At the time of closing the books, if some temporary proprietorship accounts are carried on the general ledger and some on the private ledger, those carried on the general ledger are closed off by transfer to the Private Ledger Controlling account instead of, as usually, to the summary Profit and Loss account. The adjustment of the books is usually made both on the general ledger and on the private ledger. If certain fixed assets subject to depreciation are carried on the general ledger, the adjustment of their values will have to be made by debit as usual to Depreciation account, with a credit to the suitable Depreciation Reserve account. This Depreciation account, of course, is in closing charged to Private Ledger instead of to Profit and Loss. If the Merchandise Inventory account and the Sales and Purchases accounts are carried on the general ledger, the cost of goods sold will be developed as usual on the general ledger and then transferred to the Private Ledger account. More often, however, most of these adjustments on account of depreciation reserves and reserve for doubtful accounts and the merchandise inventories are handled only on the private ledger. The Profit and Loss account as carried on the private ledger shows the net profit and usually all appropriations of that profit. The result is that the dividend accounts, the various reservations of profits, and Surplus account are handled only on the private books.
The private books are usually kept by the general auditor, the secretary, or general manager of a corporation, and by one of the partners or a trusted employee in the case of a partnership.
Journal Vouchers
Need for the Journal Voucher
Since the introduction of special journals to take care of cash, sales, and purchases, the present-day journal is used principally as a record for adjusting entries between accounts, the opening and closing entries of the ledger, and any other unusual transactions for which no other specialized form of book has been provided. For this reason it is very important that all the evidence which may be necessary to explain or to prove the correctness of an entry, together with the authority for making it, shall be instantly available in some convenient form. This not only saves much time and irritation in hunting up scattered data to explain an unusual entry, but it relieves the bookkeeper of any personal responsibility which might attach to him for making entries not strictly in accordance with correct accounting principles. It has been seen in an earlier chapter that the authorization of cash disbursements by means of the formal voucher gives a valuable control over cash and the bookkeeping record of it. In like manner, for entries appearing in the journal, the use of the journal voucher accomplishes these purposes.
The forms in which journal vouchers are made out vary with the requirements of each business, but in general they are very simple and follow the same general principles. Two features are essential: (1) the voucher must show clearly the purpose for which it is drawn; and (2) it should provide proper authority, with full explanation of the reasons for making the entry. The usual form is illustrated below:
Journal Voucher (face)
Journal Voucher (reverse)