chapter  10
The Accounting Function
Pages 29

What sort of entries do all these document generate? (2) The documents are entered in books of original entry This gives us a permanent record of the document, in date order, in books of original entry such as those listed in the diagram, the purchases day book, sales day book, etc. In fact these days we have many ways of avoiding all this rather unnecessary work. Some systems are called simultaneous entry systems, where several records are made at once using carbon paper or NCR paper (no carbon required). A famous name in this field is Kalamazoo, who specialise in these systems. Another way is to put the material on to a computer and let it print out a day book once a month. Another way is to bind the documents in loose-leaf binders. (3) The original entries are now posted to the ledger Whatever system we use for original entries in (2) above, every single transaction must be posted from the book of original entry to the ledger. A ledger is simply a book full of pages, called accounts. Every single page is entirely separate from every other page. It has a name at the top. This could read:

Geoffrey Whitehead A/c (a personal account) Mrs Amy Jones A/c (another personal account) Furniture and

Fittings A/c (a real account, because the thing it is keeping account of is a real thing)

Wages A/c (a nominal account. Nominal means 'in name only' - there is nothing real there, the real money has been paid to the workers, but we need to keep a record of how much has been paid in wages)

Every account is either personal, real or nominal. The other thing to know about these accounts is that every time one is debited

(receiving goods, or services, or money) another account has to be credited (giving goods, or services, or money). For example, if I pay out postage £2.40 on a parcel, Cash Account gives £2.40 (credit the giver) and Postage Account receives £2.40 (debit the receiver). Of course, Postage Account doesn't really receive £2.40 - it is stuck on the parcel as stamps - but then Postage Account is a nominal account - the money is there in name only.