Gains and Losses 73 



Net assets May 1, 1901 $3,280 24 



Net assets May 1, 1900 2,650 75 



Gain $629 49 



While this method of determining gain or loss 

 is correct if all property of value is accurately 

 set forth in the inventories taken at the begin- 

 ning and end of the year, it does not reveal the 

 detailed gains and losses of the various subdi- 

 visions into which the business has been divided. 



After the inventory is taken, the amount (ex- 

 cept Bills Payable) are entered on the credit side 

 of Teams, Live Stock, Farm Tools, etc., and the 

 accounts are balanced. The inventory value is 

 then carried down to the opposite (debit) side of 

 the new year's account and the " Balance," which 

 shows either profit or loss in a property account, 

 is transferred to a Gain and Loss account. If the 

 balance is on the debit side it shows a profit 

 and is entered on the credit side of the Gain 

 and Loss account; if the balance is on the credit 

 side of the property account it shows a loss and is 

 transferred to the debit side of the Gain and Loss 

 account. A red ink entry always means that 

 the amount so written is to be transferred to 

 the opposite side of some other account. 



Having credited Teams, Live Stock and Farm 

 Tools, respectively, with the amounts as found in 

 the summary values, balanced the Cash account 



