Definition of Ledger

This time we will discuss the general ledger and subsidiary books starting from understanding, accounts and also examples of list of subsidiary ledger balances. Happy reading …

 

Table of contents :

Definition of Subsidiary Ledger

Characteristics of General Ledgers and Subsidiaries

Helper Book Code

Composition of Auxiliary and Large Books

Example of Assistant Ledger Balance List

Definition of Account

Account control

General Ledger Account Form

Code

Good Code Terms

Account Code

Kinds of code

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Definition of Subsidiary Ledger

A subsidiary ledger is a special ledger that is used to record certain accounts and their changes in more detail. In other words, the forming ledger is an extension of the general ledger.

 

So the notes that are in the subsidiary ledger are the details of one of the general ledgers, namely the details of accounts payable and accounts receivable.

 

Characteristics of General Ledgers and Subsidiaries

ledger and subsidiary books

Ledger ( general ledger ) is a collection of accounts of the balance sheet and income statement are used to sort and summarize the information that has been recorded in the journal.

 

Ledger ( subsidiary ledgers ) is a branch of a large book containing details of certain existing accounts in the ledger.

 

Examples of the following help books:

 

Accounts receivable subsidiary book

Auxiliary book of raw and auxiliary materials

Machine and tool auxiliary books

Debt subsidiary book

Factory overheads subsidiary book

General and administrative expenses subsidiary books

Sales expense subsidiary book

Helper Book Code

The subsidiary book is a collection of accounts which is the details of an account in the ledger.

To make bookkeeping easier, subsidiary accounts will be coded.

In general, the code for the auxiliary account is placed behind the ledger account code digits.

These subsidiary codes can be generated in the same way for block codes as for group codes.

Composition of Auxiliary and Large Books

General ledgers and subsidiary books can be arranged according to the size of the company, the number of employees in the accounting department and the organizational structure.

 

The following is an example of the arrangement of ledgers and auxiliaries for small to large companies, namely:

 

Small company ; the transactions are not that many, so there are not too many classifications of the transactions, so the accounts used are all included in the ledger. Usually the bookkeeper is only one person or maybe the owner himself does the recording work. In such a situation the general ledger posting is done from a journal book.

In a large company , there are quite a lot of transactions and a fairly detailed classification needs to be done, which will require a fairly large number of accounts. Because the number of accounts is quite large, several accounts that need to be detailed will be made a subsidiary book. Employees working on the auxiliary book will depend on the number of employees in the accounting department and also on the organizational structure. If the employee is one person, the general books and auxiliary books are done by the same person.

“Posting to ledgers and subsidiary books is usually done from journal books.” But if the accounting department employee is more than one person, the subsidiary book work can be submitted to other employees or it can also be submitted to other employees or it can also be done by different sections. In such a situation, the ledger is posted from the journal (periodically) and the subsidiary book is posted from the journal or directly from the document (proof) of the transaction.

If there are a lot of accounts , for example accounts receivable, then a control account book can be created and each of these control accounts a subsidiary book. In this situation there are 3 books, namely: ledger, control account book and subsidiary book. The separation of work and posting is carried out in the following manner: The ledger and the control account book for the work are separated from the sections that work on the subsidiary books. Posting to the subsidiary books is made from the evidence of transactions.

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Example of Assistant Ledger Balance List

example of subsidiary ledger balance

The total balance of both accounts payable and receivable should be the same as accounts payable and receivable in the general ledger.

 

If there is a difference in the number, it means that there is a recording error. To correct this error, you can use a correction journal.

 

Definition of Account

Account is the title of an accounting record, generally in the form of a T, divided into two parts, the left is called a debit and the right is called a credit, as a tool for classifying and recording transactions based on the principle of double entry bookkeeping .

 

Account control

The ledger account, which details are made in the subsidiary book, is called the Control Account, namely; accounts that can be used to monitor balances in the subsidiary books.

 

At the end of each period (for example, monthly) can be checked by adding up the balances in the subsidiary book and comparing them with the balance in the control account.

 

Posting is the process of sorting and transferring data from journals into ledgers and subsidiary books, also known as bookkeeping.

 

General Ledger Account Form

It has been mentioned above that general ledger accounts are generally in the form of T, which are accounting records that are divided vertically in half, the left is called a debit and the right is called a credit.

 

There are various forms of general ledger account forms:

 

Accounts with wide debit (wide debit ledger)

Regular account ( regular ledger )

Account with balance column in the middle ( center balance ledger )

Account with a balance column ( balance ledger )

Double account with balance column ( doubel ledger with balance ledger )

Account with old balance and new balance ( old and new balance ledger )

Accounts with Wide Debits and Credits

This form of account provides a column “description” next to the debit which is wider than the “description” column next to credits. This is done because there are more explanations related to debit transactions compared to explanations related to credit transactions, and if it is necessary to determine the balance periodically.

Ordinary Account

This form of account is very widely used. This account has the same “description” column for one debit or one side credit. Generally general ledger accounts use this form of account. The subsidiary books that use this form of accounts are accounts receivable subsidiary books and debt subsidiary books

Account with Column Balance in Middle

This form of account is used when information on account balances is required at any time, both debit and credit balances and relatively equal amounts of explanation are needed for both debit transactions and credit transactions. The balance column is placed in the middle of the account. Accounts receivable and payable auxiliary accounts generally use this form.

Account Columned Balance

This form of account is used if a lot of explanation is needed, both for debit transactions and credit transactions, and if needed information on the current balance at any time (meaning that it is always displayed the nominal amount in the balance every transaction occurs). To indicate whether the balance listed in the “balance” column is a debit or credit balance, there are two ways to design the balance column (a) by including column D / K to mark D for debit balance and K for credit balance in advance of the number listed in the “balance” column and (b) by creating a separate debit balance column from the credit balance column. Accounts receivable, payable and inventory generally use this form.

Code

Code facilitates data processing because with code, data will be easier to identify.

Example : codes for male employees are coded L, female employees are coded W.

 

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In the accounting process the codes used are: numbers, letters or a combination of both.

 

In a computer for processing data there are code terms: alphabetic (using letters), numeric (using numbers), alphanumeric (using a combination of letters and numbers).

 

Good Code Terms

Factors to consider are:

 

The compiled code needs to be adjusted to the data processing method.

Each code should represent only one item so that it is not confusing.

The compiled code should make it easy for the user to remember.

The code compiled must be flexible, in the sense that it allows expansion without comprehensive changes.

Each compiled code must be flexible, in the sense that it allows expansion without complete changes.

Each code must use the same number of numbers or letters.

Long codes need to be chunked to make it easier to remember. For example: code 60662582549 can be made 606-258-259.

In a long code, a code that is a check digit needs to be given to check the correctness of the code.

Account Code

Code classification for accounts is required because it makes it easier to find the desired accounts.

 

When bookkeeping is done by machine, this code is unavoidable and becomes very important and becomes very important. Account codes must be compiled consistently.

 

There are several ways that can be used to provide a code, namely by numbers, letters or a combination of both.

 

Regardless of which method is used, the code provided must meet the following requirements:

 

Enables account expansion without having to make code changes.

Must be easy to remember

Make it easy for those who use it.

The following describes the use of Group Codes, Blocks and Decimal Codes to provide account codes as follows:

 

Group Code (Group Code) Group

code has special characteristics as follows: a. The position of each digit has a meaning where the leftmost digit is the group code and the rightmost digit is the account type code.

  1. The group code will consist of the predetermined numbers.
  2. Each code in the classification uses the same number of digits.
  3. If there is an additional group of accounts, it can be done by changing the leftmost number. For example, an account classification will be assigned a code consisting of 4 digits, then the method of providing the code can be described as follows:

The other groups of the examples above will be coded in the same way as mentioned above. If there is an account in the ledger whose details are made in the subsidiary book, a code for the subsidiary book must be generated. In the group code, usually a subsidiary book is made of a numeric code which is placed to the right of the account code.

Use of Group Codes for Oversight

When accounting information is used to measure performance, responsibility accounting is used. Responsibility accounting is defined as an accounting system structured in such a way that the information generated shows the level of activity associated with the responsibilities of a particular person or division.

This accountability center can be divided into: a. Cost responsibility center

That is an organizational unit that is assessed on the basis of costs for which it is responsible, for example the production department.

  1. Revenue responsibility center

That is an organizational unit that is assessed on the basis of revenue for which it is responsible, for example the Marketing department.

  1. Profit accountability center

That is an organizational unit that is assessed on the basis of profit for which it is responsible, for example a subsidiary or division of a company.

  1. Investment accountability center,

namely an organizational unit that is valued on the basis of profit, which becomes its responsibility for its investment , for example a company division. To conduct performance appraisals, a budget is used as the basis for the assessment. This budget is prepared for each accountability center. In order for the recording of transactions to be linked to the accountability center, an account code in such a way is compiled. Usually this account code uses groups.

The following is an example code for the accountability unit as follows:

Block Code

In this method, classification is also carried out as is done in group code.

The code given to each classification does not use the sequence of digits as in the group code, but by assigning one block number to each group.

So here the code will be given to each group, starting with a certain number and ending with a certain number which is a block of code numbers. Group Code Block

Assets 100 – 199

Debt 200 – 249

Capital 250 – 299

Income 300 – 399

Operating Costs 400 – 899

Income and Profit Loss Outside of Business 900 – 999

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Kinds of code

Code can be generated in a variety of different code structures. Every structure has advantages and disadvantages.

 

Therefore we need an appropriate code structure so that the purpose of coding can be achieved.

The following types of code can be used:

 

 

Sequence Code Number Codes are arranged in order of numbers. In order for each code to have the same number of digits (digits), it is necessary to plan the number of digits first, for example the number of digits is four digits so the code will start with 0001 and end with 9999.

This sequence code is simple, but does not meet flexibility requirements. We recommend that this sequence code be used to provide a document number (code) or proof of a transaction.

Group Codes Group

codes divide data into specific groups. Each group will be given a code with an angkot, so that each position of the code digit has a meaning. For more details, see account code-2.

Block Code

In block code, each data group is coded in a specific number block. This method of coding can meet flexibility requirements so that it can be used for coding on accounts. For more details, see the account codes.

Decimal Code

Each data set will be coded 0 to 9. Therefore, grouping data must be done in a maximum of ten groups. In order for this decimal code to be used for broad data grouping, stratified groups can be arranged. For more details, see account code-2.

Mnemonic Code

Stands for data characteristics. For example, a shoe factory, a large size men’s shoe inventory can be coded for SPB (Large Men’s Shoes). This code can also be compiled with a combination of letters and numbers, for example men’s shoes with number 42 are coded SP42. It is better if this mnemonic code is used if the data or elements (items) are not too much, so that it does not make it difficult for the user. If the item changes too often and a lot of data, the code user will find it difficult to remember.

Bar Code

Used for the food and beverage industry abroad (for example: USA) which uses the Universal Product Code (UPC). Each participating food and beverage entrepreneur will be given 10 digits as a product code. The first five digits contain the company code, the next five digits contain the product code. This bar code can be read by Automatic Tag Readers machine, and processed directly on the computer. Iji code is also used in libraries, etc.

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