916 



THE FARMERS HANDBOOK. 



Opening Books for a Going Concern. 

 It may happen that, when a fanner takes over a property or commences 

 keeping accounts, his capital does not consist exclusively of cash, but also of 

 horses, plant, stock, crops on hand, tfcc, and he may have certain outstanding 

 debts. These are known respectively as assets (things owned), and 

 liabilities (things owed), and must be journalised according to the rule — 

 Assets, Dr. to Liabilities (including Capital, which is a debt owed by the 

 business to the proprietor;. The words " assets " and "liabilities" are not 

 employed in making the entries, the name of each asset or liability being 

 used, as, for instance, in the following example, wherein Bull's balance-sheet 

 for 1920 is journalised : — 



£ 

 Horse. 140 



Stock . 

 Plant.. 

 Crops . 

 Bank . 

 James - 



Dr. .. 



300 



40 



60 



360 



30O 



To Sydney Plough C< 

 To Capital 



£1.1.30 



£1,150 



THE SECOND YEAR. 



To continue the work in the second year the balances in the Money, 

 Property, and Personal accounts should be "carried forward" or "brought 

 down " to the opposite side of each account, below the line which rules off the 

 previous year's entries, thus : — 



Capital Account. 



1920 



1921. 



1920 To Bank 



1921 To Balance bfd 

 19-20 To Stock 



£1,150 



By Balance b/d (brought 1,150 

 down). 



Horsk. 



150 By Balance (Valuation) c d 

 ,, Profit & Loss ale ... 



£10 



140 

 10 



£150 



140 



James. 



300 By Balance cd 



£300 



300 



£300 



1921 To Balance b <1 .. 300 



The reason for transferring the balance, when brought down, to the 

 opposite side will be apparent in the last example above. James not having 

 paid for the stock, his account shows a debit balance of £300, and in opening 

 the account for the new year's transactions, the amount of his indebtedness 

 must be shown as a debit, i.e., in the same position as the original debit 

 entry. 



