The tendency of modern accounting is to adapt the books to a business, rather than the business to the books, and this practice is particularly noticeable in bank bookkeeping. Systems and devices may differ among banks, and even between branches of the same bank, but the basic principles are the same. Once a clear understanding of bank bookkeeping in general is obtained, there will be found little or no difficulty in mastering any of the methods or systems in use by Canadian banks.
To grasp thoroly all the underlying principles of bank accounting, it is necessary to bear in mind that practically everything handled by a bank, in the ordinary course of its business, is either money itself, or a written claim or right to money. Consequently the cash book in a bank is the principal book, and thru its pages must pass a record of every transaction made by the bank, either in detail or as a total from a supplemenary book. Thus the cash book gives a bird's-eye view each day of all the work of the bank. Some banks still use, in addition to the cash book, a modified form of the old-fashioned journal, but it is preferable to make the cash book the only posting medium of the general ledger.
It would be quite possible for a newly-opened branch to conduct its business for the first six months or so with the aid of a cash book and a ledger, which would serve for all accounts. A collection register would, however, soon be necessary.
As the business grew it would be found convenient to have a special ledger for individual accounts, with the control or key account carried in the original led-ger, and to have the checks and deposits entered in a supplementary cash book, with only the totals entered in the general cash book. Similarly, it would be found necessary in time to open up a discount register and a liability ledger to look after the increased number of loans.
As the volume of business increases, the deposit ledger is capable of being indefinitely subdivided, either alphabetically or numerically. Generally, the ordinary deposit ledger is divided alphabetically and the savings bank ledger numerically.
From the above it will be noticed that bank bookkeeping, altho based primarily on the cash book and ledger, is susceptible of indefinite expansion in any direction to meet increased volume of business or other local exigencies.