78 The Farmer's Business Handbook 



made in paying out cash or in receiving it, there 

 would then appear to be either profit or loss. 

 Suppose a two-dollar bill had been paid out for a 

 one -dollar demand. Then the cash account would 

 not balance, but show a loss of one dollar. If 

 the mistake was reversed, then the account would 

 show a gain of one dollar. 



The debits and credits in the two personal ac- 

 counts, Smith's and Bryant's, do not balance 

 until an explanatory entry is made stating the 

 difference. Since it is presupposed that Mr. 

 Bryant will pay the $87.90, and that we will pay 

 Mr. Smith the $25.75 we owe him, there is neither 

 gain nor loss in these accounts. 



The Improvement account shows a gain of 

 $7.10. It appears that enough wood has been 

 sold to pay for a few improvements and leave a 

 surplus of this amount. When the wood lot is 

 small it is hardly necessary to open a separate 

 account with it, but the receipts from wood or 

 lumber may be used to reduce the debits which 

 are certain to arise by reason of making ordinary 

 repairs. If the wood lot is large and sales from 

 it considerable, then a separate wood lot account 

 should be kept. So, in like manner, a separate 

 account should be opened if any expensive im- 

 provement is to be made, such as building a 

 barn or house, that ordinary improvements and 

 unusual improvements may be clearly separated 



