Posting groups are the linking bridge between the G/L accounts and the accounts used on all application areas, such as items, customers, vendors, and fixed assets. Posting groups are used to notify the system which accounts to use on each transaction. There are three main types of posting group as follows:
Specific posting groups: These are used to link subsidiary ledgers (namely the vendor ledger entries) to the general ledger. They are used to specify balance sheet accounts.
General posting groups: Typically, these are used to specify income statement accounts that should be used on transactions. They are used to specify to whom and what we sell or buy.
TAX posting groups: You use these to specify the tax rates, calculation types, and accounts.