Encyclopaedia Britannica, 11th Edition, "Bohemia" to "Borgia, Francis" / Volume 4, Slice 2

by Various

Journal 1906

			Dr.			Cr.
Dec. 31	Trading account	110	£48,809	19	2
	To Stock account	44				£4,078	16	4
	” Purchases account	97				44,731	2	10
”	Sales account	100	48,732	4	9
	Stock account	44	5,751	3	10
	To Trading account	110				54,483	8	7
”	Trading account	110	5,673	9	5
	To Profit and Loss account	120				5,673	9	5
”	Profit and Loss account	120	5,383	1	6
	To Rent, rates and taxes	78				1,242	13	8
	” Salaries and wages	65				1,865	12	0
	” General expenses	82				1,087	8	0
	” Discounts allowed	50				975	3	3
	” Bad debts	40				71	4	2
	” Depreciation	75				141	0	5
”	Discounts received	60	1,117	17	8
	To Profit and Lossaccount	120				1,117	17	8
”	Profit and Loss account	120	1,408	5	7
	To A.B., Capital account	1				1,408	5	7
	A.B., Captial account	1	1,500	0	0
	To Drawings account	5				1,500	0	0
			£118,376	1	11	£118,376	1	11

Day Book 1906

471	Forward					£3761	7	8
	27th December.
	A. Brown,
	492 New Street, Walworth—
	2 doz. V.C. port	31/-	£3	2	0
	1 ” A.C. pale brandy	49/-	2	9	0
216	28th December.					5	11	0
	Fredk. Newton,
	Farleigh House, Epsom—
	1 gall. E. Pale sherry	13/6	£0	13	6
	2 doz. O.B. Heidsieck 1892	160/-	16	0	0
	2 gall. P. Scotch	21/-	2	2	0
408						18	15	6
	Robert French,
	214 High Road, Sutton—
	6 doz. F.D. Pommard, 1899	30/-	£9	0	0
	1 ” M.F. Margaux, 1893	66/-	3	6	0
	2 ” A. Niersteiner	24/-	2	8	0
						14	14	0
						£3800	8	2
						100

With a view still further to split up the work, thus enabling a large staff to be simultaneously engaged, the ledger itself is now generally kept in sections. Thus the cash account and the bank account are frequently bound together in one separate book called the cash book, showing in parallel columns the movements of office cash and of cash at the bank, and by the addition of a third column for discounts the necessity of keeping an additional book of first entry as a discount journal may also be avoided. Of late years, however, most businesses pay all moneys received into their bankers without deduction, and pay all accounts by cheque; the necessity of an account for office cash thus no longer exists, save in connexion with petty payments, which are recorded in a separate book called the petty cash book. With regard to the remaining ledger accounts, personal accounts—which are the most numerous—are frequently separated from the real and nominal accounts, and are further subdivided so that customers’ accounts are kept separate from the accounts of trade creditors. The customers’ accounts are kept in a ledger (or, if need be, in several ledgers) called sales ledgers, or sold ledgers; while the accounts of trade creditors are similarly kept in purchases ledgers or bought ledgers. The nominal and real accounts, if together, are kept in what is called the general ledger; but this may be further subdivided into a nominal ledger and a private ledger. This last subdivision is, however, rarely made upon a scientific basis, for such accounts as the profit and loss account and trading account are generally kept in the private ledger although strictly speaking nominal accounts; while the bills receivable account and the bills payable account are generally kept in the nominal ledger, so as to reduce to a minimum the amount of clerical work in connexion with the private ledger, which is kept either by the principal himself or by his confidential employee. By the employment of adjustment accounts, which complete the double-entry record in each ledger, these various ledgers may readily be made self-balancing, thus enabling clerical errors to be localized and responsibility enforced.

Of recent years considerable attention has been devoted to further modifications of book-keeping methods with a view to reducing clerical work, increasing the speed with which results are available, and enabling them to be handled more quickly Tabular book-keeping. and with greater certainty. Tabular book-keeping is a device to achieve one or more of these ends by the substitution of books ruled with numerous columns for the more usual form. The system may be applied either to books of first entry or to ledgers. As applied to books of first-entry it enables the same book to deal conveniently with more than one class of transaction; thus if the trading of a business is divided into several departments, by providing a separate column for the sales of each department it is possible readily to arrive at separate totals for the aggregate sales of each, thus simplifying the preparation of departmental trading accounts. As applied to ledgers, the application of the system may be best described by the aid of the above example (the proceedings of the columns being given only), which shows how a very large number of personal accounts may be recorded upon a single opening of a ledger provided the number of entries to be made against each individual be few.

Reference No.	Name of Debtor.	Amount due on 1st Oct. 1906	Charges for Current Quarter.	Total Debit.	Date received.	Amount Received.	Discounts.	Allowances.	Bad Debts.	Amount due on 31st Dec. 1906	Remarks.
		£ s. d.	£ s. d.	£ s. d.		£ s. d.	£ s. d.	£ s. d.	£ s. d.	£ s. d.

Fig. 1.—Card-Ledger Tray (Librry Bureau System).

Another important application of modern methods consists of what may be described as the slip system, which is in many respects a reversion to the method of keeping records upon movable slabs or tablets, as in the Babylonian accounts Slip system. referred to at the beginning of this article. This system may be applied to books of first-entry, or to ledgers, or to both. As applied to books of first-entry it aims at so modifying the original record of the transaction—whether it represents an invoice for goods sold or an acknowledgment given for money received—that a facsimile duplicate may be taken of the original entry by the aid of a carbon sheet, which instead of being immovably bound up in a book is capable of being handled separately and placed in any desired order or position, and thus more readily recorded in the ledger. Postings are thus made direct from the original slips, which have been first sorted out into an order convenient for that purpose, and afterwards resorted so that the total sales of each department may be readily computed; after which they are filed away in a form convenient for reference. Sometimes the process is carried a step further, and the original slips, filed away with suitable guide-cards indicating the nature of the account, themselves constitute the ledger record—which in such cases is to be found scattered over a number of sheets, one for each transaction, instead of, as in the case of the ordinary book ledger, a considerable number of transactions being recorded upon a single page. This adaptation of the slip system is impracticable except in cases where the transactions with each individual are few in number, and is not worth adoption unless the exceedingly large number of personal accounts makes it important as far as possible to avoid all duplication of clerical work. The more usual adaptation of the slip system to ledgers is to be found in the employment of card ledgers or loose-leaf ledgers. With card ledgers (fig. 1) each ledger account is upon an independent sheet of cardboard suitably arranged in drawers or cabinets. The system is advantageous as allowing all dead matter to be eliminated from the record continuously in use, and as permitting the order in which the accounts stand to be varied from time to time as convenience dictates, thus (if necessary) enabling the accounts to be always kept in alphabetical order in spite of the addition of new accounts and the dropping out of old ones. An especial convenience of the card system is that in times of pressure any desired number of book-keepers may be simultaneously employed, whereas the maximum number that can be usefully employed upon any bound book is two. The loose-leaf ledger (fig. 2) may be described as midway between card and bound ledgers. It consists of a number of sheets in book form, so bound as to be capable of being readily separated when desired. The loose-leaf ledger thus embraces most of the advantages of the card ledger, while remaining sufficiently like the more old-fashioned book ledger as to enable it to be readily handled by those whose previous experience has been confined to the latter. Both the card and loose-leaf systems will be frequently found of value for records in connexion with cost and stores accounts, quite irrespective of their advantages in connexion with the book-keeping records pure and simple of certain businesses.

Fig. 2.—Loose-Leaf Ledger (Library Bureau System.)