Monday, 29 March 2010

Money, money, money

Over the past couple of weeks I have started to focus on the financial records of Chances. These records are never viewed with much excitement by archivists as they are considered to be quite dry and boring. This viewpoint comes from a lack of understanding or even a fear of accounting records and I have to confess, I have experienced this fear myself. The sheer range of financial records and opening an over sized book with grids of figures and reference numbers can be quite daunting, especially when these books are not labelled with a helpful title to give you clues as to what the transactions contained represent. And in true Chance style, the range of financial records is overwhelming. The collection contains general, private, specialised and miscellaneous ledgers; journals; cash books; cheque payment books; balance sheets and profit and loss accounts; and tax and excise records to name but a few.

Range of Chance account books

It can really be a headache to figure out what each type of record does but after doing some research, I can give you a brief idea. It is vital to have a good understanding of the financial recordkeeping and reporting processes. Financial recordkeeping starts with an economic event, for example, the receipt of goods from a supplier, and a primary document is produced as soon as possible to record the movement of goods/services/cash to and from the company. These documents are then forwarded to the accounts department where they are summarised and analysed and recorded in the account books, for example, ledgers, journals, etc. Journals provide a daily record of transactions and act as a book of original entry whilst ledgers are books of final entry where the transactions recorded in the journals are listed in seperate accounts. Both types of book traditionally follow the rules of double entry bookkeeping where both the debits and credits of each transaction are recorded beside each other to ensure accuracy. If both totals balance you can be confident that there are no mistakes in your calculations.

Double bookkeeping in a private ledger

This is where the reporting part of the process comes in. Periodically, the balances are extracted from the account books and assembled into a trial balance which is then used as the basis for preparing accounting statements, usually a profit and loss account and a balance sheet. These financial statements are then made available to managers and external users to help reach important decisions on the direction and future of the company. I appreciate that this is a very basic illustration of the way that accounting works and I apologise to all the accountants reading but I hope this goes someway to de-mystifying the scary nature of financial records.

It is now my duty to encourage any interested researcher to actually dive in to these records, rather than tentatively considering them from the safety of the paddling pool. Financial records provide the main evidence and measure of how successful a business has been. And let's face it, the main aim of business is to make a profit. But the records can tell you so much more than just the income and outgoings of a company. The interesting bits are contained in the finer details, for example, the journals and ledgers could possibly tell you how much an individual spent on their boiled egg at breakfast on a business trip, enlightening you to their eating habits or a ridiculously cheap payment for a new piece of machinery might provide an insight into the cosy relationship the company has with its suppliers. The possibilities are endless and if you are brave enough to read between the lines of the grids containing those scary figures, you may just discover something completely unexpected.


  1. Learning makes a good man better and ill man worse.......................................................

  2. Even if the debits and credits balance it doesn't mean there are no errors, the following errors could be present without disrupting the balance of debits and credits:

    1. Duplicate entries in journal.
    2. Journal entries are omitted altogether.
    4. Debits and credits are entered in wrong account, for example, debit in liability account is recorded in an expense account.
    5. Debits and credits are entered for the wrong amount, for example, a purchase of 400 dollars is recorded as 40 dollars.

    Any of the above mistakes and combination thereof can result in a debit/credit balance yet still be mistakes.

  3. Lovely pictures enjoyed seeing a piece of history.Thanks!