24 



The Fanner's Business Handbook 



In the illustration, it will be noticed that there 

 are two sides to the account; the left hand or debit 

 side and the right hand or credit side. Note that 



Whenever the farmer re- 

 ceived money he wrote the 

 amount on the left or debit 

 side. 



Whenever the farmer paid 

 money he wrote the amount 

 on the right or credit side. 



If we deduct the cash paid from the cash received, 

 we will have the amount of cash on hand ; and if 

 the amount is not the same as the actual amount 

 of cash we at once know that an error has been 

 made in our account. The difference between the 

 two sides of an account is called the Balance, 

 because it is the amount required to make the 

 two sides equal. At regular intervals the two 

 sides of every account should be added, balanced 

 and a new account opened. Ideally, the cash 

 should be counted at the close of each day's 

 business and the amount on hand entered on the 

 credit side. However, when the transactions are 

 few, the cash account might be balanced weekly. 

 The "balance" should be written in red ink (shown 

 here in heavier type) to show that it does not 

 represent an actual transaction and that it is to 

 be the first entry in the new account on the 

 opposite side. The balanced footings are ruled 

 in red ink (shown here in dotted lines). A bal- 

 anced cash account, with a new account opened, 

 appears as follows: 



