Hi Faiz Ahmed, hope you are giving you May attempt. In this Computerised System SBL has lost its relevance. But since you have asked i shall explain in brief.
This is not a technical defintion, just a rough one to understand.
Imagine a large organisation, where there are 2000 customers and 3000 creditors and innumerous general ledger and some 150 bank accounts. It is not possible for one person to make all entries, hence, different persons maintains different ledger, i.e., customers, creditors , GL seperately.
Now, if each person will pass only one aspect of transaction. Agreed? i.e., person seeing debtors will pass only the debit in a credit sales, whereas he will not account the sales in Sales Ledger. Similarly the sales ledger person will give credit to sales account.
Now, there is a problem, if TB is prepared, what if it does not tally. Ooch, how will identify which transaction was not recorded properly???
For that only, the Debtors person while
a) for sales
X A/c Dr
To General Ledger Adjustment A/c
b) for receipt, bad debts, sales reversals
GLA A/c Dr
To X A/c
Similarly, the person maintaining, sales ledger will
a) Sales
Total Debtor A/c
To Sales
b) Reversal
Sales A/c Dr
To Total Ledger
Effect
1. Each person will be having a mini TB,
a) for Debtors person, the list of all debtors and its balances and for the credit he will have GLA, so if it doesn't tally, he will himself identify whch entry he has missed. so individually each person will ensure that his mini TB will tally.
b) Now, after each mini TB is tallied, if Total Debtor a/c of GL person should tally with Individual balances of debtors person. If it does not only those entries needs to reverified and not all other transaction. So, when TB does not tally, instead of checking all the entries, we will be able to corner the error in one or two particular areas. Hope i have shed some light
Shiva
CAclubindia
