BOOK-KEEPING FOB FARMERS. 



The Principles of Double-entry Book-keeping. 



Having thus laid down the broad outlines upon which any system o£ 

 book-keeping must be carried into effect, it is now necessary to briefly 

 describe " Double Entry " as the most suitable for the farmer. It may 

 entail a few more figures, but the ease with which its correctness may be 

 proved and the balance-sheet compiled, makes it the system least open to 

 criticism. 



It is based upon the general principle that every transaction, whatever 

 its nature, concerns two accounts, or has two aspects — that of a receiver 

 and that of a giver. If money is paid into the bank as the result of a sale 

 of stock, the bank account receives, while the stock account gives. If 100 

 corn bags are bought at lOd. each, and these are used to market the crops, 

 the crop account receives, and the bank (or cash) account gives. 



If, then, tins principle is carried out in its entirety, and the same figures 

 appear on both sides (though in different accounts) of whatever books are 

 kept, a failure of the totals to correspond would certainly indicate an error, 

 which must at once be looked for. 



The two books which are needed to supplement the diary, or whatever 

 means are used to make a rough record of daily happenings and transactions, 

 are the Journal and the Ledger. The former is written up in order of date, 

 and the latter according to the account to which the entry belongs. 



Simple Rules. 



The fundamental principles of correct book-keeping are : — 



1. Debit the receiver, or that which is received; credit the giver, or 



that which is given. 



2. Debit losses ; credit gains. 



3. Every debit must have a corresponding credit. 



4. The sum of the debits must equal the sum of the credits. 



If the first two rules are clearly grasped, the others may be neglected, 

 as they are merely the logical outcome. 



Custom has led to the placing of the debits on the left-hand side of the 

 page and the credits on the right. 



Classification of Accounts. 



Some classification of the various accounts simplifies matters, and though 

 two sections are occasionally advised, viz., real and personal, a more extended 

 division into four classes has obvious merits. These classes are :- 



Personal, or accounts with persons. 



Property, or dealings in goods, live stock, &c. 



Money, or records of receipts and expenditure. 



Convenience, or nominal, such as expenses, interest, discount, wages, ice. 



