Chapter XIX.. 4. in the Journal the Debits and Credits of Each Entry Are Fully

4. In the Journal the debits and credits of each entry are fully expressed, i.e., neither element is suppressed. In posting from this record it is best to transfer all the debits consecutively and then all the credits. The possibility of posting a debit item as a credit is thereby greatly reduced.

=Cross-Indexing the Entries.=—An essential part of posting, in addition to recording the date and the amount, is to cross-index every entry, i.e., to index it both in the book of original entry and in the ledger. The “folio” column in each book is used for this purpose. The index in the ledger consists of the first letter of the book of original entry followed by the page number, and the index in the book of original entry shows the number of the ledger page to which the item is posted. (See Form 22.)

In this way, when the indexing in both books is completed it is possible without loss of time to trace the entry from the journal to the ledger, and vice versa. Usually the ledger folio is entered in the book of original entry immediately after each item is posted. When this is done the absence of a reference number in the journal indicates that the item has been omitted in posting. This check is frequently helpful in tracing errors. Some bookkeepers, however, before doing any posting, go through the book of original entry and from the account index of the ledger enter in the ledger folio column of that particular journal the ledger page numbers. By this method, much time is saved in finding the account in the ledger, but a check mark should be placed after each item as soon as it is posted, to indicate the fact. Then the absence of the check mark indicates an unposted item.

=Explanatory Matter in the Ledger.=—In posting personal accounts it is customary to show the terms of credit in the explanation column of the account. In this way the face of the account shows whether the customer pays promptly or not, and affords a basis for his credit rating.

Notes Payable and Notes Receivable accounts in the ledger should show essential data, such as due date, interest rate, etc. However, when a separate note or bill book is used, these data are given therein and may be omitted from the account in the ledger.

With all other accounts, except sometimes the Profit and Loss account, little or no explanatory matter is carried. However, when a posting is made that is at all unusual, it is well to enter explanatory matter in the ledger. From the business man’s point of view, the ledger is the most important book of account, and if its record can be so made as to require a minimum of reference to original books, it serves its purpose so much the better. Where possible, the Profit and Loss account should carry the names of the accounts closed into it; in fact all transfers, whether made on the face of the ledger or by journal entry, should carry the account title and the ledger folio to which and from which the item is transferred. It is a fundamental principle that every entry must be indexed in such a way as to render reference to it easy at any time.