V. Use the information from the text to complete the sentences.

1. There should be a filing system in a business in order ....

2. The simplest form of an account is called a T-account because ... .

3. Any entry made on the right side is called ... .

4. The terms debit and credit come from ... .

5. The most commonly used types of accounts are ....

6. A list of accounts is called ....

7. In a manual accounting system each account ....

8. Every company designs its accounts ....

VI. Read the text again to answer the following questions.

1. When is usually a method of storage and retrieval of accounting information required?

2. What is necessary to have in order to sort out and classify all the transactions of a business?

3. What is a basic storage unit for data in accounting?

4. What parts does the simplest form of an account consist of?

5. What is meant by the terms credit and debit?

6. What are the most commonly used types of accounts?

7. Where is each account kept in a manual accounting system?

8. What is a ledger?

9. Why are all the accounts numbered?

10. Why do different companies have different charts of accounts?

The ledger – the main book of accountants

I. Practice in reading these words and word-combinations:

merchant, counter, merely, folio, surface, to duplicate, the whole story, a fur coat , searching, scattered, receipts , disbursements, unique, purpose.

II. Read the text to find out the information about the history of the ledger appearance and its usage in the accounting practice.

All records in accounting are kept in a book called a ledger. They say it takes its name from a Saxon word meaning "the one that lies" on a merchant's counter. The shelf on which it lay became known as the ledge. In the earliest days of accounting the ledger lay on the ledge, usually under a window where the light was good. Clerks would record all the transactions in date order. Each page in the ledger was called an account. Each account had the name of the person, or goods, or any other thing which was being accounted for. Many years have passed since those days. Businesses have become much larger today. It is not convenient to keep the ledger as a bound book. Instead, computer records, card indexes and loose-leaf books are being used. But still the main book of accounts is called the ledger and must be posted daily with all the transactions that take place.

A ledger is simply a group of accounts arranged in some systematic manner. The journal does not replace the account, but merely precedes it in the recording process. Transactions are first recorded in the journal (the book of original entry) and later transcribed into the individual accounts which constitute the ledger. The process of copying amounts from the journal to the ledger accounts is known as posting. As each debit entry in the journal is posted to the respective ledger account, the “folio” or "reference" columns are completed. In the journal this reference serves two purposes. First, it indicates that the posting has been completed for that particular item. Should the bookkeeper be interrupted while posting, he could easily tell just where he was when he left off. Second, the reference indicates the account number to which the posting has been made, thus facilitating cross reference. The reference in the ledger accounts similarly cross refers to the particular journal page on which the transaction was initially recorded. On the surface it may appear that the ledger duplicates what has already been recorded in the journal. This is not true. Each of these records has distinct advantages and serves a worthwhile purpose. The journal provides a complete record of transactions in chronological order. It is the only place where the accountant may find a complete record of the transaction in one place. Both the debit and credit are recorded on the same page; the whole story of a particular transaction is apparent at one glance. The ledger, on the other hand, contains only half the story in a particular account. The cash account, for example, may contain a credit of $500. This tells management that cash has decreased, but does not explain what brought about the decrease. Was the cash used to buy merchandise, to pay salaries, or to buy a fur coat for the office manager's wife? The answer to this question can be found quickly by referring to the journal, but would require considerable searching if it were to be answered from the ledger.

What good then is the ledger? The ledger serves as a device to sort and collect like items. For example, transactions involving cash, which may be scattered over several journal pages, are all collected in one place in the ledger, the cash account. If management wants to know how much cash the company has at a particular time, it will seek the answer in the ledger rather than in the journal. The cash account would summarize all receipts and disbursements of cash, regardless of the purpose. Thus it is seen that both the journal and the ledger serve unique purposes.

Comments

a ledger – головна бухгалтерська книга, гросбух

to replace – замінювати, витісняти

a journal – журнал, книга обліку

to transcribe – переписувати

to constitute – складати, засновувати

posting – перенесення (в бухгалтерську книгу), проводка

ledger account – рахунок у головній бухгалтерській книзі

respective – відповідний

folio – сторінка (бухгалтерської книги)

item – статтяя (рахунку балансу, експорту, імпорту)

a reference – посилання, згадка

a cross reference – перехресне посилання

to facilitate – полегшувати

initially – початково

worthwhile – вартий

the story – текст, текстові блоки

cash account – касовий рахунок

merchandise – товар, товари, торгувати

scatter over – розміщувати над

to seek – намагатися, докладати зусиль

receipts and disbursements – прибутки та витрати

cash receipts and disbursements method of accounting – метод бухгалтерського обліку по касовим надходженням та витратам (на малих підприємствах)

unique purposes – виключні цілі