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Bank Books

Chapter II. Head Ofce Records

1. Head Ofce Bookkeeping

A distinction must be made between the head ofce and the main ofce o a bank. By headofce is always meant the executive ofce o the bank, while the main ofce, tho generallyin the same building, is simply a branch ofce. Notwithstanding its size and importance, itsrelations to head ofce are exactly the same as the most distant branch so ar as routinematters and operations are concerned. ts business, like that o other branches , is with thepublic. !he head ofce, on the other hand, transacts no actual business with the public, andits bookkeeping consists principally o combining and analyzing the statements sent in romthe various branches. "ractically all this work is done in the chie accountant #s department.

!he machinery , however, is suprisingly simple considering the work it accomplishes.

!he immediate books o the head ofce consist o a general ledger , a cash book , acorrespondents# ledger with controlling account in the general ledger, and the stock trans erbooks.

2. General Ledger

!he head ofce general ledger contains accounts or all the assets and liabilities o the bankwhich are not included in the branch statements$ such as capital , surplus, undivided pro%ts ,head ofce investments, general expense account and the like.

At the end o each month every branch sends in an exact balance sheet o its generalledger. !hese statements are all summarized in specially ruled books or sheets under thevarious headings o the accounts, and, when combined with the balance sheet o the headofce general ledger, give the complete statement o the bank#s business re&uired by theBank Act .

Attention is called to the act that a ter allowing or the amount due to or rom the headofce itsel , the combined debit and credit balances o all branch clearing accounts '"ages())*()+ will exactly o-set each other with the exception o the items in transit. !heseoutstanding items are analyzed and allotted to their several destinations or accounts, andthere is conse&uently no branch clearings account balance shown in either the governmentreport or the annual reports.

3. Correspondents' Ledgers

very bank %nds it necessary, or exchange and other purposes, to carry accounts withcorrespondents in /reat Britain, the 0nited 1tates and other parts o the world. 2or simplicity
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and directness o accounting some o these accounts are re&uently carried at the headofce, and the various debits and credits rom the branches are passed thru the branchclearings account as later explained '1ection (3, 4hapter 5 ' !he Bank Act '4ontinued' Branch Books And 6ecords. (. Bank Accounting . As the entries reach the head ofce theyare posted direct rom the slips to the several bank accounts in a special ledger. 1tatements

o the accounts are received rom the various correspondents weekly, and in many casesdaily, and the accounts are kept in constant ad7ustment * any item outstanding an unduelength o time being*made the sub7ect o immediate in&uiry.

4. tatistical Books

Apart rom the shareholders# ledger and the stock trans er books which, or convenience tothe public, are generally kept in the main ofce, all the books used in the head ofce areprincipally o a statistical or analytical nature. !he pro%t and loss returns rom the di-erentbranches are all care ully analyzed in relation to the amount o business done and the

capital employed. 8aily circulation returns are compiled, and a close watch kept on themovement o the bank#s li&uid assets. 1pecial unds, in connection with guarantees ,pensions and the like, are also administered rom this department.

!. Branch Clearings

!he checking o the branch clearings statements received rom the branches is also incharge o the chie accountant. !he method is very simple. An ordinary %ling clip is kept oreach branch9 when a statement is received, the entries are ticked o- as ar as possibleagainst the entries on other branch statements, and it is then %led on its clip to awaitdelayed corresponding entries. As the entries on each sheet are completely marked o-, adiagonal line is drawn across the statement, and whenever a balance is struck by thedepartment these dead sheets are %led away in bundles. 1ome banks arrange the clips inalphabetical order, but the best way is to arrange them %rst by provinces, as naturally thema7ority o the entries are between branches in the same province. !he checking is alsomore concentrated under the latter system.

". tock Books# $tc.

n the shareholders# or stock ledger an account is kept with each shareholder in which arerecorded all shares bought and sold. !he amounts entered in the account represent the parvalue o the shares, and the sum o all the balances in this ledger will e&ual the amount o the paid*up capital o the bank.

!he shares o a bank are trans erable only on the books o the bank9 these are known as:!rans er Books.: ach page o the trans er book is in the orm o a legal document by whichone person agrees to trans er a certain number o shares standing in his name to anotherperson who agrees to accept the shares. !he trans er must be executed by both parties in
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person or by a properly executed power o attorney appointing some one to act or them. !he entries in the stock ledger are made direct rom the trans er book.

!he other books used in the stock department are a :6egister o 1tock 4erti%cates ssued:and a :8ividend 6egister.: !he stock certi%cates issued are not trans erable and need not be

presented when a trans er is made.

8ividends are usually paid &uarterly by check to shareholders o record on certain dates,and the dividend register is simply a record o the payees and amounts o checks issued.

A bank may keep trans er registers in other provinces than that in which the head ofce issituated. !he books consist o a stock ledger 'a duplicate being kept at the head ofce , inwhich is kept the accounts o shareholders residing within the province, a trans er book anda register o stock certi%cates issued. !he head ofce is advised regularly o all trans ersmade, and altho certi%cates are issued at the branch ofce, all dividend checks are issued at

the head ofce.

%. Circ&lation Records

An important duty o the chie accountant is to watch the circulation closely and see that anoverissue does not occur. 6eports are received daily rom the larger branches as to theamount o notes on hand, and weekly rom the smaller branches, and rom these the exactposition o the note issue is determined.

Altho a bank, under ordinary circumstances, can issue notes only to the amount o its paid*up capital , the invariable practice is to carry a large supply o circulation in the tills o thebranches thruout the country so as to be ready to meet, without delay, the re&uirements orcirculation at any point. A bank, or instance, with a paid*up capital o ;,===,=== at the credit o bank note account in the head ofcegeneral ledger .

"art o this amount would be represented by notes on hand in the head ofce, part by notesin the branch tills, and the balance would represent the amount o circulation outstanding.

At credit bank note account. . . .;>,===,=

==

?ess$

0nsigned notes...........;>==,===

1oiled and mutilated notes awaiting destruction..... @==,===
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Notes held in the tills o the branches................(,@==,===

; ,


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1/. 0inancial tate*ent

!his is orwarded daily by the larger, and weekly by the smaller branches. t is practically abalance sheet o the branch general ledger, either in exact %gures or approximately in eventhousands. t is important that this statement should be despatched promptly, as the data

are necessary to the chie accountant in arriving at the amount o circulation outstandingand the general movements o the bank#s assets and liabilities. A complete balance sheet isrendered on the last day o the month.

11. ,isco&nt Report

n some banks this is sent in daily, and in some weekly. sent in daily, it generally takes theorm o a carbon copy o the discount register , with the manager#s comments orexplanations o the di-erent transactions. a weekly statement, only transactions above acertain amount are reported. !he limit varies with the importance o the branch. All

overdra ts , no matter how small, are reported with explanations. All liability accounts in thebranch which are out o order in any way, either by the expiration o the credit or or otherreasons, are listed in each report until they have been ad7usted to con orm to head ofcere&uirements.

12. Cash Ite* cco&nt

!his return is made up at least once a month and gives the outstanding sight dra ts andother cash items with the date o origin and domicile. A special report should be given onany item which appears to be too long outstanding, thus anticipating in&uiries rom the headofce.

13. Balance heet

!his is made up to the close o business on the last day o the month, and mailed to thehead ofce not later than the ollowing business day. t is an exact statement o the generalledger o the branch, and is used by the head ofce in compiling the general statement o the bank, or monthly return to the government, as it is generally called

14. O erd&e Bills

!his statement is re&uired at least once a month, and gives a list o all overdue loans anddiscounts. t should be the ambition o every manager to keep this list down to a low point, i not entirely to eliminate it. Any name which appears re&uently in this list should be avoided9it shows a lack o business honor, or something worse.
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1!. onthl- Lia ilit- Ret&rn

!his return gives a list o all the liability accounts on the books o the branch over a certainamount with all necessary particulars regarding security, etc. 1ome banks re&uire themonthly liability return to contain the name o , and amount, no matter how small, due by

every obligant.

1". &ndr- Ret&rns

1tatements o the expense account o each branch, accompanied by the relative vouchers,are sent every month to the head ofce. !he closing o the books at the end o the bank#s%scal year calls or a number o returns or statistical and other purposes, such as the pro%tand loss statement, the report on bank premises , the bad and doubt ul debts return, and thelike. n addition to these, special reports on various sub7ects may be called or rom time totime by the head ofce.

1%. 5eekl- Report On B&siness

n discussing the 4anadian banking system, re&uent re erence is made to the very ullknowledge possessed by the general managers as to the condition and re&uirements o thecountry as a whole. !his in ormation is ac&uired thru two separate channels$ the weekly%nancial statement and the weekly report on business. !he weekly %nancial statement romthe di-erent branches shows the uctuation o the circulation, loans, deposits, etc., thruoutthe country, and orms an excellent %nancial barometer o business conditions. !hein ormation in these statements is supplemented by weekly or ortnightly letters rom thebranch managers which, as a rule, cover the ground most thoroly, and give a variety o interesting and use ul acts. Among other things with which the letter deals may bementioned the ollowing$

'a "articulars as to prices and movements o staple commodities such as grain, our, cattle,dairy produce, lumber, etc.9

'b Acreage, condition and prospects o crops, etc9

'c 2arm sales and other real estate transactions$

'd !he conditions o trade locally, scarcity or otherwise o money, general %nancial andcommercial news9

'e Business ailures or indications o beginnings o unsoundness in local %rms, whethercustomers or not9

' ?ocal rates or money, domestic and oreign exchange, etc.
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t is easily seen that no press association or mercantile agency could possibly give theintimate in ormation as to the country#s condition thus a-orded the general managers thruthe branches. By means o in ormation thus regularly a-orded, 4anadian banks are able tosee the coming %nancial clouds six months or even a year be ore they appear on thecommercial horizon, and thus not only to take the necessary steps to prepare themselves or

trouble, but also, in the annual reports o the bank, to warn their customers and the publicgenerally o the approaching storm.

1 . Records O6 Ro&tine 5ork

At the end o each month there is orwarded to the head ofce a certi%cate signed by themanager and accountant, which certi%es to the ollowing$

!hat all the general statements and work o the ofce have been completed and veri%ed orthe month9

!hat all the overdra ts shown in the deposit ledger during the month were authorized by themanager9

!hat the liabilities o customers as shown in the liability ledger are correct9

!hat all interest computations in the discount and ledger departments have beenindependently veri%ed by a second and competent ofcer9

!hat all insurance held is in orce9

!hat the time*lock is running correctly and the combination locks are in satis actorycondition9

!hat the cash items account was drawn o-, and that all outstanding items are satis actory9

!hat the current deposit ledger , savings bank , and liability ledger balances were drawn o- and ound to be correct9

!hat the notes, bills, and collaterals were inventoried and balanced9

!hat the collection register has been regularly checked, and that there were nounsatis actory outstanding items9

!hat goods pledged or warehoused have been examined and ound correct9

!hat the dra t account has been balanced.
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!he dates on which these several balances were arrived at are given, as well as the initialso the ofcer who made the check.

t is essential that a complete record o daily routine work, etc., should be maintained, andsome banks re&uire monthly reports rom their branches giving the initials o the ofcers

who ul%ll the various duties each day. ven i this report is not re&uired by the head ofce itis advisable to keep a systematic record in the ofce.

Re ie7

Chat accounts are kept at the head ofce o a bankD

Cho keeps the circulation records o the bankD

Cho makes up the branch clearing statementD Eow o ten is it sent to the head ofceD

!hru what channels does the general manager get complete in ormation about thebranchesD

Eow is the routine work reported to the head ofceD

Chapter I8. Branch Books nd Records. 1. Bank cco&nting

!he tendency o modern accounting is to adapt the books to a business, rather than thebusiness to the books, and this practice is particularly noticeable in bank bookkeeping.

1ystems and devices may di-er among banks, and even between branches o the samebank, but the basic principles are the same. Fnce a clear understanding o bankbookkeeping in general is obtained, there will be ound little or no difculty in mastering anyo the methods or systems in use by 4anadian banks.

!o grasp thoroly all the underlying principles o bank accounting, it is necessary to bear inmind that practically everything handled by a bank, in the ordinary course o its business, iseither money itsel , or a written claim or right to money. 4onse&uently the cash book in a
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bank is the principG!ype a &uote rom the document or the summary o an interesting point. Hou can position the text box anywhere in the document. 0se the !ext Box !ools tab tochange the ormatting o the pull &uote text box.I

al book, and thru its pages must pass a record o every transaction made by the bank, either

in detail or as a total rom a supplementary book. !hus the cash book gives a bird#s*eye vieweach day o all the work o the bank. 1ome banks still use, in addition to the cash book, amodi%ed orm o the old* ashioned 7ournal, but it is pre erable to make the cash book theonly posting medium o the general ledger .

t would be &uite possible or a newly*opened branch to conduct its business or the %rst sixmonths or so with the aid o a cash book and a ledger, which would serve or all accounts. Acollection register would, however, soon be necessary.

As the business grew it would be ound convenient to have a special ledger or individualaccounts, with the control or key account carried in the original led*ger, and to have thechecks and deposits entered in a supplementary cash book , with only the totals entered inthe general cash book. 1imilarly, it would be ound necessary in time to open up a discountregister and a liability ledger to look a ter the increased number o loans.

As the volume o business increases, the deposit ledger is capable o being inde%nitelysubdivided, either alphabetically or numerically. /enerally, the ordinary deposit ledger isdivided alphabetically and the savings bank ledger numerically.

2rom the above it will be noticed that bank bookkeeping, altho based primarily on the cashbook and ledger, is susceptible o inde%nite expansion in any direction to meet increased

volume o business or other local exigencies.

!he books in use at even a moderately sized ofce generally include those given in theollowing list$

Books o Friginal ntry4ash Book .

2igureJ.

4ash Book,supplementary.

). 8iscount 6egister .3. 8iscount Blotter .

+.8iscount 8iary , localbills .

(=*((.8iscount 8iary, remittedbills.

( *(.4hecks 6emitted6egister.

(J. 1ight tem 6egister.
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11/33

6egister o "owers o Attorney. 6egister o Caivers, tc. Fverdra t 6egister . xpense Book.8iscrepancy Book. !reasury Book.

!his list may appear ormidable but it is intentionally comprehensive. A small branch wouldre&uire only hal this number9 the ewer books used in an ofce the better. New books or

sub*divisions o books should be introduced only when the work on the original bookbecomes congested. A ledger, or instance, should be subdivided only when the posting andre erences become too heavy or one clerk to do, and when, in conse&uence, the work o theofce is delayed. Kethod, simplicity and concentration are the oundations o an efcientlymanaged ofce.

Books should be uni orm in size as ar as possible9 thickness and weight should be avoided. !wo or three standard sizes should be established and complied with. 0ni ormity in size andposition o post holes is particularly advantageous in the loose*lea system, as the bindersare then not only interchangeable, but one binder can be used or several di-erent orms.

Attention should be paid to the ruling, with a view to uni ormity. Fne inch and a &uarter isample width or the average money column, with a hair line dividing the thousands * allow%ve*sixteenths o an inch or the cents and, say, seven*sixteenths or the thousands. Fne*hal to three*&uarters o an inch is sufcient or discount, exchange, date columns, etc. Asregards the width between the horizontal lines, one*&uarter o an inch is a good average. nbooks where the entries are extended across a number o columns, every % th horizontal lineshould be o a color di-erent rom the regular ruling, to serve as a guide line. Books or ormsintended or use with an adding machine, i ruled, should be spaced according to themechanical spacing o the machines used.

n the sample orms given in this chapter no attempt is made to preserve the correctproportion o the various columns9 to do so would occupy too much space. !hese orms haveno particular claim to merit except that they have been in satis actory use or years indi-erent banks. !hey are general rather than speci%c, and will, it is hoped, be suggestive aswell as directly use ul.

Branch Books nd Records. 3. Loose9Lea6 cco&nting

!he vast increase in the number and volume o commercial transactions during the pasttwenty years has made the use o loose*lea ledgers and other books a practical necessity inmodern accounting. n 4anadian banks, particularly, the system has been in success uloperation or many years. !he principal ob7ection urged against loose*lea ledgers * the&uestion o their validity in a court o law * appears to have died a natural death. !he courtsrule so plainly and the logic is so clear, that it is the original entry that counts and not theassembly o entries in the ledger , that it is now generally conceded that the loose*lea ledgeris 7ust as acceptable as evidence in a court as a bound ledger. n act, with the precautions
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observed by the banks in their use o loose*lea books, the evidence might be consideredeven more competent. !he ollowing rules are generally observed$

(. !he keys o all loose*lea ledgers and trans er binders are kept in the custody o themanager or o the accountant or other ofcer specially authorized, by whom blank sheets

are inserted as re&uired, and the used sheets removed and %led in the trans er binder.

. A ter removing the sheets, the ofcer who has custody o the key must place a paper sealbearing his signature in the sealing device on the ront o the ledger, and, when opening thebook again, must satis y himsel that his last seal has not been tampered with.


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8ebit and credit entries or cash book, other than the totals re erred to above, arerepresented by vouchers giving the necessary particulars, signed by the manager ,accountant or other authorized ofcer, and it should be an imperative rule that any slip,which does not contain sufcient particulars or which lacks the necessary signature, shouldbe re used by the cash*book clerk and re erred back to the teller or completion. n order to

acilitate the sorting and checking o these vouchers, distinctive colored paper or printingshould be used9 or instance, yellow, debit slips and white, credit slips.

t should constantly be borne in mind that as the cash book and its supplementary books arerecognized in a court o law as the books o original entry, aulty or meager particulars mightcause serious trouble. 5erbal explanation, even i available, would not be admitted. xaminea bank cash book o twenty or thirty years ago$ there could be no better ob7ect lesson o what a cash book should be. 4opper*plate writing and ample particulars are characteristic.

Branch Books nd Records. !. 5riting :p (he Cash Book

Kany labor*saving and ingenious rulings are to be ound among the books o banks, andimprovements are constantly being devised and adopted. !he most essential book however,the cash book , remains practically unchanged, and is simply an ordinary commercial cashbook with two or three money columns, a space or date and particulars, and with no printedheadings. !he columnar cash book is not adapted to bank work and it has never ound avor.

Branch Books nd Records. ". &pple*entar- Cash Book

n this book are entered all the deposit slips , checks, and other vouchers pertaining to theordinary deposit and savings bank ledgers . !he ruling is simple, re&uiring no printedheadings, and consists o columns or olio, names o customers and amount o vouchers *two sets o columns to a page. !wo pages will easily contain a day#s entries or a smallbranch, the %rst or le t*hand column being used or deposits and the remaining three orchecks, the latter being much more numerous. !he savings deposits and checks, beingcomparatively ew in number, are entered at the end o the day under their own headings atthe oot o the ordinary checks and deposits respectively, tho in some small branches theyare entered in the general cash book .

n ofces where it is ound necessary to split up the deposit ledger into two or morealphabetical divisions, a special :supplementary: is devoted to each division including thesavings bank ledger. t is not necessary to open up an account in the general ledger or eachdivision o the deposit ledgers.

the savings ledger contains a large number o accounts, it will be ound o greatadvantage to split it up into several sections or blocks o accounts, as this greatly acilitatesthe location o errors when balancing. A special orm o supplementary cash book should beused with a money column or each block o accounts.
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n the case o a current account which has an unusual number o checks at a certain periodo the month or year * or instance, payroll or dividend checks * it is permissible to detail aday#s checks once, either in the supplementary cash book or ledger, and enter the total onlywith a re erence in the other book.

n the larger ofces o some o the banks, where the volume o checks is unusually heavy, aloose*lea orm o supplementary cash book is used in connection with the adding machine,the names being typewritten in a terward. Chere this orm is adopted, care should be takento see that the sheets are consecutively numbered and %led, and that each sheet is signedby the two checking ofcers.

Branch Books nd Records. %. ,isco&nt Register

n this book, as its name implies, are entered all the notes and bills discounted by a branch. !he book is ruled so as to provide space or a ull description o every item, and the notes

are entered and numbered consecutively. !wo or more lines can be used where a note hasnumerous obligants, or when the description o the security is lengthy. A orm in commonuse is shown in 2igure ). !he headings are sel *explanatory with the exception perhaps o the last two * loans and trade bills.

?oans comprise all the advances made to a borrower on his own name and consistprincipally o the ollowing classes$

'a Advances made on the name o the borrower alone9

'b Advances secured by one or more indorsers9

'c Advances secured by produce, stocks and bonds, notes and other collateral securities .

!rade bills represent settlements or actual goods sold, and are only o-ered by the partywho has disposed o the goods. !hey may consist o either dra ts or notes.

!he last, or remark column, is used to denote the domicil o a trade bill when it is payable atan outside

&pple*entar- Cash Book

2igure J

Register O6 Loans nd (rade Bills
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8

Number

Kaker

ndorser or1ecurity

!erm

8ateo

Note

Katurity

6atepercent.

8iscountandnterest

xchange

?oans

!radeBills

6emarks

2igure ) point. t is also used or any special memorandum regarding renewals, and the like.1ome banks have an additional column or proceeds in their discount register.

As already stated, all notes and bills are entered and numbered consecutively. !he loans andlocal trade bills are then entered in the diary and taken over, checked and initialed by themanager daily, or at least twice a week. !he other trade bills are entered in the trade*bills*remitted diary and initialed by the mailing ofcer.

Branch Books nd Records. . ,isco&nt Blotter

!his book is a valuable ad7unct to the discount register and an excellent orm is shown in2igure 3. n this book are entered the net total proceeds o the discounts to be credited tothe various customers, also the amount o interest and exchange collected . more than onedeposit ledger is used, a column is provided or each ledger. !hese entries are made romthe discount deposit slips or lists which are then passed on to the ledger*keeper who poststhe net proceeds to the credit o the various customers in the ledger, marking theabbreviation :disct: opposite each entry.

n the case o casual or transient notes discounted or customers who have no depositaccounts, a special orm o receipt is used which, when signed by the ob*ligant, is cashed bythe teller and charged to an account called :petty discounts: in the deposit ledger. !heo-setting credits are entered in detail in the last column o the blotter, extended at the endo the day into the ledger column and posted in one amount to the account.

Chen the day#s work is balanced, the interest, exchange, and ledger columns will agree withthe total o the loans and trade bills in the discount register. !he total or the deposit ledgeris included in the total o the supplementary cash book or the day, and the balancingentries are passed thru the general cash book .

!he entries in the blotter are called o- with the deposit ledger daily.

Branch Books nd Records. ). ,isco&nt ,iar-

2igure + shows a use ul orm o diary or loans and local trade bills maturing, a page or parto a page being given to each day o the year. As each day#s bills mature the notes are takenover and initialed by the teller , a line being drawn across the money columns, and the loansand trade bills or the day totaled. At the end o the day the unpaid items are extended into
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the past due column or debit to past due bills account, and the entries passed thru theteller#s blotter, whose : Notes paid: column should balance with the total o the credits toloans and trade bills.

Any notes paid be ore maturity are marked o- the diary on the day due, entered below the

dividing line o the day#s notes and added to the total. 1imilarly any past due bills should bemarked o- and entered in the column provided, all entries below the line in this columnbeing considered credits.

,isco&nt Blotter

Account4redited

8iscount andnterest

xchange

?edgerA*L

?edger?*M

4asual8iscounts

2igure 3

B ??1 8 14F0N! 8, KA!06 N/ ........(+(......

No."romissor

2or Chom8iscounted

!eller#snitials

?oans

!radeBills

8ate o

"ayment

' prepaid

4harged "ast 8ue Bills

AmountChen"aid

nterest

*

2igure +. 8iscount 8iary

!he column or interest can be used or a record o any interest collected which is notentered in the register, such as interest on past dues, demand notes, etc. !he diary sheet o the day will a-ord, there ore, a complete record o all payments made to the discountdepartment.

Branch Books nd Records. 1/. (rade Bills Re*itted ,iar-

Fnly in the very large ofces is it necessary to have a separate book or this diary. n theordinary branch, the ruling given in 2igure (= appears at the oot o the discount diary . Atthe end o each day the total is credited to trade bills remitted and debited to cash itemsaccount, there to await the relative remittances, credits, etc., when the items are dulymarked o- as either paid or returned.
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4onsiderable space is wasted in connection with this daily diary, and a weekly diary, asshown in 2igure ((, has been used to advantage. 2our sheets to the month are used,covering (st to 3th, +th to (>th, (Jth to 6. ==

2igure ((. !rade Bills 6emitted 8iary
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!hese generally have to be covered by remittances or credits to another branch orcorrespondent. /reat care should be taken to see that the dra t is properly made out,signed, advised and remitted or correctly.

2igure (< is the register or dra ts drawn on other branches . !he total or the day is credited

to an account in the general ledger called dra t account. A ter payment the dra t is returnedby the drawee branch at debit, is marked o- with the dating stamp, listed with other paiddra ts in the right*hand column, and at the end o the day this total is debited to the dra taccount. !he items unmarked at any time will be outstanding, and their total will balancewith the dra t account in the general ledger .

Branch Books nd Records. 12. Chech Lists

All debits between branches , including checks, dra ts and money orders paid, and the like,are listed on a special orm called a check list, and debited in one total to branch clearings

account and the list orwarded direct. !he receiving branch gives credit on the branchclearings statement immediately on receipt. ven i an item has to be returned or there is anerror in the addition o a list, the amount as shown must be credited exactly, and thedi-erence ad7usted on :At 4redit: advice or a return check list, as the case may be. 4hecklists are o di-erent orms and sizes, but are invariably in duplicate, the carbon copy beingretained as a record . n the larger branches the lists are on loose sheets o one, two or threelists each, or use with the typewriter or adding machine, the carbon copies being %led in abinder or re erence. 2igure (@ is a common orm.

terling# 0oreign nd &ndr- ,ra6ts# $tc.# Iss&ed

8ate

No.

8rawn on

n2avoro

"urchaser

1ellingBate

1terlingor

2oreign

4urrency

4over 4redited or 6emitted 4redit

2oreign

xchange

nitialBan

k !own

2oreign

8ollar

4orrespondent

6ate

2igure ( . 8ra t 6egister

Branch ,ra6ts nd ettle*ent Checks Iss&ed

8ate

No.Branch8rawn on

2avoro ,

"urchaser,etc.

4ommission

8ra ts

1ettlement4hecks

nitials

8ate"aid

8ra ts "aidNo. Amount

*
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2igure (


20/33

? 1! 8 B ?FC

2igure (>. 4heck ?ist

'c 6emitted discounts as debited each day rom the diary. !hese include bills held bycorrespondents as well as by branches.

!his account should be drawn o- weekly and balanced with the general ledger. Any itemoutstanding an undue length o time should be promptly in&uired about or : ated: * to usean ofce term.

CE N 46 8 ! N/ F6 6 K !! N/ 2F61.4.

!E 1 ! K1 8 146 B BH !E NF.

!E 4ANA8 AN BANL F2 4FKK 64

.. ............. (+( .

C N4?F1 2F6 46 8 ! F6 6 K !!AN4 ! K1 A1? 1! 8 B ?FC

Kanager

2igure (J. 4ash or 1hort 8ate 8ra t Account
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2igure (J is a common orm, combining a record and a letter, bound six or eight to a page, acarbon copy being retained as the record.

Branch Books nd Records. 14. Re*ittance Book

!his book was originally used simply to record the remittances rom other

8r. 6 K !!AN4 BFFL 4r.

1undry

Branch4learings

xchange

6emitted or4redited by

"lace

FurNo.

xchange

4ashtems

Branch

4learings

"articulars

?edgerAccount

2igure () banks and the distribution o the proceeds9 but it gradually developed into a

general sorting*out book or the cash book , and is particularly use ul in connection with themail work. All credits or cash items account should be entered here and, i possible, all theentries or branch clearings account, in order to orm a check on the completed statement.

!he ruling and headings vary in di-erent banks, but a good orm is shown in 2igure ().

!he bulk o the entries or this book arrive in the morning mail.

6eturned cash items are also entered in this book, being credited in the cash items columnand debited in the sundry column to the indorsers, only the totals being handed to the teller .

!his book is most use ul in sorting out and blocking the work.

Branch Books nd Records. 1!. Branch Clearing tate*ent

n a branch system there must, o necessity, arise each day numerous entries between thebranches themselves, and between the branches and the head ofce. 8irect accountsbetween branches are out o the &uestion, and separate accounts with the head ofce arecumbersome, especially when the branches are at all numerous. !he most satis actorymethod in use is what is known as the branch clearing system. !his is a simple andingenious system which makes the head ofce the clearing house or all inter*branchtransactions. !he medium is a statement called the branch clearing statement which is sent

to the head ofce daily by each branch, and on

Account

No................................. (+(

B6AN4E 4? A6 N/1 A44F0N!86. 46.
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8ate F ?ist

BranchAmount.

8ate

BranchAmount

:At 4redit: advicesreceived

4heck listsreceived

4heck lists sent:At 4redit: advicessent

Eead Ffce 'debits toEead Ffce'credits to

!otal !otalBalance Balance

have compared the above entries with the relative At 4redit slips, checked the summations,and have compared the balances shown with the %gures o the /eneral ?edger .

!he balance to be carried orward rom this account should be written on a lower line thanthat on which the balance rom the previous day is given.

...................... Accountant

xtreme care must be taken to avoid errors o any kind in this 6eturn

2igure (3 which are entered all transactions with the other branches and with the headofce. '1ee 2igure (3.

1o ar as possible, the entries passing thru branch clearings account consist o totals only.

No particulars are necessary except the name or number o the branch credited or debited.

4heck lists originate as debits and are responded to by credits. :At credit: advice slipsoriginate as credits and are responded to by debits. Eead ofce entries , both debit andcredit, originate at the branches.

All entries or the statement should be systematically arranged both as to classi%cation andthe order o the branches. At the end o the day the branch clearings statement is addedand the totals, debit and credit entered in the cash book . !he statement is then balancedwith the general ledger by the addition o the day#s balance, care ully checked, and

orwarded to the head ofce the ollowing day. No change is permissible in the entries. !heymust be credited or debited to the statement exactly as received. rrors in check lists oradvices must be corrected by the creation o separate entries.

(J. :At credit: advices. * Cith the exception o check lists, no branch debits another branchin this statement without %rst receiving an advice on an :At credit: slip. '1ee 2igure (+.
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All other items collected by one branch or another during a day are entered on an :Atcredit: slip, the total o which is credited on the branch clearings statement against thename o the branch interested,

:A! 46 8 !: A85 4 !E ..............................................................BANL,........................................................................................................ !ransit No..................

(+(............................ At credit o .................................

tem NameRAmount('8#sGor8.6#s.I4ash tems , etc.

Amount'8ep#s,B.4#s, 1.B#s,4.8#s,4oll#ls, etc.

2or Chose Account

Add column ( and carry amount intocolumn

R !he name need not begiven except in the case o items entered in the right*hand column.

!otal...

(, . * nter in the le t*hand column all payments on account o 8#s made at maturity9 inright*hand column payments on 8#s made be ore maturity. '/ive due date o bills paid be orematurity. **********************************No checking mark o any kind should be put on this slip bythe sending Branch. "articu?ar 4are should be taken to see that the total is written in plainround %gures.

Acc#t.

2igure (+ and the advice is then mailed direct to the latter, a carbon copy being retained orrecord . mmediately on receipt o the advice the total amount is debited in branch clearingsagainst the name o the advising branch, and the items credited to their severaldestinations. !he credit entry is thus o-set and ticked o- in due course at the head ofce.1ome ofces will, o course, re&uire the use o a much larger advice slip than the ormshown.

!wo columns will be noticed in the advice. !he %rst column is used or debits already createdat the credited branch, which await the relative credits in :4ash items account.:
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!he second column is used to advise all other credits such as collections, deposits,collaterals, trade bills paid out o date, and other similar items.

4ash items consist principally o sight items and matured trade bills, and these, on thereceipt o the advice, are marked o- as paid, and the %rst column o the advice credited to

the account as a total.

Branch Books nd Records. 1%. Head Ofce $ntries

Eead ofce entries, both debit and credit, originate with the branches in every case. !heentries can be made either in red ink at the oot o the branch clearings statement, or elseentered on a special orm in detail, and only the totals entered into the statement. 2igure =is comprehensive and allows or an analysis o the contents o all money per*cels debited. Alldebits and credits on correspondents originating at the branches, are passed thru the headofce account. ?ists o dividend warrants, pro%t

6elative to Branch4learings Account No (+(

8r. E A8 F22 4 N!6 1 4r.

KFN H "A64 ?14k.

Amount

KFN H "A64 ?1 4r.Amount

Number

Branch

4.B.o 4.

FtherBanks

8om. Notes or1pecie R

!otal Number Branch

;8ate

1undry ntries '5ouchers to

accompany this return 1undry ntries AmericanBank ntriesAmerican Bank ntries

!otal orward to Branch 4learings1tatement

; !otal orward to Branch4learings 1tatement

R Chen parcels consist o specie, they should be so ndicated opposite the amount.

2igure = and loss entries, expense checks and other head ofce matters are all enteredhere.

Branch Books nd Records. 1 . B&siness 5ith Other Banks

!ransactions between 4anadian banks are generally e-ected thru the daily clearing, andvery seldom thru the medium o an account. 2oreign correspondents generally carry adeposit account at one o the large ofces to which any collections made or them by any o the branches are credited or dra ts drawn debited. Kost accounts with correspondents,however, are more conveniently carried at the head ofce9 all debits and credits originating
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with the branches being advised thru the branch clearings account. 8aily statements romthe correspondents give the responding entries, and the accounts are kept in constantad7ustment. Not only does this concentration at the head ofce simpli y the bookkeeping,but, as the balances with correspondents re&uently orm an important part o a bank#sreserve , it enables the head ofce to control the balances accordingly.

Branch Books nd Records. 1). (eller's Records

!he teller #s cash book or blotter consists o a skeleton ruling with no printed headings, thesebeing written in daily by the teller according to his re&uirements. Cere the headings printedit would re&uire a specially printed book or each class o teller, and even then it might notbe suitably spaced or local re&uirements.

A teller should arrange his entries, debit, and credit to con orm with the general system o the ofce. 4hecks should be sorted out and entered according to the divisions o the ledger ,

thus balancing with the various supplementaries. the checks are very numerous, separatesheets, suitably ruled, can be used9 these can be entered on an adding machine or by anassistant.

A teller#s book is, in reality, a skeleton cash book, and the entries should be so arranged thatthe books o the various departments should balance with the combined entries o thetellers.

2igure ( is used at the end o the day as a balance book and record o cash in hand9 it issel *explanatory.

All parcels o money received are acknowledged, and entered in a special book. the advicecomes in %rst it should be at once entered in this book, and the parcel in&uired or i necessary. Koney parcels dispatched are also entered in a book. /reat care is necessary inhandling money parcels. Both sent and received parcels should be counted by two men ineach other#s presence and, in the case o the ormer, it is necessary to have the parcel in theuninterrupted custody o two men rom the time it is counted and sealed until it is deliveredto the express company or post ofce.

!he relative advices and acknowledgments should be care ully watched and any delayimmediately in&uired into.

Branch Books nd Records. 2/. General Ledger

!he general ledger, next to the cash book , is the most important book in a branch9 in act itis e&ually important, tho in a di-erent sense. !he cash book is the book o original entry, andcon! ?? 6#1 BA?AN4 BFFL AN8 6 4F68 F2 4A1E
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!otals"articulars o Notes E eld 1ummary6eceipt

s"ayments

Balance broughtorward

Notes o the Bank x >Notes o the Bank

x (=

Branch 4learings x =?egal !ender Notes

4urrent Accounts x >=

1avings Bank 9 x (==Notes and 4hecks o .Fther Banks

?oansKutilated and un*lssuable Notes

!rade Bills .

Fther Bank Notes x >

x (=

x =

4ash tems

x >=American 4urrency

x (==

8ra ts ?egal !ender x l 1pecie

Koney Frders

x

x @ Anier.gold

x > Brit.gold

nland xchange 4irculation *Notes onhand yesterday ; 1ilver

2oreign nterest6eceived since ; 4opperNotes on hand to*day ;

!otal ; !otal 4ash

Balance on Eand4ir. or the day bgt. or#d ; Balance per 4ash Book

4irculation or the monthto date

; xaminedKanager

2igure ( tains a chronological record o all the transactions o a branch. !he general ledger

contains the summary or analysis o these transactions under the various headings, while itssubsidiary books, the deposit and liability ledgers , summarize the amount due to or romindividuals respectively. !he general ledger is posted every day rom the cash book, andcontains all accounts necessary to show the position o a branch with regard to the businessdone under the various classi%cations called or by the government statement. As a mattero act, however, the accounts kept in the average branch ledger are not very numerous andconsist broadly o $
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Assets * cash, loans9

?iabilities * liabilities to the public9

Ffce Accounts * pro%t and loss, branch clearings, etc.

!he pro%t and loss and branch clearings accounts are internal accounts, and may be eitherdebit or credit. !he latter is the ad7usting account o the branch with the bank as a whole,and varies approximately with the di-erence between its loans and deposits, as everybranch either supplies unds to the head ofce or the reverse.

?oans are generally carried under two headings, loans and trade*bills, tho in a large cityofce they are re&uently sub*divided into hal a dozen accounts. !his is merely a matter o convenience, however. n the same way the liabilities are divided into ordinary and interest*bearing deposits, etc. !he orm most generally used is similar in ruling to the current deposit

ledger '2igure , with wider money columns and more space or particulars.

Branch Books nd Records. 21. C&rrent ,eposit Ledger

!he ordinary or current deposit ledger is a very active and important book in a bank, andone which calls or both accuracy and dispatch on the part o the clerk in charge, as errorscan easily be made, involving the bank in serious loss. !he deposit ledger is invariably aloose*lea book and ruled as shown in 2igure . !his orm is invariably used by all thebanks. !he so*called Boston ledger has been tried several times, but was not oundpracticable in 4anada, owing perhaps to the method o marking or accepting checks by adirect debit to the account. !he accounts are arranged alphabetically, and are there ore sel *indexing, but an index is usually kept on the tagged sheet dividing the alphabet.

n small ofces there is usually only one current ledger used, A*M. As work increases andbecomes too much or one ledger*keeper , a second ledger can can be opened divided A*L and ?*M. 2or three ledgers the divisions generally run A*/, E*F, and "*M, and or our thedivisions are A*4, 8*L, ?*6 and 1*M.

As the ledger is loose*lea there is no accumulation o dead leaves, but the generalregulations regarding loose*lea ledgers given in 1ection < o this chapter should beobserved closely.

!he posting is invariably made direct rom the

BANL

1heet No.

Account No.Name

Address
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8ate

"articulars

8ebit

4redit

8r. or4r.

Balance

8ate

"articulars

8ebit

4redit

8r. or4r.

Balance

2igure . 4urrent 8eposit ?edger

1heet No. Account No.Name Fccupation

Address1ignature Kanager

8ate

"articulars

8ebit

4redit

nitials

Balance

nterest8ays

8ebit

4redit

Balance

2igure


29/33

Branch Books nd Records. 23. Lia ilit- Ledger

!his book bears the same relation to a b

bank books list

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