THE LEDGER 29 



actions on pages 14 and 15, for discussion with a view 

 to finding the reason for interpreting them in the ledger 

 accounts as they are illustrated on pages 20-22. How- 

 ever, the ones already discussed illustrate all the prin- 

 ciples involved. With the exception of the $700 mortgage 

 paid off on December 10th, all the remaining transactions 

 involve either an increase in cash with a resulting increase 

 of the Capital account, or a decrease in cash with a corre- 

 sponding decrease in the Capital account. 



Interpretation of Accounts. From an examination of 

 Mr. Arnold's Capital account as shown on page 20, 

 we see that it shows $4000 net capital invested on Mar. 

 1, 1916. During the year it shows several additions to 

 capital on the right side, aggregating $2000, and several 

 deductions from capital on the left side, aggregating $1000. 

 By a purely arithmetical process, then, we find that the 

 capital at Mar. 1, 1917, is $5000 as shown by the account, 

 or $1000 more than it was on Mar. 1, 1916. 



This increase of $1000 in net capital does not take the 

 form of an increase in property, for all the property ac- 

 counts (Cash, Mr. Bell; Horses, Cattle and Equipment) 

 show the same amounts on hand Mar. 1, 1917, as on Mar. 

 1, 1916. It is represented by a decrease in liabilities. 

 Mortgage Payable and Notes Payable have decreased dur- 

 ing the year $700 and $300 respectively, a total of $1000. 



Since Mr. Arnold has just as much property on Mar. 

 1, 1917, as he had on Mar. 1, 1916, but owes $1000 less to 

 other people, it is quite apparent that he is $1000 better 

 off. This condition is reflected in his Capital account. We 

 find, then, that this account fulfils the requirements of an 

 account as previously defined, in that it is "an exhibit of 

 the bookkeeping effects resulting from transactions involv- 

 ing a particular thing. " The particular thing in this case 

 is Mr. Arnold's capital. 



Likewise, Cash, Horses and other accounts exhibit the 



