18 FARM ACCOUNTING 



with no claims whatever against it. The economist defines 

 capital as " wealth used in the further production of 

 wealth." He, therefore, considers all of the resources as 

 capital regardless of the claims against them by outside 

 parties. 



It is the common practice in bookkeeping to show the 

 capital under various headings to signify the nature of 

 the property, horses, cattle, cash, etc. Under another head- 

 ing, however, is shown the net total of all the capital. Th is 

 latter heading is usually called the proprietor's capital ac- 

 count, meaning that it shows the capital invested by the 

 proprietor or owner the property which is available for 

 his personal use after debts to aU outside parties have been 

 paid. 



It should be borne in mind that the true capital of a 

 business is its net resources. The capital account of the 

 proprietor merely represents net capital in the aggre- 

 gate. 



Account.' An account 1 is the exhibit of the bookkeep- 

 ing effects resulting from transactions involving a particu- 

 lar person, thing, or class of things. The name of that 

 person, thing, or class of things is written at the top of 

 the account. 



Debits ajid Credits. It is customary to divide the ac- 

 count into two equal parts by means of a perpendicular 

 line, the left hand part being known as the debit side and 

 the right hand part as the credit side. All items on the 

 debit side are known as debits and all items on the credit 

 side as credits. " Debit" is used interchangeably with 

 "charge." 



An account is not complete unless the date of each item 

 is shown, together with such other data as conditions re- 

 quire such as the folios of pages from which the items 

 are posted, and explanations of particulars bearing upon 



1 Bentley's "The Science of Accounts." 



