73. Methods Of Proving Each Of The Above Ledgers

In describing the method of proving each of the individual ledgers, we must assume that each has its controlling account on the general ledger, that the sum of all debits given to the individual bookkeeper to post has also been given to the general bookkeeper to post in his ledger against the controlling accounts, and the same for all credits.

To prove an old style ledger such as shown in Figure 3 on page 30, it is necessary to foot the debits and credits in each account, strike the balances in pencil and take a list of them. If any of the accounts are overdrawn the totals will need to be deducted from the gross credit balances in order to arrive at the net balances as per the general ledger. An adding machine will greatly facilitate the work. If a difference appears when the work is completed, it will be necessary to go over the work again in the reverse order from which the entries were set up, i. e., call back the listing of balances first, then if the difference is ten, one hundred or a thousand dollars, test the footings and balances. If the difference is an odd amount, it will probably be found in the postings.

The proofs of the Cincinnati and the interest ledger shown in Figures 45 and 46 on pages 92 and 94, are made in the same way, except that the balances are shown at all times and all that needs to be done is to take a summary of the balances.

Proofs of these ledgers should be made very often because it is a trying task to check back the deposits and withdrawals of a long period. Some banks have proofs taken off once a month, others twice a month, some weekly and some have them prepared twice a week. The oftener they are made, the better.

There are many tricks in striking the balances in a Boston ledger, and these can be acquired only by practice. After the balances have been struck, each page should be footed, and a summary made of all the credit and debit balances. The latter will be very few in number and should be deducted from the credit balances. If the ledger does not prove, the location of the difference may be narrowed down to a page by footing the debits and credits and striking the balance for the page. If it agrees with the sum of the balances, the striking and footing is probably correct. This should be done with each page. If the difference still remains undiscovered, take a summary of the debits and another of the credits. Compare with the paying teller and receiving teller. If the bank is located in a city having a clearing house, the clearing house debits may be footed separately from the items cashed over the window and the general location of the difference narrowed down still further.

74. Inactive Accounts On Boston Ledger - How To Han-Dle

One of the objections to the use of a Boston ledger is that inactive accounts must be carried forward each day, while in the older style no work is done unless there is action. This difficulty may be reduced to a minimum by dividing the individual accounts into three classes, active, inactive and dead. The last class of accounts is usually known as sundry accounts and kept in a separate ledger, with a controlling account on the individual ledger. These accounts are usually very small amounts which everybody wishes could be gotten rid of. They cost money to carry, and where the amount is very small could be eliminated by charging the account with cost of check books, stationery, etc., used while the account was active and mailing a formal bill, duly receipted, to the last known address of the depositor. A certain bank issued a cashier's check to the order of the depositor for the amount of the balance, and filed it in its vault with a statement closing the account. When the customer called at the bank the check already drawn, together with the statement, was handed to him. This cleared the individual ledger, but it only transferred the burden to the general ledger, and so was only a choice of two evils.

The inactive accounts are those which are really alive and have good balances, but very few deposits or withdrawals. It is entirely unnecessary to carry these balances along every day. Separate these accounts from the others and arrange them in alphabetical order in the back of the ledger, carrying a controlling account in the current work called "inactive accounts," allowing several lines for it. All entries should be posted to the account affected among the inactive accounts and also to the controlling account. The balance of the controlling account, of course, will be struck every day. The balances in the inactive section should be struck about twice a month and a proof made with the controlling account.

The bookkeeper should have the privilege of transferring an account from the active to the inactive whenever he thinks it will be more convenient in one place than another. He will undoubtedly be the best judge. It may be argued that one will never know where to look for an account, but this argument has no weight in practice. The ledger man is usually at his desk when questions are asked, and he will know just where to open to the account. Others should not have access to the ledgers. If an officer wishes to know and cannot wait until the return of the bookkeeper, the account will be found in alphabetical order in one of two places.