76 FARM ACCOUNTING 



balance items not otherwise specifically li*t'd i" tllt St;itt 

 incut of Resources and Liabilities. This net n-sult is ob- 

 tained through the medium of the Loss and Gain State- 

 ment. 



The Loss and Gain Statement, then, might be called 

 an analysis of the one item in the Statement of R's<> 

 and Liabilities which is added to the capital to show the 

 total present liability to the proprietor. It should 1* n 

 called in this connection that th capital in the trial bal- 

 ance before closing (Illustration 18) is the capital at the 

 beginning of the fiscal period, while the Capital in the trial 

 balance after closing (Illustration 1 \ U the capital at the 

 close of the period, after transferring to it the gain of tin- 

 period. 



The amount shown as capital in the last column of the 

 Statement of Resources and Liabilities (Illustration 17) 

 is the same as the balance of the Capital account in the 

 trial balance after closing (Illustration 14). 



Two Methods of Preparing Financial Statements. Ai 

 a result of these comparisons between trial balances and 

 statements we find that there are two general methods of 

 preparing the financial statements, in simple cases, after 

 the trial balance has been prepared. 



1. The expense and income accounts are closed into the 

 Capital account through the Loss and Gain account, and a 

 trial balance is taken after dosing. The Loss and Gain 

 Statement is then prepared by merely copying tin- Loss 

 and Gain account, while the Statement of Resources and 

 Liabilities is prepared by copying the trial balance after 

 closing in slightly different form. 



2. Using the trial balance before closing, the Loss and 

 Gain Statement is prepared and then the balance of net 

 gain or loss is used in the Statement of Resources and 

 Liabilities as an addition to or subtraction from capital 



