If the loose-leaf book is a ledger in which we wish to maintain our accounts in a certain order, the leaves may be shifted at will so as to maintain that order. When new sheets are inserted they will be placed in the order desired. It is possible to combine sev eral different books in one by inserting sheets of the desired ruling whenever necessary.
For instance, the general and subsidiary ledgers may be kept in one book by having different colored sheets for each class of accounts. Again, in a small business it may be desirable to combine all the books of original entry by having a journal, cash book, sales book and purchase book, in one binder. This is also possible thru the use of appropriately ruled sheets of different colors.
5. Indexing loose-leaf books.—Difficulty may be experienced in indexing loose-leaf records. This dis advantage has been overcome in various ways. For example, if a ledger is kept in alphabetical order, new sheets will be continually added so that a numerical numbering of the sheets is impossible. To overcome this we may insert a control sheet for every alpha betical subdivision.
Thus for the "A" accounts, we would have a con trolling sheet with the letter "A" on its tab, to serve as a guide in reference. The pages on which the "A" accounts are entered would be numbered, "A-1," "A-2," "A-3," etc. On the control sheet we would enter the number of each sheet as fast as it is added. Thus, back of the "A" guide, there may be ten ac counts, numbered, respectively, "A-1" to "A-10," in clusive. The guide sheet would have the same num bers on it, so that no sheet could be withdrawn with out a record of it being kept. If the records are par ticularly important and subject to frequent handling, it may sometimes be advisable to insert the name of the account on the control sheet as well.
6: Card records.—Card records give the same flexi bility and compactness as loose-leaf books. In some cases they are even more satisfactory, because of their greater flexibility. They are less permanent as a record, however, and are much more easily lost.
The most frequent use of card records is for the subsidiary ledgers which are controlled by controlling accounts. Accounts receivable are most frequently recorded on cards. When an account is closed it can be easily transferred to a separate file, so that without trouble or waste of time the subsidiary ledger is made to contain only active accounts.
. An accurate control, however, is a prime requisite to the successful use of card records. If the cards are split into sections, it is advisable to have a con trol for every section. This control should simply show the reference number or the index number of the card and the name of the account. At frequent intervals it will be necessary to check the cards within that section against the control, so as to make cer tain that no card has been lost.
This is especially necessary as regards card ledgers, since the ledger would be out of balance if a card was missing. It becomes necessary, also, in the case of card records for customers' accounts, because it is essential to successful collection that accounts be fol lowed up frequently and regularly.
7. Advantages and disadvantages of these records. —The advantages of any flexible record are more or less apparent. Saving of space and flexibility of handling are the most important. Obviously much time will be saved if the accounts follow each other in a regular order, and if transfers of accounts or addi tions of new accounts can be easily made.
The disadvantages are perhaps equally apparent. If a dishonest bookkeeper wishes to cover up some of his transactions, he may detach an entire page from one of the books and rewrite it, making such correc tions as will hide his theft. When taken out of the book for one purpose or another, sheets may be lost, and thus the record will be incomplete.
There is also considerable doubt as to whether loose leaf records would be accepted in a court as legal evi dence. A loose-leaf journal, for instance, affords no proof that a particular entry was made under the date on which it is entered. There is nothing to pre vent the entire sheet for that day being rewritten so as to present information favorable to the side which claims it as evidence.
In order to be on the safe side, many business houses keep their cash book and journal in the form of permanently bound records, and maintain their subsidiary journals and ledgers in loose-leaf form. By this means they are able to enjoy practically all the advantages of loose-leaf records and still be able to maintain the more important records in bound book form, should they ever be compelled to present them in court.