THE PRIVATE LEDGER
18. A ledger, devised to contain such accounts as the principals of a business desire to keep from the knowledge of the bookkeeper or other office employes, is known as a private ledger. The title is also frequently used to designate an ordinary general ledger.
The accounts most frequently found in the private ledger are Capital accounts, Profit and Loss, Reserves, Surplus, Bills Payable, Bonds and Mortgages Payable, and Controlling accounts with the general or personal ledgers. It may also contain such accounts as Salaries of Officers, or Partners, Investment and Drawing accounts, and accounts with real or nominal assets. If it is desired to keep from the employes, knowledge of the exact nature of any transaction, or the standing of a particular account, it can be done by making use of the private ledger.
When both ledgers are used, the private ledger contains only those accounts which it is desired to keep private, while the general ledger is kept for all other accounts, except those included in the personal ledgers.
The private ledger is most commonly used in large businesses where, for various reasons, a number of employes have access to the books, and it is desired to keep them in ignorance of the private affairs of the concern. The private ledger is usually kept by one of the partners, an officer, the auditor, or the chief accountant.
19. Advantages of Private Ledger. The primary advantage of the private ledger to the principals of a business, is that by its use, they can keep to themselves all details of transactions of a special nature.
Some other advantages that accrue to the principal may be enumerated as follows:
He can, through the private ledger, keep an eye on the activities and condition of the business as a whole, or of any particular department or branch of that business.
He can keep in touch with the liabilities, or with the total amount of personal accounts outstanding.