Finance for Non-Finance ProfessionalsAccounting Fundamentals
General and Subsidiary Ledgers
Most large organisations maintain separate Ledgers and Cash and Bank Books for different types of transactions. For example, the Ledger may be split into General Ledger, Customers’ Ledger (Accounts Receivable) and Suppliers’ Ledger (Accounts Payable), and separate books may bemaintained for Cash and each Bank Account instead of the Cash and Bank Book.
Generally, a set of subsidiary books is also maintained. Subsidiary books are registers in whichfrequently occurring transactions are recorded, such as the Purchase Register, Sales Register and PettyCash Book. The totals of transactions recorded in the subsidiary books are periodically posted to the principal books.
Each accounting entry has an underlying document – called ‘Voucher’ in accounting terminology – insupport of its validity. The term ‘Books of Account’ generally includes the primary and subsidiary books, as well as the vouchers.
Voucher No.:Date:ParticularsDebit (Rs.)Credit (Rs.)TOTALPrepared by:Authorised by:
Voucher (General Format)
Types of Accounts
Accounts are classified into:
Personal – relating to an individual or firm
Nominal – relating to a head of income or expenditure
Real – relating to an asset or a liability
Chart of Accounts
The Chart of Accounts is a list of all accounts created in the ledger of the entity, arranged under thefollowing four principal groups:
ExpenditureEach of the groups has several sub-groups and every such sub-group either has accounts or sub-groupsas its sub-units, forming a tree structure.-