24 BIJLLEtlX 590, tf. S. DEPARTMENT OF AGMCULTUBE. 



and are afterwards found to be uncollectible. To charge these uncol- 

 lectible items off during the succeeding year would throw the full 

 burden of loss upon the business of a year in which it was not incurred. 

 A better policy is to set aside out of each year's profits a sufficient sum 

 to cover the estimated losses on bad debts. The balances of the 

 accounts found to be uncollectible are then charged to this account. 

 Should any of the past due items thus charged off be collected later, 

 they will then be credited to surplus. By showing the name of all 

 uncollectible balances on this account a very definite record of them 

 is established. The credit balance appearing on this account is the 

 available amount reserved against losses from bad debts. On the 

 balance sheet it should not appear as a liability on the credit side 

 but as a deduction from the total amount due from growers on the 

 asset side. 



Packing-house closing account. — This account is raised on the books 

 at the end of the year for the purpose of assembling in one account 

 the expenses and revenue derived from packing-house operations, so 

 that these may be shown in their proper relations. The balance 

 appealing on this account is transferred to the profit-and-loss account 

 at the time of closing the books. 



The same procedure is followed for the closing of the warehouse 

 operations into the warehouse closing account. 



Profit and loss. — The accounts containing profit-and-loss elements 

 are brought together in this account at the end of the year for the 

 purpose of determining the net profit or loss for the year. 



Surplus. — The credit balance appearing on this account measures 

 the amount of undivided profits remaining in the business. The net 

 profit or loss at the end of the year is transferred from the profit and 

 loss account to the surplus account. The operation of a business 

 at a net loss will result in a debit balance, or deficit, in the surplus 

 account. 



