BOOKKEEPING FOR GRAIN ELEVATORS. 7 



chahdise purchases and local retail sales, have been combined into 

 one form. 



This form differs from ordinary books of first entry in that both the 

 debits and credits arising from transactions must of necessity be 

 entered on it before it can be balanced. 



The fundamental principle of double-entry bookkeeping is here 

 illustrated; in every transaction two or more accounts are always 

 affected and m opposite ways, these opposite effects being designated 

 in accounting as debit and credit. That is, if value has been received 

 or given it is necessary not only to show what account received, or 

 cost value, but it is also necessary to show what account produced or 

 surrendered that value. The debit and credit effects will be equal. 

 For example, when merchandise is sold, the merchandise account 

 obviously surrendered value, hence that account will be credited. 

 In order to complete the entry, however, it is necessary to show what 

 account or accounts have received an equivalent Tialue, which in this 

 case will be either the cash account or the accounts receivable ac- 

 count, which must be debited. Similarly, when a note with accrued 

 interest is paid, the Cash account surrenders value equivalent to the 

 sum of the note and interest, hence a credit to the Cash account. 

 Again it is necessary to show what account or accounts have received, 

 or cost value. In this case the Notes payable and the Interest 

 accounts are iiiTolved. They will be debited respectively with the 

 face value of the note and with the interest paid. Every transaction 

 must be analyzed in a similar manner and an entry made showing the 

 effect of the transaction on all accounts involved. 



A column captioned Items is provided between the debit and the 

 credit sides of the Cash Journal, in which are written the names 

 of the ledger accounts to be debited or credited, and in each case an 

 explanation of the transaction. Complete explanation must always 

 be made in order that one unfamiliar with the transaction can under- 

 stand it readily. The amount or amounts are then extended on 

 the debit and credit sides under the proper headings. (See sample 

 entries, p. 48.) 



The debit columns, to the left of the Items column, are captioned. 

 Date, Folio, Cash, Bank deposits. General ledger. Accounts receiv- 

 able, Hard coal (lbs., amount). Soft coal (lbs., amount). 



The credit columns, to the right of the Items column, are : Check 

 number, Folio, Bank withdrawals. General ledger. Accounts receiv- 

 able, Sales ticket number, Hard coal (lbs., amount), Soft coal (lbs., 

 amount). 



Blank columns are also provided on both sides to be used as de- 

 sired. 



