Posting group is the element that determines the account.
For example, when a sales order is posted to an invoice, general ledger entries are created. You don't need to specify G/L account when posting, the general ledger entries will be created.
Who determines the G/L account? That is the posting group. When you create a new voucher, for example, when you create an sales order and specify a customer or an item in the sales order, various posting groups are loaded into the sales order from the customer master or the item master. Then, when posting, the program refers to G/L accounts associated with these posting groups in advance, and creates general ledger entries.
- Customer Posting Group determine G/L account of AR(Account Receivable).
- Vendor Posting Group determine G/L account of AP(Account Payable).
- Inventory Posting Group and location determine G/L account of Inventory.
- Gen. Bus. Posting Group and Gen. Prod. Posting Group determine various P/L account such as Sales, Purchase, cost of goods sold etc. General Posting Setup page will show you which combination will determine which G/L account.
- VAT Bus. Posting Group and VAT Prod. Posting Group determine VAT(Value Added Tax) account. VAT Posting Setup page will show you which combination will determine which G/L account.
