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Sometimes the accounts are numbered according to their order in the leger; and the references, both in the journal and leger, point out the number of the account inftead of the folio.

36. In complex pofts, turn to the feveral Drs. or Crs. in their order, and enter the articles according to the foregoing directions; placing the fums belonging to each in the money-colum, againft the refpective en

tries.

37. An article in the leger is generally comprehended in one line. The narration fhould be as full as can be contained in that bounds. If it cannot be narrated completely, the journal is referred to for further particulars, by writing per Journal, (or p. 7.), either after an incomplete narration, or immediately after the Dr. or Cr. when there is no room for a proper narration. In complex posts, there can feldom be any narration annexed to the fingle Dr. or the fingle Cr. The entry is generally To Sundries per J. or, By Sundries per 7. If the fenfe of the whole article can be narrated, it should be done; but it is improper to narrate the firft or any other part of the article, and omit the others.

38. When the space allotted for an account in the leger is filled up, the account must be transported to another folio. For this purpose add the columns on both fides, and write against the fum, Tranfported to folio , inferting the number of the folio where the new account is opened, in the reference-column, or on the line, if no reference column be ufed. Then, after titling the new account, and entering the number of the folio in the index, write on the Dr. To amount, brought from folio inferting the number of the folio where the old account was; and on the Cr. By amount, brought from folio ; and place the fums, and quantities, if any, in the proper columns.

When either fide of an account is full, both fides fhould be tranfported, and diagonal lines drawn, to fill up the vacant space of the fide which requires it.

39. The books fhould be written up as frequently as can be done conveniently; fo that the journal may keep pace nearly with the wafte-book, and the leger with the journal. Each book should be carefully revised, and compared with the book from which it is posted. In comparing the leger, obferve the following direc

tions:

Begin with the first journal-poft, and turn to the folio of the leger where the Dr. is entered, which you are directed to by the marginal reference, and compare the date, entry, and fum. If you find them to correfpond, it is well; if not, the leger must be altered till it correfpond with the journal. Then place a dot before the reference-figure in the journal, and a mark A before the fum in the leger.

Proceed in the fame manner to compare the Cr. of the journal-poft, and all the following pofts in their order. The dots in the journal fhow how far the comparifon is advanced, and the marks in the leger show what articles are compared.

The fums of accounts tranfported fhould be left blank till the books be compared; as an error in any article will occafion an alteration in the fum.

40. Some accountants correct all errors in the leger, without erazing any thing, by the following methods: rft, If the fum be entered too small, they make

a fecond entry for the deficiency. 2d, If it be entered too large, they make an entry on the oppofite fide for the excefs. 3d, If it be entered on the wrong fide of the account, they enter it twice on the other; once, to counterbalance the error, and a fecond time for the true entry. 4th, If it be entered on a wrong account, they charge the wrong account Dr. to, or Cr. by, the right

one.

41. We do not much approve of these methods, as they give the books a confufed appearance; and would rather recommend the following rules: 1ft, If an article be omitted, do not attempt to interline at the place where it should have been; but infert it under the laft article when you difcover the omiffion, and mark a crofs X against it on the margin, and another at the place where it should have been. 2d, If you difcover a miftake immediately when committed, correct it without cancelling any thing, as in this example. To Cash, Jay, To James Speirs received to account. 3d, If you have written a line entirely wrong, or in a wrong place, write the word Error at the end, prefix a cross, and omit or cancel the fum. 4th, Cancel errors, by drawing a line lightly through them, fo that the old writing may ftill be legible; by which it will be evident, that the book has not been vitiated for a fraudulent purpose. The fame method should be followed in correcting errors in the journal.

42. When the comparison of the books is finifhed, glance over the leger, to obferve if the mark of com. parifon be affixed to every article. If not, you must turn to the journal, and obferve if the articles be right which had not been marked.

43. Because the whole fum of the Dr. fide of the leger should be equal to the whole fum of the Cr. § 14. it is proper to try if they correfpond. For this purpofe, you may add the Dr. of every account, except fuch as are already balanced, placing the fums in an inner column, and extending them at the end of one or more folios, as you find moft convenient, to the outer column: and, as you go along, add the Cr. in the same manner. If the fum total of both fides be equal, it gives a prefumption that the books are right; if they differ, there is certainly fome mistake. This is called the Trial-balance. The labour bestowed upon it is not loft, as the fums may be referved for affifting us to collect the balances; the method of which will be explained afterwards.

44. If the fums of the trial-balance do not correfpond, the books must be examined again. For this purpose, begin with the firft article on the Dr. fide of the firit account, and turn to the account where the corresponding entry is, which you will find by the figure in the reference-column. If the articles agree, mark them with a dot. Proceed in like manner with the other articles on the Dr. of the firft account; then with the articles on the Cr. of the fame; and then with the following accounts in their order, till the error or errors be discovered. In complex entries, obferve if the amount of the fums on one fide be equal to the fum on the other. When you come to a dotted article, you may pafs it by, because it has been examined already.

If the errors be not discovered at the first revifal, you muft repeat the fame operation again, till you bring the books to balance. Marks different from the former

ones,

ones, or differently placed, may be ufed, to fignify that an article has been examined a fecond or third time. As the detection of errors is the most tedious and difagreeable part of book-keeping, the accountant will be induced to guard against them with all poffible care, when he has once experienced the trouble which they occafion.

45. Before we explain the method of balancing the books, it will be proper to direct the learner how to balance particular accounts. When we fettle accounts with any perfon, and afcertain how much is owing at either hand, it is neceffary to balance his account in the leger, and open a new one, beginning with the fum that was due according to the fettlement; and when we clear accounts again, we must go back to that article, and no farther.

If any articles be charged on either fide, at the time of fettling, they must be immediately entered on the wafte-book; from which they will pafs in courfe to the journal and leger; and a remark must be entered in the wafte-book, that the account was fettled, and the balance transferred to the proper fide of the new account. This remark is tranfcribed in the journal; and the leger account is balanced, when it occurs, in the course of pofting.

If the balance be due to you, write on the Cr. By balance due to him to Dr. new account, and infert the fum due you; after which, the amount of both fides will be equal. Add the account, placing the fums oppofite to each other; and, if the fides be unequal, draw a diagonal line through the vacant space of the fhorter fide, and close the old account by drawing lines under the fums. Then open the new account immediately under the old one, or in a new folio if the old one be full, by writing on the Dr. To balance of former account due by him. If the balance be due by you to him, the entries are made on the oppofite fides, with the necessary alterations. When the new account is opened in the fame folio, it is unneceffary to repeat the title; but the year and month, as well as the day, are repeated at the date of the firft article.

46. Sometimes when an account is balanced, one or more articles are left out on purpose: For example, goods lately bought on credit may be left out, and the fettlement may only relate to articles of longer ftanding. When this is the cafe, if the articles omitted be on the Dr. of the leger, we write on the Cr. thus, By articles fold him fince ft January replaced: and when we have balanced the account, and opened a new one, we write on the Dr. To articles replaced at fettling, furnished fince ft January: or, if the articles were left out for any other reafon, we explain the fame in the narration. If the omitted articles be on the Cr. the like entries are made on the oppofite fides. It fhould be noticed in the waft-book and journal when this operation is neceffary.

47. When we poft any common article from the journal, we enter the fum on the Dr. of one account, and on the Cr. of another: when we balance an account, we place the balance fum on the Dr. of the old account, and on the Cr. of the new one, or contrarywife and when we replace an article, as above directed, to the Dr. or Cr. of the old account, we place it after balancing to the Cr. or Dr. of the new one. Thus, in thefe entries, as well as in common posts, there are like

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fums entered on the Dr. and Cr. of the leger, and the general equality of the fides is ftill preserved.

48. Merchants generally balance their books once ayear. The defign of this operation is, to collect the various branches of their business, diffused through the books, into a concife abftract; to afcertain their gain or lofs fince the last balance; and exhibit the prefent state of their funds. If the bufinefs be of fuch a kind, that moft of the branches naturally come to an iffue at a certain time of year, that time is the proper one for making the balance. Otherwife the end of the year, or the leaft busy time, may be chofen.

49. It is proper, before balancing, to fettle as many perfonal accounts as poffible; to clear all arrears and fmall charges; to take an exact inventory of the goods on hand, as far as can be done; and affix a moderate value to each article, according to the current prices at the time; fuch a value as you would be willing at prefent to buy for. It is more proper to value the goods on hand in conformity to the current prices, than at prime coft: for the defign of affixing any value is to point out the gain or lofs, and the gain is in reality obtained fo foon as the prices rife, or the loss fuffered fo foon as they fall; therefore it is impoffible to make up a juft ftate of the affairs, unless the prefent prices be attended to.

50. These things being done, proceed to make the balance as follows: Prepare two fheets of paper, ruled with money-columns, in the form of Dr. and Cr.; writeProfit and Lofs as the title of the first, and Balance as the title of the fecond..

Prepare alfo fome paper for computing the balances, and mark down the folios, titles, and fums of each account in the leger, in a regular order. If a trial-balance was made, the fums may be transcribed from it. Pafs by fuch accounts as are already closed; also the accounts of Stock and Profit and Lofs, which are always the laft of being balanced. Then fubtract the leffer fum from the greater, and enter the difference on either of the sheets that the nature of the article points out, and on the fide of that sheet which corresponds to the greater fum of the account. More particularly,

In perfonal accounts, enter the difference, which is the debt owing to you, or by you, on the proper fide of the balance sheet.

In the cash-account, enter the difference, which is the money in hand, on the Dr. fide of the balance-sheet. In accounts of goods or other property, if there be nothing remaining on hand, enter the difference, which is the gain or lofs, on the proper fide of the profit and lofs fheet.

If the whole be ftill on hand, enter the prefent value on the Dr. of the balance-fheet; and, if this be different from the prime coft, charges included, enter the difference in the proper fide of the profit and lofs fheet..

If part be fold, and part on hand, place the value of the quantity on hand under the fum of the Cr. and add them. The fum is the whole return that will be obtained, if the reft of the goods be fold at the eftimated value; and this, being compared with the fum. of the Dr. which is the whole expence, fhows the gains or lofs. Enter the fame in the proper fide of the profit and lofs fheet, and enter the quantity and value on hand on the Dr. of the balance-sheet.

Obferve if the quantities in the inner columns be equali

2d, Sundries Dr. to Profit and leafs, for gain, on the following accounts. The particulars are taken from the Cr. of the Profit and Lofs sheet.

qual on both fides, when the goods are all fold; or, if following accounts. The particulars are taken from the the difference, when only part is fold, be equal to the Dr. of the Profit and Lofs fheet. quantity on hand. If they correfpond, you have a just account of the goods. If the Dr. be greater, there is fomething amiffing, which you must enter on the Dr. of the balance-fheet, and mark the cause of the deficiency, as inlake, wafte, or the like. If the Cr. be greater, there is an excefs, which you must enter on the Cr. of the balance-sheet, together with the occalion of it, as difference of measure, or the like.

In accounts fubfidiary to profit and lofs, enter the difference on the proper fide of the profit and lofs fheet. When there is nothing written on one fide of an account, enter the fum of the article or articles on that fheet which the kind of the account points out.

51. When you have collected all the balances, fum up both fheets, and add to the profit and lofs fheet the fums of the profit and lofs account in the leger: then fubtract the leffer fum of each fheet from the greater. This being done, mark the fums of the ftock-account on your computation-paper, and add thereto the balance of the profit and lofs fheet on the fide which correfponds with the greater fum of that account: then fubtract the leffer fum from the greater. The remainder will be equal to the difference of the fides of the balancefheet, if the books be right, and the balances exactly collected.

52. We fhall prove that this equality muft always hold, from the nature of the articles collected. The Dr. of the balance-fheet contains every kind of property belonging to you, and every debt owing to you; and the Cr. contains every debt owing by you: therefore the difference of the fides fhows what your nett eftate amounts to. The profit and lofs fheet, when the articles from the leger are included, contains every thing you have gained on the Cr. and every thing you have loft on the Dr. ; and the difference of the fides is your nett gain or lofs. The ftock-account contained your effects and debts at the time the books were opened; and therefore, when the gain or lofs is added to the proper fide, it muft fhow the extent of your nett eftate at prefent. Thus the stock-account and the balancefheet both point out how much you are worth at prefent; the one from your former ftock, allowance being made for your gains or loffes; the other from a view of your prefent effects and debts; and they will correfpond, because both must be agreeable to the truth, if the books be correct.

53. Though the books muft balance, if free from error, yet it is fometimes difficult to adjust them exactly, efpecially when the bufinefs is extenfive, and the error trifling. If there be still a difference, which we do not think it worth while to make further search for, we may close the books, by making Profit and Lofs Dr. or Cr. for the fame. This introduces an article on one fide of the leger, which has none correfponding to it on the other, but is balanced by fome undiscovered

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3d, Balance-account Dr. to Sundries, for debts and property belonging to me.

4th, Sundries Dr. to balance-account, for debts due by me. The particulars of this and the former are taken from the refpective fides of the balance-fheet. 5th, Profit and Lofs Dr. to Stock for nett gain; or Stock Dr. to Profit and lefs, for nett lofs. 6th, Balance-account Dr. to Stock, for nett flock. 55. When the four first of these articles are pofted in the leger, all the perfonal, real, and fubfidiary accounts will balance, and you may add them as you go along. In accounts of goods, if there be any deficiency, you must enter it on the Cr. in the inner column; and, if there be any outcome, you must enter it on the Dr. before you add the account. Then the fums of every account and every column on the oppofite fides will be equal.

The only accounts that remain open are, Profit and Lofs, Stock, and Balance. The fifth poft balances the profit and lofs account, and the fixth balances the stockaccount. It was noticed, § 14. that the whole fums of Dr. and Cr. of the leger are equal; and therefore, if the fides of every account, except one, be balanced, that one will balance of its own accord. The balanceaccount alone remains open, and, upon trial, you will find that the fides are equal. This affords an additional proof, or, at least, a different view, of what was demonftrated, with refpect to the balance of the books, in $ 52.

The lines above and under the fums, at a general balance, may be drawn with red ink; and, at the balancing of particular accounts, with black ink, for diftinction.

56. Some chufe to infert the particulars of the profit and lofs and balance fheets in the respective accounts of the leger. If this be done, it is unneceffary to enumerate them alfo in the journal. Some chufe to balance the accounts of goods, whenever the quantity is fold off; and we approve of this method, as it leffens the work at the general balance, which is always fufficiently laborious.

57. Thus is the ftate of a perfon's affairs brought together, in a fhort compafs, under his view; and the articles of the balance-fheet fupply materials for a new inventory. It is convenient, however, to alter the order, and arrange the real accounts together, and the perfonal ones together.

accounts may

58. It is not neceffary to begin new books, nor open the accounts anew, unless the old folios be full. The be continued in the former folios; but it is beft to begin a new leger, if the old one be not likely to hold all the bufinefs of the next year. When one comes to have several sets of books, it is common to diftinguish them by the letters of the alphabet. The firft walte-book, journal, and leger, are marked A, the fecond, B; and fo on.

In the following fpecimen, the wafte-book and journal are placed on oppofite pages, that the learner may eafily compare them; and the rules are referred to by their numbers.

WASTE

(1) WASTE-BOOK. Edinburgh, JANUARY 1. 1789.

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JOURNAL.
Edinburgh, JANUARY 1. 1789.

Sundries Dr. to Stock for articles belonging to James

Ofwald merchant Edinburgh.

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LIST of debts by the faid James Ofwald.

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Stock Dr. to Sundries.

.2 To Royal Bank per account

3 To Tho. Smith merch. London 3To Will. Nibet carpenter Leith per do

(1)

82.4 2 8.

per

acc.

L230 54

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28 7 5

312 7 3

1612 6

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Rule III.

10.

Paid William Nisbet in full

Rule I.

·13.

33 26

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Bought from Will. Bruce merchant

Leith, 200 bushels falt, at is 8d

320 ftone iron, at 3s 4d

Rule II.

∙15.

Sold 30 rms paper to Ja. Bofwell, at 128 L 18

12 to John Henderson ftationer
Edinburgh, at 128

5 for ready money, at 118.

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2719 Cash. For

.

.2

Sold Will. Hunter merchant Dunbar

150 bufh. falt, at is 9d, Li3 2

Received in part

And he owes the balance

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Cab. Received in part

4 William Hunter merchant Dunbar, for

balance due by him

3 B:

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