Sub-division of the Ledger

As a business grows and the number of accounts increases, keeping every single account — cash, debtors, creditors, expenses, income, assets — together in one large Ledger becomes impractical: it slows down posting, makes any one account hard to find quickly, and makes it impossible for more than one clerk to work on the ledger at the same time. For this reason, the single Ledger is commonly SUB-DIVIDED into three parts.

In the Illustration used through this chapter, Ravi's Account would be kept in the Debtors Ledger, Suresh's Account in the Creditors Ledger, and the Cash, Capital, Purchases, Sales, Furniture, Rent and Salaries Accounts would all be kept together in the General Ledger.

Advantages of sub-dividing the Ledger

• Posting work can be divided among several clerks and carried out simultaneously, instead of one person handling every account alone.
• Locating any particular account becomes much faster, since a clerk only has to search within the relevant ledger, not the whole set of accounts.
• It becomes easier to fix responsibility for an error, since each ledger is typically handled by a specific person.
• Debtors' and creditors' accounts, which change most often (sales and purchases happen daily), are kept separately from the comparatively stable general-ledger accounts, so day-to-day work moves faster overall. …