7. Books of subsequent entry.—The books of the second class are known as "books of subsequent en try." These are the books in which the detailed rec ords in the books of preparatory entry are classified and summarized in account form. Just as a journal is a book of preparatory entry, the ledger is a book of subsequent entry. Since entries in the ledger are sup ported by the detailed information in the journal, it is unnecessary to transfer the complete history of each transaction to the ledger.
When accounting records are submitted as evidence in court, the ledger accounts will be accepted only on the condition that they shall be verified from the orig inal records. The law, as a rule, requires that a con tinuous chronological record be shown—a record that is the compilation of memoranda made at the time each transaction occurred. A ledger account may be easily changed by subsequent entries or by manipula tion, and therefore has not much standing as evidence. But, in the journal, the entry is made when the trans action occurs, or immediately afterward, and cannot be changed later unless a new entry is inserted or the first one is altered; in either case it would be evident that a change had been made.
In the ordinary form of ledger a page is devoted to each account. For instance, the merchandise ac count illustrated on page 72 would make up one page of the ledger. Sometimes, however, four or more accounts may be grouped on a single page. The amount of space that shall be given to an account will be determined by the size of the ledger and the number of items that make up each account.
8. Memo books.—The books of account of the third and last class are the memo books. In every business many records are kept which do not pertain directly to the financial books. These records are usually simple memoranda of facts that will require atten tion at some future time. They are, therefore, kept in special memo books. These books furnish a record of details to which space cannot be devoted in the prin cipal accounting books. The order book, and the book for the record of notes receivable and payable are good examples of the memo type. Illustrations of the form of draft books and note books are given be low : 9. Subsidiary journals; general characteristics.—It is a monotonous and an expensive process to write for each transaction or operation the name of each ac count to be debited and of each account to be credited, and to post each of these debits and credits separately to their respective accounts. In almost every busi
ness there are certain transactions that occur fre quently and certain accounts to which many debits and credits are posted.
The reader has probably noted the frequent debits or credits to "cash" and "merchandise" in the illus trations given in the present chapter as well as in earlier parts of this Text. Because all records pass thru the journal, the name of each account must be written whenever the account is used, and each entry must be posted separately. It is evident that much of the labor of posting to these accounts could be saved by totaling the debits and credits in the journal and posting these totals instead of the individual items.
The only difficulty arises with the question, How are the transactions for each account to be grouped? The journal is, as we have termed it, a book of prepara tory entry. If the term, "journalizing," be broadly interpreted, it may be defined as the process of mak ing any preparatory assignment of debits and credits that are later to be assembled in the ledger accounts. It does not matter, then, in what form the assignments of debits and credits are prepared, so long as complete information about each transaction is given and so long as the accounts and amounts to be debited and credited are clearly designated.
It has been found that the simplest method of grouping the various entries that occur frequently for such accounts as "cash" and "merchandise," is to divide the journal into several books. Each book will be a separate journal, with all the characteristic fea tures, but it will record only a part of the transactions of the enterprise, instead of all of them. Let us now consider the standard subsidiary journals.
10. Cash book.—The following definition of a cash book is perhaps sufficiently adequate and com prehensive: A journal or posting medium devoted entirely to a record of cash transactions. In the usual form of cash book, the debits and credits to cash are entered on separate pages. Customarily, cash debits ( i.e., receipts) are recorded on the left-hand page and cash credits on the right-hand page.