
d. Is done by posting all the debits and credits of one entry before moving on to the next entry.
The correct answer and explanation is :
The correct answer is:
d. Is done by posting all the debits and credits of one entry before moving on to the next entry.
Explanation:
Posting is an essential process in the accounting cycle that involves transferring the information from journal entries to the general ledger. The general ledger is a collection of all the accounts that a business uses to track its financial transactions. Each account in the general ledger represents a specific type of transaction (such as cash, accounts receivable, sales revenue, etc.). Here’s a breakdown of why d is correct and the other options are incorrect:
- a. Accumulates the effects of ledger entries and transfers them to the general journal.
This is incorrect because posting is the process of transferring the details of journal entries into the general ledger, not the other way around. The general journal is where transactions are first recorded, and the general ledger is where these transactions are grouped by account. - b. Is done only for income statement activity; activity related to the statement of financial position does not require posting.
This statement is false because posting applies to all types of transactions, not just those related to the income statement. Both income statement accounts (revenues and expenses) and statement of financial position accounts (assets, liabilities, and equity) require posting to the ledger. Therefore, posting isn’t limited to income statement activity alone. - c. Is done at least once per year.
While posting occurs regularly, it is typically done more frequently than once per year. Posting occurs after journal entries are made, and it could happen daily, weekly, or monthly, depending on the volume of transactions. The idea of posting only once per year contradicts standard accounting practices, where timely updates to financial records are critical for accuracy. - d. Is done by posting all the debits and credits of one entry before moving on to the next entry.
This is the correct answer. When posting journal entries to the general ledger, accountants ensure that they first post both the debit and credit amounts of one journal entry before moving on to the next. This maintains the integrity of the accounting system and ensures that the ledger is accurate and complete.
In summary, posting involves transferring both the debits and credits from the journal entries into the general ledger, where each transaction is recorded in the appropriate accounts to accumulate financial data. This step is crucial for preparing accurate financial statements.