Record, count, close

ArtisanBois SARL keeps its books in a spreadsheet: one line per invoice, sorted by supplier, for a total of 48 000 € of purchases over the year. The manager finds that sort order handier than working by date. The commercial code, however, requires chronological recording. Before you read: which accounting duties does a trader actually carry, and in which books?

Three duties in a single article

Article L123-12 of the commercial code runs to three paragraphs and sets out three distinct duties. The first: every natural or legal person having the status of trader must carry out the accounting recording of movements affecting the assets of their business.

The text immediately adds the constraint that governs everything downstream: those movements are recorded chronologically. The order is not left to the convenience of whoever keeps the books; it is the order of dates, and it is not rearranged afterwards.

The second duty concerns the stocktake. The trader must verify by inventory, at least once every twelve months, the existence and the value of the asset and liability items of the business. Two checks, then: existence and value.

The third closes the cycle. The trader draws up annual accounts at the close of the financial year, on the basis of the accounting records and of the inventory. The accounts do not come from the books alone: the inventory corrects and completes them.

The two books every trader keeps

Article R123-173 names the books. Every trader is required to keep a day book and a general ledger. The wording in force since 1 January 2016 names two of them, and only two, as compulsory.

These two books do not do the same work, and the third module comes back to it. The first receives operations in the order in which they occur; the second groups them by account. The same accounting fact therefore appears twice, from two angles.

The most widespread confusion is to believe that software does away with one of the two. It does not: it produces both from a single entry, which makes their existence invisible without making it optional.

Paper or electronic, initialled or not

The day book and the general ledger may, at the trader's request, be numbered and initialled in the ordinary form and free of charge by the clerk of the court in whose district the trader is registered. The wording deserves to be read slowly.

It says two things. The initialling is done at the trader's request, so it is not imposed; and it is done free of charge, so it does not have to be bought. Each book then receives an identification number, listed by the clerk in a special register.

The text finally allows the paperless form. Documents in electronic form may serve as the day book and the general ledger. The condition is precise: they are identified and dated as soon as they are drawn up, by means offering every guarantee as to evidence.

That last clause is the one spreadsheets fail. A workbook that is reopened, re-sorted and saved again is neither identified nor dated as soon as it is drawn up, and nothing in it guarantees that a line has not moved since.

• Record the movements affecting the assets of the business, chronologically.
• Verify by inventory, at least every twelve months, the existence and value of asset and liability items.
• Draw up the annual accounts at the close, from the records and the inventory.
• Keep a day book and a general ledger.
• If the form is electronic, guarantee identification and dating as soon as the document is drawn up.