The sales book will be totalled at the end of each month and the total sales on account for the month will be charged to the customers' controlling account in the general ledger and credited to the merchandise sales account. At the same time each individual customer will be charged in the customers' ledger with the respective amounts sold to him.
When controlling accounts are used in conjunction with the forms of books which have been discussed thus far, it will be necessary to post individually those items which are not segregated in individual books. As an illustration, payments by customers in settle ment of their account must be posted individually from the cash book to the controlling account and to each customer's account. In the next chapter our discus sion of "posting media" will take up, among other things, an explanation of group postings to control ling accounts, so that there will remain but a very few postings which must be made individually both to the controlling and to the individual accounts.
13. Subsidiary ledgers and their control.—The ledger in which the customers' accounts are kept, is usually termed a subsidiary ledger or the customers' accounts' ledger. It should be borne in mind that the total of the accounts in the subsidiary ledger must equal the balance of the controlling account in the gen eral ledger. In order that this may always be true, provision must be made for posting to the controlling account whatever postings are made to an individual account. This posting may be made individually or in total as the accounting system permits. Obvi ously the reverse of this rule is equally important— any postings to the controlling account must be made to one or more of the individual accounts as well.
14. Applications of controlling accounts.—The ex tent to which the use of controlling accounts and sub sidiary ledgers may be developed, is unlimited. All assets which are made up of numerous items similar in nature, when the details of each individual item as well as the total amount involved must be known, can be recorded thru the use of the controlling accounts. In the case of a concern which possesses considerable real estate, the total amount may be indicated by one account headed "real estate" in the general ledger.
A subsidiary ledger will contain a record of the sepa rate amounts invested in different parcels of land as well as many other details. Similarly departments, branches, classes of liabilities, etc., may all be con trolled thru these accounts.
Some business houses prefer to divide their cus tomers by territories. They will set up controlling accounts for each territorial division and will keep the subsidiary accounts for each controlling account sepa rate, in order that they may be checked against their respective controls. The value of this division lies chiefly in aiding the determination of administrative policies. Territorial division of accounts will also furnish a great deal of information to the manager regarding the profitableness of the business carried on in each geographical section. Any peculiarities of a certain territory will quickly become apparent if ac counts are kept by territories. Sales policies may be changed so as to meet local conditions in each territory.
In other cases accounts receivable may be grouped numerically. A number will be assigned to each ac count and all accounts divided into equal sections. Thus accounts 1 to 1000-1001 to 2000, etc., would each have a separate control. This division makes proof easy and greatly simplifies reference to the ac counts. The numbers run consecutively and each ac count retains the same number all thru the records.
15. Private ledger.—One of the most frequent uses of a controlling account is to control a private ledger. In every business there are certain features connected with the personal accounts of the officers, salary ac counts, profits, investment, etc., which the manage ment will not wish to disclose to the bookkeeper or his clerks. All such data may be recorded in a private ledger which will be operated by one of the officials of the company. As it is not advisable to operate two main journals and, as all transactions must be re corded first in the journal or its sub-divisions, entries going into any of the accounts carried in the private ledger must originate in the general books of account.