Why is Posting Important In Accounting

Because, from Journal, all the accounts’ balances are finally transferred to concerned Ledger Accounts as Books of Final Entry. So, now the balances are finalized for the preparation of Trial Balance.

If this step is missed, then the accounting record may not be correct and errors, mistakes and frauds can not be detected, corrected and prevented easily. Any error in Trial balance is detected from books of accounts, especially books of final entry because these books show the finalized balance of an Account which may be incorrect due to wrong posting, errors of omission and other hidden errors which are not easy to reveal. Such errors are detected with the help of Ledger’s balances when these accounts from journal are finally posted to concerned ledgers’ accounts.

For Example, if the Cash Book is undercasted by Rs. 1000, then we need to check cash book for checking transactions, then we can detect the errors easily and trial balance will agree after rectifying this error.