27. General Ledger; Old Style

Although bank book-keeping is supposed to be very simple, there are many ways of doing the same thing and therefore every bank may find something in the methods of some other bank, which would be worth its while to adopt.

The general ledger most often found is the old-fashioned ledger, shown in Figure 3 on page 30. This ledger needs no explanation. It is sometimes ruled with two columns on each side, as shown in Figure 4: on page 30, the inside columns being used to bring down the totals from day to day, instead of directly under the day's work, as in Figure 3. These additional columns prove a blessing, when an analysis of previous work is desired. The footings are usually made in a hurry and are often so large and heavy that it is hard to tell them from the actual debits and credits. It should be borne in mind that the general ledger is continually used to prepare statements of all kinds. Every item of unusual nature should be properly explained on the ledger. For example, the profit and loss account frequently contains debits representing loans, discounts, or overdrafts charged off. Money subsequently recovered from these losses is credited to this account. The record on each side should be so plain that any item may be traced back, in order to show both debit and credit without referring to tickets or journal of any kind. It is worth while to itemize the expense account in the same way unless a detailed expense account is kept separately. Do not debit expense with "Hargood & Co.'s bill, $122.30," but "Stationery, $122.30." A few years hence the bank may be dealing with another stationer.

28. Three Column Ledger

Another form of ledger has the money columns together, as shown in Figure 5 on page 33, making it much easier to strike the balance. The debit balances should be struck in red and the credit balances in black ink when using this form.

29. Boston Ledger

A ledger on the style of the Boston ledger, a thorough explanation of which will fol-low later, is used in many banks and found satisfactory. In this ledger the names of the accounts are written or printed down the middle or side of the page. The days are placed side by side, across the page. See Figure 6 on page 34. A small column may be left for remarks beside each of the debit and credit columns as noted in the figure. It is preferable to arrange the asset accounts in proper order on the upper part of the page and the liabilities on the lower part. When the postings have been made and the balances struck and proved, a complete daily statement will be made on the ledger it-self.

The objection to this style of general ledger is that an analysis of any account is a very trying task because of the meager explanations of debits and credits. A large New York bank has adopted a form which does away with this objection. The front part of the ledger is a two column Boston. See Figure 7 on page 36. (This will also be enlarged upon later.) The back part of the ledger is ruled like the old style ledger shown in Figure 3 or 4. The postings are all made first in one section and then in the other. The bookkeeper takes off a trial balance of the old style section at frequent intervals and compares the balances in each account with the balances in his skeleton section. If this duplication of the ledger should seem useless, the desired results can be obtained by keeping a skeleton ledger and an analytical account for such accounts as "profit and loss," "expense," etc. The Boston ledger and the old style each have their advantages as a general ledger. A union of the two combines all the good points of both, and when bound in the same cover furnishes, with a very small amount of extra work, as comprehensive a volume as one could wish.

Figure 5. Balance Ledger.

Figure 6. Boston Ledger

A very simple point overlooked by most general ledger keepers using a Boston ledger may prove valuable. When closing the books at the end of a fiscal period, enter a trial balance of the ledger in the statement book before any closing entries are made, and another after closing the earning and expense accounts into profit and loss. If a statement of earnings and charges is desired, covering a period dating from before the closing of the books to a period after the closing, it may be very easily prepared by simply deducting the balances in the accounts chargeable to profit and loss on the first day of the period from the balances shown as of the closing date, and adding to the differences obtained, the balances in the same accounts on the last day of the period. Proper addition must be made to each side of the resulting statement for charges and credits made directly to profit and loss account.