S68 



THE POPULAR EDUCATOR. 



JOURNAL. 



(7) 



THE LEDGER. 



We have already said so much on the Ledger, and the manner [ 

 of posting the Journal into it, in Lessons VI., VII., and VIII., | 

 pages 32, 96, and 139, Vol. II., that we have now only to refer 

 our students to that lesson again for the proper explanations, 

 before commencing the study of the Ledger. Wo shall here, 

 however, repeat emphatically what was there taught in another 

 form, in order to impress their minds with the simplicity of the 

 method of keeping Books by Double Entry. 



When an entry in the Journal contains only a single Dr. and 

 a single Cr., the rule is to Debit the Dr. and Credit the Cr. ; this 

 has been explained at page 368, Vol. I. When an entry in the 

 Journal contains a single Dr. and a number of Crs., included in 

 the word Sundries, the rule is to Debit the Dr. and Credit each 

 of the Crs. When an entry in the Journal contains a number 

 of Drs., included under the word Sundries, and a single Cr., the 

 rule is to Debit each of the Drs. and Credit the Cr. Now, as 

 nothing can be more simple than these rules, we proceed to ex- 

 plain the method of striking a General Balance, that is, of find- 

 ing out a Merchant's Assets and Liabilities, and consequently 

 whether he has gained or lost by trade. 



In commencing the process of balancing the Ledger by 

 Double Entry, the first thing is to close up all accounts in it, of 

 which the two sides, Dr. and Cr., when added up, are perfectly 

 equal, or balanced by the settlement of account. This will 

 generally be the case in a great number of the personal accounts 

 at the end of a given period, say the close of the year, or at 

 Midsummer. To close up such accounts is merely to add up the 

 sums on each side, to draw lines under the sums exactly oppo- 

 site each other, to put down the totals, and to draw lines under 

 them also. If there be any space left in the folio under an 

 account thus closed, it may be used for the entry of new trans- 

 actions under the same account, or with the same party. 



All the self-balancing accounts being closed up, the Trial 

 Balance is now to be made out ; this consists of a list of all the 

 unbalanced accounts in the Ledger, with the total sums of all 

 the entries on each side inserted in Dr. and Cr. columns, for the 

 purpose of easy reference in making out the General Balance, 

 and for the immediate object of ascertaining the accuracy of all 

 the entries in the Ledger. The latter object is at once obtained . 

 by adding up both sides of the Trial Balance, namely, the Dr. i 

 side and the Cr. side ; for if the sum of both sides be the same, i 

 the strong presumption is that the Ledger is correct ; and, of I 



course, the Journal, and all the subsidiary Books, equally so. 

 We say the strong presumption only, because there sometimes 

 occurs in a Ledger such a thing as a balance of errors, that is, 

 when a wrong entry on the Dr. side of the Ledger is balanced 

 by a wrong entry of the same amount on the Cr. side. 



In Balancing the Books, as the phrase is, very great trouble is 

 saved in making out the Balance Sheet and Check by Double 

 Entry, in consequence of the admission into the Ledger of all 

 the Property and Profit and Loss Accounts, and indeed of every 

 account in any manner affecting the business. In conducting 

 this process, as shown at the end of the Journal in our last 

 lesson, two new accounts are opened in the Ledger, the one 

 being called Balance Account, which is to be considered the con- 

 verse of Stock Account as to its Dr. and Cr. sides ; for on the 

 Dr. side are contained all the Assets, and on the Cr. side all the 

 Liabilities ; the other being called The Profit and Loss Account, 

 which contains on the Dr. side the amount of all the Losses ex- 

 perienced in business, and on the Cr. side the amount of all the 

 Gains. By means of these two accounts, all the unclosed ac- 

 counts in the Ledger are balanced, and the Real Worth of the 

 Merchant, as well as the Net Gain of the business, is ascer- 

 tained, independently of every book but the Ledger. 



In order to effect this purpose, the Balance Account is now to 

 be debited to every Personal or Property Account on which there 

 is a balance in favour of the Merchant, such balances forming 

 what are called his Assets ; and Balance Account is next to be 

 credited by every Personal or Property Account on which there 

 is a balance against 4ihe Merchant, such balances forming what 

 are called his Liabilities. Consequently, on the principles of 

 Double Entry, as soon as these entries are made, the accounts of 

 both kinds must be balanced, that is, the sums of both the Dr. 

 and the Cr. sides will be alike, and the accounts themselves may 

 be closed up in the same manner as those accounts formerly 

 mentioned which balanced without further entries. The two 

 sides of Balance Account thus constitute the Balance Sheet of 

 the Merchant, and their difference constitutes his Real Worth at 

 the time when the Balance is made in the manner we have de- 

 scribed. For this difference, or Real Worth, Stock Account is 

 made Dr. to Balance Account, and thus the Balance Account is 

 closed up just in the same way as other accounts in which both 

 Dr. and Cr. sides are alike ; the amount for which Stock 

 Account is debited showing the Merchant's Real Worth at the 

 time the Balance is taken. 



