Where do the totals and entries from the journals end up, and how are the ledgers divided?
Post from the books of prime entry to the sales, purchases and general ledgers
A simple answer to the N(A)-Level Principles of Accounts outcome on posting to the ledgers. The three ledgers, how journal totals and individual entries are posted, and why the ledger is divided this way.
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What this dot point is asking
SEAB wants you to post from the books of prime entry to the three ledgers and to know which account belongs in which ledger. Posting is the step that turns the journals into running account balances. The central insight is that the ledger is divided into three for control and tidiness: customers in one, suppliers in another, and everything else in the general ledger.
The answer
The three ledgers
| Ledger | Holds | Examples |
|---|---|---|
| Sales ledger (debtors ledger) | Personal accounts of credit customers | Tan, Lim, Ng |
| Purchases ledger (creditors ledger) | Personal accounts of credit suppliers | Wong, Soh |
| General ledger | All impersonal accounts and capital | Sales, purchases, rent, equipment, capital |
Cash and bank live in the cash book, which acts as their ledger.
How posting works
From the journals:
- The total of each journal is posted to the matching impersonal account in the general ledger. For example, the sales journal total goes to the credit of the sales account.
- Each individual entry is posted to the personal account in the sales or purchases ledger. Each customer is debited, each supplier credited.
From the cash book, receipts and payments are posted to the matching accounts (the other side of each entry).
Why divide the ledger
Dividing the ledger keeps thousands of customer and supplier accounts out of the general ledger, makes it easy to see who owes what, and lets different staff keep different ledgers. It also allows control accounts, which check each personal ledger against a single total.
Examples in context
Example 1. Knowing who owes what. Because each customer has a personal account in the sales ledger, a business can see at a glance that Tan owes \1,200\. The general ledger only carries the total receivables, so the split ledger is what lets the business chase individual debts, showing the practical value of dividing the ledger.
Example 2. Sharing the work. In a slightly larger business, one clerk keeps the sales ledger and another keeps the purchases ledger, while the general ledger is kept by a third. Because the ledgers are separate, the work divides cleanly and each can be checked against a control account, which is only possible because posting sends individuals and totals to different places.
Try this
Q1. State the ledger in which a credit supplier's account is kept. [1 mark]
- Cue. The purchases ledger (creditors ledger).
Q2. The returns inwards journal total is \300$. State where the total is posted. [2 marks]
- Cue. To the debit of the returns inwards account in the general ledger (and individuals credited to customers in the sales ledger).
Q3. Explain one reason a business keeps customers in a separate sales ledger. [2 marks]
- Cue. It lets the business see how much each customer owes and chase debts individually, and it keeps the general ledger uncluttered.
Exam-style practice questions
Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Original6 marksState the ledger in which each account is kept: (a) a credit customer, Tan; (b) the sales account; (c) a credit supplier, Wong; (d) the rent account; (e) the bank; (f) capital.Show worked answer →
(a) Tan, a credit customer: the sales ledger (also called the debtors ledger).
(b) Sales account: the general ledger.
(c) Wong, a credit supplier: the purchases ledger (also called the creditors ledger).
(d) Rent account: the general ledger.
(e) Bank: kept in the cash book (which serves as its ledger).
(f) Capital: the general ledger.
What markers reward: customers in the sales ledger, suppliers in the purchases ledger, and impersonal accounts (sales, rent, capital) in the general ledger, with bank recognised as part of the cash book.
Original5 marksThe sales journal total for the month is \3\,000\, Lim \800\. Describe how this is posted to the ledgers.Show worked answer →
The monthly total of \3,000$ is posted as one entry to the credit side of the sales account in the general ledger.
Each customer is posted individually to the debit side of their personal account in the sales ledger: Tan \1,200\, Ng \1,000$.
So the general ledger gets one total entry, while the sales ledger gets three individual entries, and the two agree ().
What markers reward: the total to the sales account (general ledger) on the credit side, the three individual debits in the sales ledger, and noting that they agree.
Related dot points
- Write up the sales, purchases and returns journals and the general journal, and total them
A simple answer to the N(A)-Level Principles of Accounts outcome on the journals. What the sales, purchases and returns journals and the general journal are for, how to write them up, and how their totals are used.
- Identify common source documents and state which book of prime entry each one is recorded in
A simple answer to the N(A)-Level Principles of Accounts outcome on source documents. The invoice, credit note, receipt, cheque counterfoil and others, what each one proves, and the book of prime entry it leads to.
- Write up a two-column cash book recording cash and bank receipts and payments, with discount columns
A simple answer to the N(A)-Level Principles of Accounts outcome on the cash book. How the two-column cash book records cash and bank together, how receipts and payments are entered, and how the discount columns work.
- Prepare a trial balance from a list of ledger balances and explain its purpose
A simple answer to the N(A)-Level Principles of Accounts outcome on the trial balance. What a trial balance is, which balances go on the debit and credit sides, how to total it, and what it can and cannot prove.