12 BULLETIN 865, XJ. S. DEPAETMENT OF AGEICULTUEE. 



D. PREPAID EXPENSE. 



Prepaid Insurance (D 1). 



Debit: 



Credit: 



1. With the total amount of fire insur- 



1. At the close of the period with the 



ance premiums prepaid as shown 



portion of fire insurance premiums 



by the Balance Sheet at the time 



expired. 



of opening the books. 



2. With the returned premium when 



2. With the amount of fire insurance 



any policy is canceled. 



premiums paid. 





Usually policies run for a year and are paid for in advance. This payment is charged 

 to the Prepaid Insurance account and represents an asset value. The amount is re- 

 duced periodically by a charge to Insurance Expense, the credit being carried to the 

 Prepaid Insurance account. 



Printing and Stationery (D 2). 



Debit: 



Credit: 



1 . With the estimated value of the stock 



1. At the close of the period with the 



on hand as shown by the Balance 



estimated value of the amount 



Sheet at the time of opening the 



used during the period. 



books. 



2. With any amount disposed of other- 



2. With the cost of all purchases during 



wise. 



the period. 





It is advisable to carry a Printing and Stationery account, inasmuch as such supplies 

 will be purchased in quantities sufficient to cover several months' usage. Prorating 

 the expense over the period during which it will be used is preferable to burdening the 

 month in which the purchase is made with the entire cost and thus possibly affecting 

 the profits for the period. In this case Printing and Stationery Inventory account will 

 be credited with the value of the amount used, the corresponding debit being carried 

 to Office Supplies. 



LIABILITIES, RESERVES, AND NET WORTH. 



F. CURRENT LIABILITIES. 



Notes Payable (F 1). 



Debit: 



< 'kkdit: 



1. With the amounts paid in partial or 



] . With the face value of all signed ob- 



entire settlement of signed obli- 



ligations of the organization as 



gations. 



shown by the Balance Sheet at the 



2. With signed obligations given in re- 



time of opening books. 



newal. 



2. With the face value of any obliga- 





tions subsequently issued. 



Should a note be renewed , thus in effect giving a new note for the old note, debit this 

 account for the face value of the old note, and credit the account with the amount of 

 the new note. 



A careful record should be maintained of all notes given, showing date issued, to 

 whom, date of maturity, and rate of interest. 



