APPENDIX. 



[How to keep the necessary accounts, close the books at the end of the year, prepare the annual reports, etc.. 

 LEDGER ACCOUNTS TO USE. 



No matter what forms are used in recording the transactions, unless 

 the financial facts are recorded in a uniform manner, under uniform 

 account-captions, a uniform system of accounting can not be said to 

 exist. The use of a uniform system of accounting and reporting by 

 the ginning industry as a whole makes possible the exchange of data 

 regarding business operations which is of great value as a guide to 

 efficient operation. Furthermore, the attitudes of banks toward the 

 extension of credit is influenced by the clarity of the reports sub- 

 mitted hi support of an application for a loan, and by the ease with 

 which the financial condition and progress of the organization can be 

 ascertained from such reports. It is with the aim of assisting in this 

 highly important work of unification that a classification of general 

 ledger accounts is presented herein. 



On pages 21 to 35, following, is described the detail operation of the 

 general ledger accounts which it is believed will be found desirable 

 for use in the average cotton ginnery. Some organizations will not 

 need all of these accounts, while others will wish to have additional 

 ones to show certain special features of their operations. 



The accounts hereinafter described are so arranged that a monthly 

 income and expense statement can be prepared with a minimum of 

 work and without closing the books. The combination of letter and 

 number shown at the right of the account title should be used as the 

 number (page) of the account in the ledger. .This plan of numbering 

 permits the insertion of additional accounts without disturbing the 

 relative position of those already in use. The plan is a decided aid 

 to the preparation of monthly and annual statements. In the dis- 

 cussion of ledger accounts the term "fiscal period" means the financial 

 or other operating period as distinguished from the calendar periods; 

 the term " at the opening of the books" means the time of installation 

 of a new system of accounts. 



OPENING THE BOOKS. 



In order to open the accounts, it is necessary to take a physical 

 inventory of all assets and to take into consideration all liabilities of 

 the concern. These should be arranged in the form known as a 

 balance sheet, with assets on the left and liabilities on the right. 

 (See illustration on page 4.) The difference between the total 

 assets and total liabilities will represent the net worth, either as 

 capital stock, surplus, or deficit. These accounts are described at 

 length under their respective captions. The assets should be arranged 

 in the order of their probable cash realization and the liabilities in the 

 order of their probable priority as to liquidation. 



The items appearing in the balance sheet should then be entered in 

 the cash journal, the amount of each item being posted from the cash 

 journal to the proper ledger account. As succeeding transactions are 

 classified, entered in the journal, and posted to the proper ledger 

 accounts, the ledger will contain a summary of the financial facts 



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