You are the new bookkeeper in a small business. The bookkeeper whose job you are

Question

You are the new bookkeeper in a small business. The bookkeeper whose job you are taking is training you on the business's manual system. As he journalizes, he writes the account number in the Post Ref. Column because he thinks it's easier. Then, when he posts, he won't have to be bothered writing the account numbers. How would you explain why he should not write the account number in the Post Reference column immediately and should instead enter the account number after he has posted the amount to the ledger? Give some examples from the every day workplace where using the Post Reference column in a manual accounting setting could avoid accounting problems. address why you think a Post Reference feature is not necessary in an automated accounting system.

Explanation / Answer

We should not write the account no. in the post ref. column immediately because its cross refererence ,it tells where this amount came from and the origination of the initial transaction but should instead enter the account number after the transaction has been posted to ledger in case if you are interuppted during posting process it will help bookkeepers to mark the posted journal entries and keep track of the ones that still need to be posted in the future.The post ref. will provide cross reference between jounal and ledger.
For Instance John purchased the land for $10,000 for cash.John has assigned cash account as 100 and Land account as 150 in the accounting system. When John purchases the land, he records debit in the land asset account and a credit in the cash account. When John’s bookkeeper posts this entry to the asset account ledgers, the bookkeeper would put a 150 in the posting reference column next to the Land account debit and a 100 next to the cash account credit. This shows that not only both of these entries have been transferred to the ledger accounts, but it also shows what ledger accounts they were transferred to.
Post Reference feature is not necessary in an automated accounting system because it eliminates the process of posting a transaction into ledger account, it posts automatically, soon the transaction enter into the software it will post into ledger account automatically and keep updating based on the posting of transactions,so no cross reference is required in automated accounting system.

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