670 



BOOK-KEEPING. 



BooJet at the close of every, month ; that a general balance 

 Keep ing, j n t },e Leger may not be a matter of uneasiness to 

 * the merchant. 



70... It may happen, that the credit or debit may 

 be really entered, but in an account to which it does 

 not belong. This error cannot be removed but by 

 inspection ; at the same time it must be observed, 

 that this error may extend only to two or three ac- 

 counts, and seldom to more than five. In the plan 

 now presented to the public, this inconvenience is re- 

 moved. 



71. A method has been lately recommended, to 

 form four money columns to the left of the debtor 

 side, each to contain three months, at which period 

 the total was t# be entered in one line in the narra- 

 tive of the account ; the same process was to be ob- 

 served in the right of the creditor side, and carried 

 into the narrative of the creditor side. This seems, 

 to abridge the labour of the merchant, but has this 

 evil consequent to it, that his accounts furnished can 

 never be the transcript of his Leger, for the import- 

 ant entries of it, ( 55, 56, 61.) should the Day-book 

 be lost or injured, the memorial of the whole trans- 

 action is utterly destroyed ; while, by the common 

 method, these two inconveniences are avoided. 



72. From what has been said, the total sums of 

 the debtor and creditor side must be found equal, be- 

 fore the merchant can proceed to the final business 

 of closing the accounts. 



Balance in 73. The word Balance has, to this period of the 

 the Leger. Book-keeping, been used to express the equality of 

 the whole of the opposite sides of the Leger entries ; 

 but now it is limited to point out the difference be- 

 tween the amount of the inner columns of all the real 

 and personal accounts, and the difference of the outer 

 columns of the cash account, and of such personal 

 accounts as have no inner columns, ( 38.) except the 

 single case of insolvency. 



74. Thus it is a title peculiar to the Leger, and is 

 an account formed by 



Debtor and Creditor. 



On the debtor side are the 

 Cash, 



On Me creditor aide 

 The debts due by the mer- 

 chant. 

 The amount of sales of 

 such goods as could not 

 be specially valued. 



Wares not sold, 

 Paper effects, 1 remain- 

 Single effects, 3 ing. 

 Debts due to the mer- 

 chant. 

 The cost and charges of 



such goods as could not 



be balanced, as their 



special value was not 



known, 



This leads to the solution of the problem of Book. 

 keeping, What is the merchant worth? The difference 

 between these two sides is evidently the answer; and 

 the proof is given by the succeeding operation. 



The difference between the columns of the cash 

 account being found, it is brought to the balance 

 sheet. The inner columns of the wares are compared, 

 to shew what quantity remains ; this is found and 

 valued at the first cost, and the amount carried to the 

 outer column, and from it to the balance title : next, 

 the amount of the inner, columns of the perwnal ac- 



counts is valued according to the rat* of exchange, 

 and carried to the outer column, and from it to the 

 balance sheet ; and, finally, the difference of each 

 other personal account is carried to the balance sheet. 

 What had been done on the opposite sides of the 

 whole Leger, is now to be done on each particular 

 account ; and the difference between the two sides 

 being added to the less, the equality of the two sides 

 appears instantly to the eye. In pursuance of this 

 plan, the outer columns of all those accounts that 

 have inner columns, and the inequality of the sides 

 of the summary titles of 



Charges, ~i are to be made equal, and the 



Commission, and J- title chosen for this is, Pro- 

 Interest, J fit and Loss. 



Profit, means excess ; loss, separation ; so in those 

 accounts which have inner columns, if the debtor 

 side exceeds the creditor, there is a loss ; because 

 the produce of the sale was less than the price of the 

 purchase : on the contrary, if the creditor side ex- 

 ceeds the debtor side, there is a gain, which remains 

 unnoticed in some real or personal account. From 

 this it must appear, that this summary account, pro- 

 fit and loss, is appropriated to the Leger, and can 

 never appear in the Journal, unless some entire ac- 

 count be at that time closed in the Leger, as will be 

 proved in the process of the second and third sets ; 

 it must also appear, that this title profit and loss is 

 unnecessary in forming the balance sheet, when that 

 account is not connected with the Leger. The par- 

 ticular sums connected in the several accounts, with 

 the title profit and loss, are transferred to one gene- 

 ral account, and the difference of the two sides of it 

 made equal by the title stock. If the difference is to 

 be brought to the creditor side of the stock account, 

 it shews, by addition, what is the property of the 

 merchant ; and if the difference is to be brought to 

 the debtor side of the stock account, it shews, by 

 subtraction, what is the property of the merchant ; 

 and, therefore, these two accounts are necessary to 

 shew, that the balance in the Leger is correctly ta- 

 ken ; and is the only proof that can be given, that 

 errors have not been committed in the posting of the 

 Leger. 



75. Now, in the balance sheet, the difference be- 

 tween 



Dr. Cr. 



And what the merchant I What the merchant owes-. 



has, and 

 What is due to him,. 



Is really what he is worth. 



And in the stock account, the difference between 

 Dr. Cr. 



Or lost since. I What the merchant had 



when he began. 

 | What he gained since. 

 Is really what he is worth. 

 Therefore these two accounts, apparently different 

 from each other, leave a proof, that the accounts are 

 fairly stated, so far as they relate to the Leger. 



The entire value of the property at the commence- 

 ment was represented by the stock account ; the in- 

 crease or decrease of it was particularly marked by 

 the closing of the real accounts, of the personal ac 



Book' 

 Keeping- 



