Quick Answer
Broker-dealers must keep required books and records current. The blotter is the daily record of original entry, covering purchases, sales, securities and cash movements, and other debits and credits. A trial balance and the related capital computations follow on a monthly cycle.
The daily blotter captures original activity as it occurs. Periodic financial entries then use ledger balances to support the firm's continuing financial picture.
Which Entries Must Be Recorded Daily?
- Current books and records: Required records relating to the broker-dealer's business must be made and kept current.
- Daily original-entry record: The blotter contains an itemized daily record of purchases and sales, securities movements, cash movements, and other debits and credits.
Timing rule: The blotter is a current record of original entry containing the required itemized daily activity, and the firm must keep it current.
Exam Tip: Gotchas
- The blotter records original entries daily. Do not substitute a later financial summary for the required itemized transaction record.
Which Financial Records Must Be Prepared Monthly?
- A trial balance proves the money balances of ledger accounts and is prepared currently at least once a month.
- Capital computation: The required aggregate-indebtedness and net-capital computation, prepared currently at least once a month.
- Financial records and reporting: These operate within the broker-dealer books-and-records framework alongside the transaction records.
| Record | Timing | Purpose |
|---|---|---|
| Blotter | Daily | Original, itemized transaction entries |
| Trial balance | At least monthly | Proof of ledger-account money balances |
| Capital computation | At least monthly | Required aggregate-indebtedness and net-capital computation |
Exam Tip: Gotchas
- A daily blotter and a monthly trial balance serve different purposes. The blotter records original transactions; the trial balance supports periodic proof of ledger money balances.
What Should You Check on Exam Day?
- Put itemized purchases and sales, securities movements, cash movements, and other debits and credits in the daily blotter.
- Prepare proof of ledger money balances at least monthly.
- Prepare the aggregate-indebtedness and net-capital computation at least monthly.