BOOK-KEEPING. 



'To matt a Irl-! Inliinci, 



%Vhen every sccoutu 15 polled twice from the journal into 

 the IrJjjer, aiid on ofipoiiti-, <ir contrary, fides, it is evident 

 tliat all t!>e fumj uu llie Dr. lidc will equal all thofc 011 the 

 Cr. fide. 



This triiil, or check, is generally made on a feparate pa- 

 prr, Slid it nay be pcrloiircd every d.iy, rroiith, or year, 

 according to t!ie extent of the biHiicfs. Tlic titles of the 

 k-dj;cr Bccmints are wiitteu under each other vvutli Dr. to 

 the left, and Cr. to the right. A'uiexcd to each, on its 

 proper fide, is fit down the fiiin of every Dr. and Cr. ; and 

 both fides will a;;ree if tlic v^'orlv be right : as in tht follow- 

 ing example, from the preceding ledger. 



Trial balance. 



To matt tilt general balance, and chfe the ledger. 



The journal being all corrcttly pollod, an account mud 

 be opened for profit and lofs, and anotiicr for balance. 

 Tl'.cfe two acconnts, vvitli that of (lock, are not to be 

 elofed until the others are balanced. 



Proceed, tlieief )rc, to the fecond account) where the dif- 

 ference between the Dr. and Cr. fides appears to be 40 1, j 

 fct this funi under the fmalltr fide, making both equal. 



This balance or difference being on the Cr. fide, John 

 Smith's account is therefore credited by balance, and on the 

 balance fiieet it is entered on the Dr. fide : for if John Smith 

 be Cr. by balance, then is balance Dr. to John Smith. 



By this fiinple method all ptrfonal accounts are elofed ; 

 but in real accounts a double operation is necefiary, when 

 any of the goods remain unfold, as thefe mull be firll 

 balanced. 



Thus, in the cloth account, the quantities on the Dr. and 

 Cr. fides mull be compared, and tlicir difference fct down 

 wnder the fmaller quantity, making both fid'.s equal. 



Here the difference is :o yards, which, at firll co(l, is 

 worth J-';l. ; this fum muil be entered on tlie Cr. fide of 

 the cloth account, and then on the Dr. fide of the balance 

 account, thus making cloth Cr. by balance, and balance Dr. 

 to cloth. 



When the eoo.ls on the Dr. and Cr. fides are balanced, 

 the money columns mull be next compared, and their differ- 

 ence ihcws the profit or lofs upon the article. In the cloth 

 account the Cr. fide is lol. more than the Dr. ; hence 

 clctii is made Dr. to profit and lofs for that fum ; and pro- 

 &t and lofs Cr. by cloth for the fame. 



James Taylot's account, and the account of cafli being 

 next balanced, proceed to prove the work. 

 The proof of booh ■keeping. 



The accounts being all balanced, except thofe of flock, 

 profit a::d lofs, and balance, let the profit and lofs account 

 be fird elofed. Hue profit and lofs is Dr. to flock for lol. 

 gained, and therefore Hock is made Cr. by the fame. 



Th« ftock accouut nmlt be next clafed, where tlie balance 

 appears to be iiol. Hence Hook is made Dr. to balance 

 •for this fum, and the balance account mufl therefore be 

 mnde Cr. by lloek for the fame. 



Mow if the work be right, both fides of the balance ac- 



count will be equal ; wh'ch is the proof of book-keeping, 

 and which proof iiectffarily arifes from double-entry. 



The reafon of this proof willalfo appear obvious from the 

 following confiderations : 



The balance account contains on the Dr. fide what 

 goods I liave unfold, what eafli I have in hand, and what 

 debts are due to me : 



And on the Cr. fide it contains v.'hat debts T owe. There- 

 fore the difference between the Dr. and Cr. fide of the ba» 

 hu.ce account is the net of my eltate. 



Now there is another method of finding the net of my 

 cfl.ite, which is, by adding my profits or fnbtracting my 

 loffcs from my original (lock ; and when this fum is put on 

 the Cr. fide of the balance account, it will make both fides 

 equal, if tlie-books be correft. 



This principle, or proof of book-keeping by double entry 

 Biay be thus mathemiticaily demonllrated : 



Let S=:;the net flock at opening the books. 

 p:=the gain or lofs at clofing the books. 

 l)=:thf Dr. fide of the balance account. 

 C=;the Cr. fide of the balance account. 



Then S + p=:N=itlie net flock at clofing the books, 

 and D — C=:the net flock at clofing the books. 



Hence (per. Ax. 1. Euclid) D — C=N, and therefore 

 D = N-f-C which was to be proved; that is, the Dr. fide 

 of the balance account (hould equal the Cr. fide, added to 

 the net flock. 



Hence the proof of book-keeping may be confidered as 

 confining of two methods of afcertaining my property, and 

 thefe muff always agree if the work be right. If they dif. 

 fer, the books are certainly wrong. 



The converfe of this rule, however, does not hold ; for the 

 balance account may clofe when the work is wrong — a falfe 

 ftatement, for inftance, continued on both fides of the ledger, 

 will not prevent the proof ; but there is fcarcely a probabi- 

 lity that fuch an error could be continued unobferved ; and 

 even intentional mif-ftatements may be prevented by a "check 

 ledger ;" that is, by having two ledgers kept by different 

 perfons. The general praitice is to examine the books fre- 

 quently, which is done by one perfou reading the journal, 

 while another infpefts the ledger, in order to fee that every 

 account has been regularly poded by double entry. It alfo 

 promotes accuracy, to have the books regularly written up, 

 lo as to make the journal keep pace with the wade book, and 

 the ledger with tiie journal. 



Tlje folloiving Set of Booh exhibits the modern improvements 

 of Merchants^ Accounts. 

 This fyffem of book-keeping is performed on the princi- 

 ples of double entry, like the foregoing, with a waile book, 

 journal, and ledger, but it differs in arrangement ; for here 

 the wafte book is divided into a certain number of fubfidiary 

 books, each adapted to a particular kind of bufinefs : thefe 

 are, the Cash Book, Bill Book, Invoice Book, and 

 Sales Book. 



The cnf}} look is the 

 received. 



nfte book for all money paid or 



The bill book is the wafte book for all bills of exoliange 

 received or accepted. 



The invoice book is the wade book for all goods ex- 

 ported or fent off, whether on commiffion, or on the mer- 

 chant's own account. 



The fiili-s look, or account of fales book, is the wafte 

 book for all goods imported and fold on cor.-.miffion. 



The auafle book contains the particulars of fuch occur- 

 rences as cannot be brought under any of the foregoing 

 heads, and it ^Ifo gives a general account of every tranfac 



tiODj 



