Some accounts may be partly real and partly nominal, such as the general merchandise ac count, and are called mixed accounts. It is best not to keep such accounts but to separate them into their component parts which are wholly real and wholly nominal. Sometimes accounts are classified as personal and impersonal; that is, accounts dealing with persons and those dealing with tangible and intangible property.
Real accounts may be either personal or im personal, while nominal accounts are all im personal. The proper classification of accounts is one of the most important tasks of keeping books.
Ledger.— The book in which the elements of the transactions are recorded in classified groups or accounts is called the ledger. In the journal the unit is the transaction, while in the ledger the unit is the account. The ledger is the most important book of any set of books. In it the records of all other books are collected and classified so as to show results. If the pro prietor or manager wishes to know how much any person owes the firm or how much the firm is in debt to anyone, he turns to the proper ledger accounts; if he wishes to know the amount of any kind of expense for a period or the income from any particular source, he will find it in the ledger. From it he can ob tain quickly and easily the effect upon the busi ness of any class of transactions and a compre hensive view of the business as a whole. Legally, however, the journal or book of orig inal entry is the more important one because it is the first record and less easily falsified. It holds a higher place in court in case of dispute. The process of transferring the items of the journal entries to the proper accounts in the ledger is called posting. In posting it is im portant that the connection between the ledger and the book of original entry should be indi cated. This is accomplished by placing in the folio column of the journal opposite each entry the page of the ledger to which the posting was made; and in the folio column of the ledger account the journal page from which it came.
i All entries in the ledger must be posted from some other book, never made directly.
Books Used.— In theory the journal and ledger described above are the only books necessary for the double entry system. In actual practice and especially in a large busi ness, it is impractical to keep only one book of original entry for all transactions. Therefore the journal has been subdivided into many books, each of which is used to record a par ticular class of transactions. It is convenient and saving of space and time to employ a sales journal or sales book in which to record only those transactions concerning merchandise sold.
Other books of first entry which are split off from the journal are: Purchase Book, Notes Receivable Register, Notes Payable Reg ister, Sales Return Book, Purchases Return Book, Cash Book, the names of which indicate their particular uses.
Since every book of original entry is used to record a particular class of transactions in each of which one element is the same, that element is not recorded for every transaction but only at the end of a period and then as a total of all the opposite elements. Thus, in the sales book illustrated each customer is debited for the amount of his purchase at the time it is made, but sales credited only at the end of the period and then for the total sales. This saves many postings to the ledger and although the form of the entries differs from that of a single journal entry, yet they are of the same nature and maintain the equality of the fundamental equation. It is an invariable rule that every entry in any book of first entry is of the nature of a journal entry.
In addition to the principal books of first entry, from which postings are made to. the ledger, another class of books, called auxiliary books, is sometimes employed, such as invoice book, order book, check book, inventory book, etc. No postings are made from them and they are kept merely for convenience of reference or for statistical purposes and to supply more de tails than are put in the principal books. Often the notes receivable and notes payable regis ters are used as auxiliary books and then no postings are made 'from them.
To prevent the ledger becoming too cumber some and to enable several clerks to make the postings simultaneously the ledger is divided into several volumes. The personal accounts taken out. Such an account is called a con trolling account. A controlling account is, therefore, a summary account in the general ledger, to which are posted in totals the debits and credits which are posted in detail to various separate accounts in some subsidiary ledger. In order to post to a controlling account in the general ledger the total of those items which have been posted separately to some subsidiary ledger, it is necessary to use special columnar books of original entry; that is, books in which there are separate columns for all the items which belong to particular subsidiary ledgers. These columnar books vary, in form according to the number of controlling accounts kept, the nature of the business and the amount of infor mation desired in the records.