page_title: Edward P. Moxey
section_title: Relation Between Cost and General Books
hierarchical_section_title: Edward P. Moxey / Work / Relation Between Cost and General Books
caption_attribution_description: English: Relation of Cost Books to Commercial Books, 1919
context_page_description: Edward Preston Moxey, Jr. was an American accountant, and the first Professor of Accounting at the Wharton School of Finance and Commerce at the University of Pennsylvania. He is known for his early works on cost keeping in factories, which describe the elementary principles of cost accounting.
context_section_description: In factory accounting more cost books are being used corresponding to the different divisions of the factory: There are the "Stores Ledger," the "Cost Ledger," and the "Stock Ledger." The relation of these cost books to the general commercial books is shown by the diagram.  
  In order to understand the diagram and illustrate the operation of the books, it can be presumed that a certain sum of money is disbursed for the purchase of materials, labor, and other supplies and services connected with the production of the goods. This, in the ordinary journal form, would be represented by an entry, whereby materials, labor, and/or indirect expense are directed to cash. By this entry the accounts costing the business value are debited, and the account which has produced value, viz., cash, is credited.
  Now Moxey explained, that in his days in a small business this method of accomplishing the result might be satisfactory. In a large business, however, there are numerous transactions involving these accounts which occur every business day. If these were to be separately recorded in the 
  journal, the work required and the expense involved would be out of all proportion to the results obtained. To avoid this labor, transactions 
  of a similar nature, when there are many of them, are brought together in one subsidiary record, and the totals only are posted to the ledger. Thus there is usually a book devoted to the detailed recording of cash receipts and payments, while the general ledger cash account is concerned 
  merely with the totals. Likewise the "Stores Ledger" contains a number of accounts usually kept upon cards for convenience in handling, or 
  else in loose-leaf books whose totals appear in a general ledger "Stores" account.  If, then, a certain amount of money should be paid out for the purchase of stores, the cash book entry expressing such transaction.
  Both the stores item and the cash item find their way to the general ledger in totals. The stores item also appears in the stores ledger in 
  detail, being taken from the original purchase invoices. When the stores purchased, after having been received and placed in the storeroom, 
  are requisitioned and delivered to the producing departments, there must be a credit to the Stores account for the value of the quantity delivered, etc.
caption: Relation of Cost Books to Commercial Books, 1919
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