{m}.{s}.1The actual ledger can take several different forms.

These basically fall into two categories:

{m}.{s}.2Book

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 This has the great advantage that new pages can be added as required and old out-of-date pages can be removed.

{m}.{s}.3Computerised ledger

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.

     {m}.{s}.4Computerised ledger: Coding system

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:

  • Profit and loss items
    • I1 Sales
    • E1 Expense 1
    • E2 Expense 2
  • Balance sheet items
    • A1 Asset 1
    • A2 Asset 2
    • L1 Liability 1
    • L2 Liability 2
    • C1 Capital
    • C2 Drawings

This would not quite work in a computer system as the trial balance would be in order of account code.

  • A Assets
  • C Capital
  • E Expenses
  • I Income
  • L Liabilities

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
1010
1011
1021
1030
-
-
-
-
-

 

101-20-4065
101-20-4070
101-20-4080
101-21-4065
101-25-4070
-
-
-
-
-

[{m}.{s}a]

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
[{m}.{s}b]

{m}.{s}.5Sample codes: Fixed assets

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
[{m}.{s}c]

Digits: key of meaning

  • 1st digit = 1 means fixed asset
  • 2nd digit indicates fixed asset category
    • 1=Property
    • 2=Vehicles etc
  • 3rd digit = subgroup of asset category
    • Property
      • 1= Factory
      • 2= Office
    • Vehicles
      • 1= Lorries
      • 2= Vans
      • 3= Cars
  • 4th digit indicates cost (0) or accumulated depreciation(1)
Open/Close{m}.{s}.Q1

{m}.{s}.6Other codes

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
[{m}.{s}d]

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
[{m}.{s}e]
Pile of accounts