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Chapter 7

Organising the bookkeeping system

So far, the bookkeeping exercises you have seen and tried for yourself have involved
only a small number of transactions, and you have therefore been able to keep all of
your ledger accounts in one place, with no difficulty in locating a particular ledger
account or transaction if you wanted to check it again. Furthermore, producing a trial
balance from a small number of ledgers is fairly quick, and any errors can easily be
located by tracing through the entries again.

In larger organisations, a single ledger may not be sufficient to hold all the ledger
accounts and it is common for the ledger accounts to be divided up into sections
known as 'divisions of the ledger'. A common division of the ledger is as follows:

 All receivable accounts kept in the sales ledger (also known as the receivables
ledger)

 All payable accounts kept in the purchase ledger (also known as the payables
ledger)

 All bank and cash accounts kept in a cash book with perhaps a separate petty
cash book

 All other accounts kept in the nominal ledger (also known as the general ledger)

Do note that the sales and purchase ledgers are for personal accounts. They do not
contain the sales and purchases accounts – these are found in the nominal ledger.

It is possible to maintain other books, records, lists and so on, that, although not part
of the ledger, help in recording and controlling the transactions in the ledger. These
books are known collectively as books of prime entry ('prime' means 'first' – and the
transactions are 'captured' here first, before being entered in the ledger accounts).

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