Auxiliary Ledger

Originally, the term “auxiliary ledger” referred to a book in which all inflows and outflows were recorded continuously. Income was recorded on the left and outflows on the right.

In modern book keeping, auxiliary ledgers are rarely mentioned. The term “mixed accounts” is now more widely used.

Today, when auxiliary ledgers are mentioned, it is usually in reference to an order book used in stock trading. This book is used to record all purchases and sales made in a day of trading, and the rates at which they transacted.

While a ledger was once a physical book in which records were recorded by hand, business transactions are now recorded electronically through a stock market computer.

Still, numerous terms have been carried over from the days of hand-written ledgers. For example, transactions are still recorded “in the books”.

Additionally, the basic positions in securities trading are referred to as long and short. These terms are derived from the differences in the way these two positions appeared in a hand-written ledger.

An order book manager, which works for a brokerage firm and acts as an intermediary between buyers and sellers, is responsible for the management of an order book. It is their responsibility to determine the correct market value of stocks sold on securities markets based on the information stored in the order book.

When determining prices, all purchase and sale orders recorded from the beginning of the price listing must be taken into account. This can be done using the information recorded in the order book.

Order book managers are supervised by trade supervisors employed by stock exchanges. The order book management process is increasingly being automated through digitalization.

More on this topic:
Online trading comparison
Price-to-cash-flow ratio
Price-to-earnings ratio

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