{m}.{s}.1The actual ledger can take several different forms.
These basically fall into two categories:
The ledger will be in the form of a book. The page may be divided into two, in traditional double entry format, or may be ruled off in a three- column format.
The book may be a normal hard backed ledger or, as is common, may be in the form of loose leaf pages in a binder. This has the great advantage that new pages can be added as required and old out-of-date pages can be removed.
The accounts will be stored in computer files.
Accounts can be viewed either on screen or by taking a print-out. They will usually be shown in a three-column format as we have seen previously, or in two-column format together with the closing balance given. The accounts will all be given account codes - these will be used in a similar fashion to the way we have used codes to indicate particular accounts to the computer.
For making entries to the rather simplified nominal ledgers that we have used, our coding system has been very simple. Trial balances have been listed in the order:
This would not quite work in a computer system as the trial balance would be in order of account code.
A computer coding system will use the same idea but it will be more sophisticated. Codes may be as little as 4 characters in length, but may be up to 16 or more characters. Codes may contain letters (alpha-numeric) but more often contain only numbers (numeric):
1000 |
101-20-4065 |
Like items will be grouped together. Thus the first character will usually indicate the category of account. The ordering may be profit and loss items first and then balance sheet items or vice versa.
1xxx | Fixed assets |
2xxx | Investments |
3xxx | Current assets |
4xxx | Long term liabilities |
5xxx | Current liabilities |
6xxx | Capital |
7xxx | Income |
8xxx | Expenses |
9xxx | Other accounts eg Suspense account |
Within each category individual digits may also be used to provide further groupings. The example below shows the fixed assets section of an accounts code list, or chart of accounts.
1 1 1 0 | Factory - Cost |
1 1 1 1 | Factory - Accumulated depreciation |
1 1 2 0 | Offices - Cost |
1 1 2 1 | Offices - Accumulated depreciation |
1 4 1 0 | Motor lorries - Cost |
1 4 1 1 | Motor lorries - Accumulated depreciation |
1 4 2 0 | Motor vans - Cost |
1 4 2 1 | Motor vans - Accumulated depreciation |
1 4 3 0 | Motor cars - Cost |
1 4 3 1 | Motor cars - Accumulated depreciation |
Digits: key of meaning
Other categories of accounts will similarly use the characters in a suitable way. For example, expenses may be coded:
80xx | Cost of sales |
82xx | Administrative expenses |
84xx | Distribution costs |
86xx | Selling expenses |
88xx | Financial expenses |
Instead of simply using consecutive numbering (80xx, 81xx etc), gaps have been left. If further subdivisions are required later intervening numbers can be used.
Similarly, when coding individual accounts, gaps will be left so that new accounts can be fitted into the right places.
8210 | Rent |
8211 | Rates |
8212 | Insurance |
8220 | Electricity |
8221 | Gas |
8240 | Stationery |
8241 | Printing |