BOOK

BOOK-BINDING is the art of gathering together and sewing the sheets of a book, and covering it with a back, &c. It is performed thus: The leaves are first folded with a folding-stick, and laid over each other in the order of the signature; then beaten on a stone with a hammer, to make them smooth and open well; and afterwards pressed. They are sewed upon bands, which are pieces of cord or packthread; six bands to a folio book; five to a quarto, octavo, &c.; which is done by drawing a thread through the middle of each sheet, and giving it a turn round each band, beginning with the first and proceeding to the last. After this the books are glued, and the bands opened and scraped, for the better fixing the pasteboards; the back is turned with a hammer, and the book fixed in a press between two boards, in order to make a groove for fixing the pasteboards; these being applied, holes are made for fixing them to the book, which is pressed a third time. Then the book is at last put to the cutting press, between two boards; the one lying even with the press, for the knife to run upon; the other above it, for the knife to run against; after which the pasteboards are squared.

The next operation is the sprinkling the leaves of the book; which is done by dipping a brush into vermilion and sap-green, holding the brush in one hand, and spreading the hair with the other; by which motion the edges of the leaves are sprinkled in a regular manner, without any spots being bigger than the other.

Then remain the covers, which are either of calf-skin or of sheep-skin: these being moistened in water, are cut out to the size of the book; then smeared over with paste made of wheat flour; and afterwards stretched over the pasteboard on the outside, and doubled over the edges within; after having first taken off the four angles, and indented and platted the cover at the head-band: which done, the book is covered, and bound firmly between two bands, and then set to dry. Afterwards it is washed over with a little paste and water, and then sprinkled with a fine brush, unless it should be marbled; when the spots are to be made larger by mixing the ink with vitriol. After this the book is glazed twice with the white of an egg beaten, and at last polished with a polishing iron passed hot over the glazed cover.

IS the art of recording mercantile transactions in a regular and systematic manner.

1. A merchant's books should contain every particular which relates to the affairs of the owner. They should exhibit the state of all the branches of his business, the connection of the different parts, the amount and success of the whole. They should be so full and so well arranged, as to afford a ready information in every point for which they may be consulted.

The matter which the books should contain is comprehended under the three following heads: First, The debts which are owing to the owner, and the debts which he owes to others. Secondly, The goods and other articles of property which belonged to him; the quantity and value sold, or otherwise disposed on; and the quantity and value which still remain in his possession. Thirdly, The amount of his stock when the books were opened; the profits he has obtained, and

VOL. IV. Part I.

the losses he has suffered, since; and the amount of his stock at present.

That method of book-keeping which answers these purposes most clearly and concisely, is the best. The Italian method, by double entry, is generally preferred; at least, it is founded upon the most universal principles, and is the most convenient in extensive and complicated business; and the accountant who understands it, will find little difficulty in following, or even in inventing, other methods that are better accommodated to any particular purpose.

The Italian method requires three principal books; the Waste-Book, Journal, and Leger.

2. THE waste-book, or day-book, contains an exact register of all occurrences in business in the same order

as they take place. It begins with an inventory of every thing belonging to the owner, a list of the debts due to him, and of the debts he owes to others: It is carried on with a full relation of all the money he receives or pays; of all the goods he buys or sells; and of every other occurrence in his business. Each article should be entered as soon as the transaction takes place, and should be clearly expressed in the plainest language. It should require no supply from the accountant's memory, but should be fully intelligible to any person, however unacquainted with the business; at the same time, it should be written with all convenient brevity; and, therefore, sometimes refers to invoices and other accounts, for particulars. The accountant's first care should be to have nothing defective or ambiguous; his second, to have nothing superfluous.

3. The date is written in text on the top of each page. The articles are separated from each other by a line: and the transactions of one day are separated from those of another by a double line, in the middle of which there is left a blank space for inserting the day of the month. This book must be kept with the greater care, as it contains the materials from which the other books are composed; and any error or defect will occasion a like one in the others. Besides, it is the book whose authority is trusted to, and which must be exhibited to judges, or arbiters, when an account is disputed. As the journal is filled up from the waste-book, the authority of the former is esteemed more authentic, unless there be an obvious mistake through hurry; and either of these books is depended on rather than the leger, which, from its form, is more liable to error, and may be more easily vitiated by a fraudulent design.

4. As the waste-book contains the whole substance of the business, it may be applied so as to afford any information that can be wanted: but the labour of consulting it would be very great. For instance, if it were required to know how much any person owes us, we must look over the book from the beginning, and mark down every article in which we have dealt with him; or, if it were required to know what quantity of goods we should have on hand, we must look over the whole book, and mark down every article bought or sold. This operation would not only be found very tedious, but much exposed to the risk of omissions. To prevent these inconveniences, another book is used, in which the articles are arranged in a methodical order. This book is called the Leger, and we shall consider it next; because the journal, though it comes before it in the order of writing, cannot be well understood, till the nature of the leger be explained.

5. In the leger, articles of the same kind are collected together; and, for that purpose, it is divided into many accounts, under which the different branches of business are arranged. Each account is introduced by a proper title, to explain the nature of the articles it contains; and articles of opposite kinds, which belong

to the same account, are placed on the opposite pages of the same folio: for instance, money received on the one side, and money paid on the other; or goods bought on the one side, and goods sold on the other. The left-hand page is called the Debtor or Dr. side of the account, and the right-hand page the Creditor or Cr. side. The difference between the sums of the Dr. and Cr. sides is called the Balance.

Accounts in the leger are of three kinds, which answer to the three purposes of book-keeping mentioned § 1.

6. First, Personal Accounts. It is necessary to open an account for every person or company with whom there are any dealings on credit. At opening the books, if they be indebted to the owner, the debt is entered on the Dr.; but if he be indebted to them, it is entered on the Cr. During the course of the business, goods sold on trust, money paid, and every thing for which they are accountable to him, is entered on the Dr.; but goods bought on trust, money received, and every thing for which he is accountable to them, is entered on the Cr. The balance shows how much they owe him, when the Dr. side is greatest: and how much he owes them, when the Cr. side is greater.

7. Secondly, Real Accounts. By this we understand accounts of property, of whatever kind, such as ready money, goods, houses, lands, ships, shares in public companies, and the like.

The account of ready money is entitled Cash. On the Dr. side, the money on hand at opening the books is entered, and afterwards every article of money received. On the Cr. side there is entered every article of money paid out; and the balance shows how much ought to be on hand. The sum of the Dr. side of this account is always greater than that of the Cr. side.

8. Accounts of goods are generally ruled with inner columns for entering the quantities. When the books are opened, the goods on hand are entered on the Dr. side of the respective accounts; the quantities being placed in the inner, and the values in the outer column. Goods bought are entered in the same manner, and goods sold are entered on the Cr. side; the quantities and values being placed in the proper columns. Charges laid out on goods are entered on the Dr. side; and, when an incidental advantage arises from them, such as public bounty, it is entered on the Cr.

If the sums of the inner columns on the opposite sides be equal, it shows that the goods are all sold, and then the balance of the money-column shows the gain or loss. If the Cr. side be greater, it is gain: if the Dr. side be greater, it is loss. If the sum of the inner column be greater on the Dr. side, it shows that part of the goods are on hand; and their value must be added to the sum of the Cr. side, in order to determine the gain or loss.

6. If there be two or more kinds of the same sort of goods, they may be entered in the same account, allowing as many inner columns as there are kinds, and entering the quantities of each kind in the inner column reserved for it. This method exhibits the gain or loss on the whole goods; but does not show how much of it arises from each kind.

Or, a separate account may be opened for each kind, distinguishing the titles by the qualities, or by some other mark. Thus, one account may be kept for fine linen, another for coarse linen; one for port-wine crop 1787, another for port-wine crop 1788; one for rum from Jamaica, another for rum from Barbadoes. This method shows the gain or loss on each kind.

When there are more kinds than can be conveniently introduced in the same account, they may be divided into several classes, each class being placed in a separate account; and the particular kinds distinguished in inner columns. Thus the account of fine linen may be divided into several columns, for different kinds, distinguished by the number of threads in the breadth, or by any other convenient character.

10. Accounts of ships contain on the Dr. the value of the ship when the books are opened, and all expenses laid out thereon; on the Cr. all freights received. In like manner, accounts of houses or lands have the value of the subject, and all repairs or other charges, entered on the Dr. and all rents or other profits received on the Cr. If the subject be sold in whole or in part, the sale is entered on the Cr. And the balance after valuing the subject (if any) on hand, shows the gain or loss.

Accounts of property in the public funds, or shares in companies, public or private, contain the value, or money paid in, on the Dr. and the dividends received on the Cr. and are balanced as other real accounts.

Some persons open accounts for household furniture, plate, jewels, books, or the like. The entries on these accounts are made in the same manner.

In general, real accounts contain the value of the property, and all charges, on the Dr. and the sales and other returns on the Cr. When the account is to be balanced, if any property remains, the value thereof is placed on the Cr.; and then the balance shows the loss or gain, according as the Dr. or Cr. side is greatest.

11. Thirdly, Accounts of STOCK, PROFIT and LOSS, and its subsidiary accounts, which are sometimes called fiduciary accounts.

The stock account contains on the Dr. the amount of the debts which the owner owes when the books are opened; and on the Cr. the amount of ready money, goods, debts, and property of every kind belonging to him: therefore the balance shows what his nett stock is; or, in case of bankruptcy, how much his debts exceed his effects. There is nothing further entered on this account till the books are balanced: and then, if the business has yielded profit, the nett gain is entered on the Cr.; if it has been unsuccessful, the nett loss is entered on the Dr.: after which, the balance shows the nett stock at the time the books are closed.

12. The Profit and Loss account contains every article of gain on the Cr. and every article of loss on the Dr. The balance shows the nett gain or loss, and is transferred to the proper side of the stock-account, as mentioned above. This account is partly composed of articles that occur while the books are running. For example, legacies received are entered on the Cr. goods destroyed on the Dr. The rest of the articles are those

of gain and loss, arising from the real accounts, which are collected when the books are balanced.

13. It has been found convenient to open several subsidiary accounts, in order to shorten and methodize that of profit and loss. These contain certain articles of gain or loss, which may be reduced under distinct heads. They are in effect so many parts of the profit and loss account, and their balances are entered on the proper side of that account when the books are closed. The chief of these accounts are the following.

Interest account, Which contains on the Dr. sums paid or incurred for interest; and on the Cr. sums received, or become due for the same.

Commission account, Which contains on the Cr. articles of gain received or owing us for our trouble in transacting business for others. There are seldom any entries on the Dr.

Charges merchandise, Which contains on the Dr. all charges paid or incurred on the business, which do not belong to any particular account, as shop-rent, public burdens for trade, clerks wages, postages, and the like. If any of these should afterwards be charged to some other account, the sum so charged is entered on the Cr.

Proper expenses, Which contains on the Dr. money or any thing else, withdrawn from the trade for our private use. There are seldom any entries on the Cr. The amount of this account, as well as the former, is not properly loss; but as it has the same effect in diminishing the stock, it is placed in the same manner to the Dr. of profit and loss.

Loss by bad debts, Which contains on the Dr. such debts as we reckon desperate; and on the Cr. any of these which may happen to be unexpectedly recovered.

Account of abatements, Which contains on the Dr. discounts allowed by us on payments received; on the Cr. discounts (if any) allowed to us on payments made. It is particularly useful in retail business, where discounts are often given, to show how much they amount to.

Insurance account, Which contains on the Cr. premiums received for making insurances; and on the Dr. losses sustained on the same. There may be several accounts of this kind, such as insurance against sea-hazard, which is the most common; insurance against fire; insurance of lives; and insurance of debts. The balance shows the gain or loss which arises from being concerned in insurance.

More or fewer of these accounts may be used, according as the articles are frequent; and others may be invented to suit the purposes of the business which the books are kept for.

14. Every simple transaction in business belongs to two accounts, and must be entered on the Dr. of the one and on the Cr. of the other. Thus, when a person becomes indebted to us, the article he owes must be entered on the Dr. of his account; and, if it be for money paid him, it is also entered on the Cr. of cash; if for goods sold, it is entered on the Cr. of the account of goods; if for any thing delivered him by another person at our desire, it is entered on the Cr. of the deliverer's account; if for any wager or bargain, by which we are gainers, it is entered on the Cr. of profit and

Leger. loss. Thus, in whatever way the debt arises, it is entered on the Cr. of some other account, as well as on the Dr. of the person's account who owes it.

In like manner, when we become indebted to any person, the article we owe must be entered on the Cr. of his account. If it be for money received, it is also entered on the Dr. of cash; if for goods bought, it is entered on the Dr. of the account of goods; if for any thing delivered to another person at our desire, it is entered on the Dr. of the receiver's account; and if it be in consequence of a losing bargain, it is entered on the Dr. of profit and loss.

Again, when goods are received, the transaction is entered on the Dr. of the account of goods. If they be bought for ready money, it is also entered on the Cr. of cash; if on trust, it is entered on the Cr. of the seller; if they be exchanged for other goods, it is entered on the Cr. of the goods delivered; if they be obtained by some profitable business, without any return, it is entered on the Cr. of profit and loss.

When goods are delivered, the transaction is entered on the Cr. of the account of goods; and, if they be sold for ready money, it is also entered on the Dr. of cash; if on credit, it is entered on the Dr. of the purchaser; if exchanged for other goods, it is entered on the Dr. of the goods received; and, if they be given gratis, or destroyed, it is entered on the Dr. of profit and loss.

Lastly, When any article of loss occurs, the transaction is entered on the Dr. of profit and loss; and as we must either pay it in money or goods, or remain indebted to some person for it, it must be entered on the Cr. of cash, or of goods delivered, or of the person entitled to receive it. And, when an article of gain occurs, it is entered on the Cr. of profit and loss, and also on the Dr. of cash or goods, if money or goods be received; and on the Dr. of the person accountable for it, if not immediately paid.

Thus, every article in any account, whether personal or real, or belonging to profit and loss, corresponds to some other article on the opposite of a different account. The same sum is entered on the Dr. of one account and on the Cr. of the other; and it follows from this, that, If all the accounts in the leger be added, the amount of the sums of the Dr. will be equal to those of the Cr.

15. THE journal is a fair record of all the transactions compiled from the waste-book, in the same order as they stand there; but expressed in a technical style, that it may be transferred to the leger with more ease.

When we are to enter any article in the journal, we must consider which accounts in the leger it will require to be placed to, both on the Dr. and Cr. and write [the former account] Dr. to [the latter account]; then we annex an explanation of the article, and place the sum in the money-column.

Waste-book. Sold for ready money, 30 yards linen, at 3s.
L. 4 10 —

Journal.) Cash Dr. to Linen. Sold 30 yards, at 3s.
L. 4 10 — Journal.

Here we consider, that the article must be entered on the Dr. of cash, because money is received; and on the Cr. of linen, because linen is delivered: Therefore we write Cash Dr. to Linen, to which we annex the nature of the transaction. The article thus entered is called a journal-post; Cash is called the Dr.; Linen the Cr.; the words "Cash Dr. to Linen," the Entry, and the following words the Narration.

The purpose of expressing the article in this form, is to point out the accounts in the leger, to which it will require to be posted, and thereby enable the accountant to write the leger with more ease than he could do if it were filled up immediately from the waste-book.

The learner will be able, from this example, to enter any simple article in the journal, providing he knows the accounts to which it should be posted on the Dr. and Cr. of the leger. This must be collected from the description of the leger accounts already given § 6—13. and the nature and tendency of the article.

I. Every thing received, or person accountable to us, is Dr.

II. Every thing delivered, or person to whom we are accountable, is Cr.

17. As the whole art of writing the journal depends on a proper choice of the Drs. and Crs. we shall give some particular rules for the most common cases, and a few examples for the illustration and practice of each.

Rule I. The person to whom any thing is delivered is Dr. to the thing delivered, when nothing is received in return.

Therefore when money is paid, the receiver is Dr. to cash.

When goods or other property is sold on credit, the purchaser is Dr. to the thing sold. Thus,

18. Rule II. A thing received is Dr. to the person from whom it is received, when nothing is delivered in return.

Therefore, when money is received, Cash is Dr. to the payer: when goods are bought, the goods are Dr. to the seller. Thus,

19. Rule III. A thing received is Dr. to the thing given for it.

Therefore goods bought for ready money are Dr. to cash.

When goods are sold for ready money, Cash is Dr. to the goods.

When goods are bartered, the goods received are Dr. to the goods delivered. Thus,

20. Rule IV. Goods and other real accounts are Dr. for all charges laid out on them. If money be laid out, they are Dr. to Cash; if any thing else be delivered, they are Dr. to the thing delivered: if the charge be taken in trust, they are Dr. to the person to whom it is due. Thus,

21. Rule V. When rents of houses or lands, freights of ships, bounties on goods, or any other profits from real accounts, are received, Cash is Dr. to the account from which the profit arises: if any thing besides money be received, the article received is Dr.: if they remain unpaid, the person who owes them is Dr. Thus,

22. Rule VI. When an article of loss occurs, Profit and Loss, or some subsidiary account, is Dr. If the loss be paid in ready money, it is Dr. to Cash: if it be paid in any thing else, it is Dr. to the thing delivered. If it remain unpaid, it is Dr. to the person to whom it is owing. Thus,

23. Rule VII. When an article of gain occurs, that is not immediately connected with any real account, Cash, the article received, or the person accountable for it, is Dr. to Profit and Loss, or to some subsidiary account. Thus,

24. Rule VIII. When one person pays money, or delivers any thing else to another on our account, the person who receives it is Dr. to the person who pays it. Thus,

Payments of this kind are often transacted by bills of exchange.

25. These

25. These examples will make the learner acquainted with the form of the journal, and the rules extend to the greatest part of the simple transactions that occur in domestic trade. We may observe, that the technical sense of the words Dr. and Cr. has an analogy to their meaning in common language, but is not precisely the same. Thus in Ex. 1. Rule VIII. the journal entry is, Bank of Scotland Dr. to James Goldsmith; by which we are not to understand that the bank is indebted to James Goldsmith; for a debt between them has no connection with our business, and therefore ought not to be entered in our books: the meaning of the entry is, that the bank becomes indebted to us by the transactions narrated; and that we become indebted to James Goldsmith by the same.

26. An article which contains more Drs. or more Crs. than one, is called a complex post. The form of these will appear from the following examples.

If the two articles sold to William Drapier were entered separately in the Waste-book, and transferred to the Journal by Rule I, they would stand thus:

And if these were posted to the ledger, there would be two articles placed to the Dr. of William Drapier, one to the Cr. of Cloth, and one to the Cr. of Wool.

But the sales may be entered in the form of one complex journal post, as follows.

And then there is only one article on the Dr. of William Drapier in the ledger.

This example also falls under Rule I. But whereas there was one Dr. and two Crs. in the former example; there are two Drs. and one Cr. in this: William Drapier and John Mercer, the purchasers, are Drs. for their respective quantities; and cloth, which is the only thing delivered, is Cr. for the whole quantity. The journal post is,

Sundries Drs. to Cloth,
W. Drapier, for 10 pieces, at 15s.

This example falls under Rule II. The articles received, rum, claret, and madeira, are Drs.; and the person from whom they are received is the only Cr.

This example also falls under Rule II. There is only one Dr. wheat being the only thing received; and two Crs. because it is received from different persons.

In like manner, examples might be given of complex posts under every rule, which contained either several Drs. or several Crs.; but as it is unnecessary to enlarge so far, we shall only add a few examples of cases, in which the different parts of the complex article fall under different rules.

Here beans are delivered, some to different purchasers on trust, and some for ready money. The purchasers are Drs. for the quantity sold to each, by Rule I.; Cash is Cr. for the quantity sold for ready money, by Rule III.; and beans are Cr. for the whole.

Here the article received, copper, is the only Dr.; but as it is bought partly for ready money, and partly on credit, it is Dr. to cash for the value of the former, by Rule III. and to the seller for the value of the latter, by Rule II.

Ex. 7.] James Wilson being bankrupt, I have accepted a composition on the debt due by him to me of 150l. and discharged the same.

Here the whole debt of 150l. due by James Wilson, is cancelled; and he must therefore be stated as Cr. for that sum. Cash is Dr. for the sum received, by Rule II.; and Profit and Loss, or Loss by bad debts, for the rest, by Rule VI.

Here William Smith is Dr. for the amount of the cargo; he is debtor to linen for the quantity delivered, as by Rule I. and to J. Currier for the leather delivered by him, by Rule VIII. and to cash for the charges paid by us, by Rule I.

27. The learner may be assisted in understanding these and other complex posts, by resolving them into simple ones. Most of them might have been stated in

that manner; and the complex form is only preferred for abridging the leger. In some articles the different classes are so connected, that they cannot be separated with propriety.

The narration is sometimes equally diffused through the post, after the Dr. and Cr. as in the five first examples. Sometimes the chief circumstances are narrated before the Drs. or Crs. be specified, as in Ex. 6.; sometimes after the first, as in Ex. 7.; and sometimes at the end, as in Ex. 8.

28. In some articles, there are both more Drs. and more Crs. than one. These may be entered in one journal-post, Sundries Dr. to Sundries, specifying first the Drs. and then the Crs. But, as this method is somewhat confused, we would recommend it as a better way to divide the transaction into two journal-posts; so that the first may contain only one Dr. and the second only one Cr.

26. It is neither practicable nor necessary to enumerate all kinds of complex posts that may occur in business. We shall here only mention the entries which occur at opening the books.

The first journal post contains the substance of the inventory. The entry is Sundries Drs. to Stock; the particular Drs. are Cash, the different kinds of goods and other property belonging to us, and the persons indebted to us.

Journal. The second journal-post contains the debts due by us. The entry is, Stock Dr. to Sundries; the particular Crs. are the persons to whom we are indebted.

The form of these entries is more fully exhibited at the beginning of the following sets.

30. The journal should be written by one person, in a fair hand and at leisure hours. The articles are separated, and the titles and dates marked in the same manner as in the waste-book, § 3. The entries are written in half-text for ornament and distinction. In the inventory, the designation (or the business, station, and the place of residence) of every person is mentioned; and the same is done the first time that any name occurs in journal-entry. At other times it is sufficient to enter the name without the designation, unless we have dealings with two persons of the same name; in which case, it is always necessary to annex the designation, in order to distinguish them. The narration should be complete, without referring to the waste-book; and so clear, that every person, acquainted with the style of the journal, may understand it with ease. When the post is written, we mark a dash / against the article, on the margin of the waste-book, to show how far the writing of the journal is advanced.

31. THE first thing to be done in the leger, is to allot a proper space for each account. The accounts may be either opened in the same order that they occur in the journal; or accounts of the same kind may be placed together, the personal accounts in one part of the leger, and the real accounts in another. The accounts of Stock and Profit and Loss are generally placed at the beginning. The room which each will require cannot be exactly known, but it must be conjectured from the number of transactions that are likely to follow.

The number of the folio is marked in strong text at each corner of the top-line; and the titles of the accounts are written in fair text through both folios, if necessary. The designations of the personal accounts may be written in half text, or Italian hand: and some write the titles in Saxon hand for ornament. The word Dr. is prefixed to the title on the left-hand page: and Contra Cr. annexed to it on the right-hand page.

32. Next, An Index must be provided for pointing out the folios where the accounts are opened. The titles of the accounts are entered alphabetically in the index, and the number of the folio annexed. Personal accounts are entered by the first letter of the surname; companies, by the first letter of the surname of the first partner; and all other accounts by the first letter of the first word. The most convenient kind of index is a long narrow book, of 24 leaves, one for each letter of the alphabet. A is marked on the top of the first leaf, and the paper pared away below it; B is marked on the second leaf under A; and the other letters on the following leaves, in the same manner; by means of which we can turn at once to any letter required.

33. In posting the leger, proceed by the following directions. First, look for the Dr. of the journal-post

in the index, under the proper letter, and this directs you to the folio of the leger where the account is, if it be already opened; if not, you must allot a space for it, write the title, and enter it in the index. Then enter the article on the left-hand page of the account under the title of the former article, by writing the date on the margin, and the name of the creditor on the line, with the word To prefixed, and a short narration of the transaction annexed, and inserting the sum in the money column, and the quantity, if it be an account of goods, in the inner column. Then turn to the account of the Cr. of the journal-post, and enter the article in the right-hand page, prefixing the word By to the name of the Dr.

34. This being done, turn to the journal, and mark on the margin the number of the folios to which the article is posted. The figures which point out the reference to the Dr. and Cr. folios should be separated by a line: for example, if the Dr. entry be on the third folio, and the Cr. entry on the fifth, the reference is marked $\backslash frac\{3\}\{5\}$. These figures show how far the posting is advanced, and are useful in comparing the books.

The figures for dates or references should be written in a lighter hand than the figures in the columns for money or quantity.

35. There is often a reference-column ruled in the leger, for pointing out the other entry, corresponding to any article. In this column, the folio of the Cr. entry is marked against the Dr. article, and the folio of the Dr. entry against the Cr. article.

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 instead of the folio.

36. In complex posts turn to the several Drs. or Crs. in their order, and enter the articles according to the foregoing directions; placing the sums belonging to each in the money-column against their respective entries.

37. An article in the leger is generally comprehended in one line. The narration should 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. J.), 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 seldom be any narration annexed to the single Dr. or the single Cr. The entry is generally To Sundries per J. or, By Sundries per J. If the sense of the whole article can be narrated, it should be done; but it is improper to narrate the first 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 sides, and write against the sum, Transported to folio, inserting the number of the folio where the new account is opened, in the reference column, or on the line, if no reference-column be used. 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, inserting the number of the folio

Posting and Balancing the Leger. lio where the old account was; and on the Cr. By amount, brought from folio; and place the sums and quantities, if any, in the proper columns.

When either side of an account is full, both sides should be transported, and diagonal lines drawn, to fill up the vacant space of the side which requires it.

39. The books should be written up as frequently as can be done conveniently; so that the journal may keep pace nearly with the waste-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, observe the following directions:

Begin with the first journal post, 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 sum. If you find them to correspond, it is well; if not, the leger must be altered till it correspond with the journal. Then place a dot before the reference-figure in the journal, and a mark $\backslash Lambda$ before the sum in the leger.

Proceed in the same manner to compare the Cr. of the journal-post, and all the following posts in their order. The dots in the journal show how far the comparison is advanced, and the marks in the leger show what articles are compared.

The sums of accounts transported should be left blank till the books be compared; as an error in any article will occasion an alteration in the sum.

40. Some accountants correct all errors in the leger, without erasing any thing, by the following methods: 1st, If the sum be entered too small, they make a second entry for the deficiency. 2d, If it be entered too large, they make an entry on the opposite side for the excess. 3d, If it be entered on the wrong side of the account, they enter it twice on the other; once, to counterbalance the error, and a second 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 confused appearance; and would rather recommend the following rules; 1st, If an article be omitted, do not attempt to interline at the place where it should have been; but insert it under the last article when you discover the omission, and make a cross $\backslash times$ against it on the margin, and another at the place where it should have been. 2d, If you discover a mistake immediately when committed, correct it without cancelling any thing, as in this example. To Cash, say, To James Spiers 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 sum. 4th, Cancel errors, by drawing a line lightly through them, so that the old writing may still be legible; by which it will be evident, that the book has not been vitiated for a fraudulent purpose. The same method should be followed in correcting errors in the journal.

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

43. Because the whole sum of the Dr. side of the

leger should be equal to the whole sum of the Cr. $\backslash S$ 14. it is proper to try if they correspond. For this purpose, you may add the Dr. of every account, except such as are already balanced, placing the sums in an inner column, and extending them at the end of one or more folios, as you find most convenient, to the outer column; and as you go along add the Cr. in the same manner. If the sum total of both sides be equal, it gives a presumption that the books are right; if they differ, there is certainly some mistake. This is called the Trial-balance. The labour bestowed upon it is not lost, as the sums may be reserved for assisting us to collect the balances: the method of which will be explained afterwards.

44. If the sums of the trial-balance do not correspond, the books must be examined again. For this purpose, begin with the first article on the Dr. side of the first 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 first account; then with the articles on the Cr. of the same; and then with the following accounts in their order, till the error or errors be discovered. In complex entries, observe if the amount of the sums on one side be equal to the sum on the other. When you come to a dotted article, you may pass it by, because it has been examined already.

If the errors be not discovered at the first revival, you must repeat the same operation again, till you bring the books to balance. Marks different from the former ones, or differently placed, may be used, to signify that an article has been examined a second or third time. As the detection of errors is the most tedious and disagreeable part of book-keeping, the accountant will be induced to guard against them with all possible care, when he has once experienced the trouble which they occasion.

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 settle accounts with any person, and ascertain how much is owing at either hand, it is necessary to balance his account in the leger, and open a new one, beginning with the sum that was due according to the settlement; and when we clear accounts again, we must go back to that article, and no farther.

If any articles be charged on either side, at the time of settling, they must be immediately entered on the waste-book; from which they will pass in course to the journal and leger; and a remark must be entered in the waste-book, that the account was settled, and the balance transferred to the proper side of the new account. This remark is transcribed in the journal; and the leger account is balanced, when it occurs, in the course of posting.

If the balance be due to you, write on the Cr. By balance due to him to Dr. new account, and insert the sum due you; after which, the amount of both sides will be equal. Add the account, placing the sums opposite to each other; and, if the sides be unequal, draw a diagonal line through the vacant space of the shorter side, and close the old account by drawing lines under the sums. Then open the new account immediately.

diately 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 opposite sides, with the necessary alterations. When the new account is opened in the same folio, it is unnecessary to repeat the title; but the year and month, as well as the day, are repeated at the date of the first 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 settlement may only relate to articles of longer standing. When this is the case, if the articles omitted be on the Dr. of the leger, we write on the Cr. thus, By articles sold him since 1st January replaced: and when we have balanced the account, and opened a new one, we write on the Dr. To articles replaced at settling, furnished since 1st January: or, if the articles were left out for any other reason, we explain the same in the narration. If the omitted articles be on the Cr. the like entries are made on the opposite sides. It should be noticed in the waste-book and journal when this operation is necessary.

47. When we post any common article from the journal, we enter the sum on the Dr. of one account, and on the Cr. of another: when we balance an account, we place the balance sum on the Dr. of the old account, and on the Cr. of the new one, or contrarywise: 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 these entries, as well as in common posts, there are like sums entered on the Dr. and Cr. of the leger, and the general equality of the sides is still preserved.

48. Merchants generally balance their books once a year. The design of this operation is, to collect the various branches of their business, diffused through the books, into a concise abstract; to ascertain their gain or loss since the last balance; and exhibit the present state of their funds. If the business be of such a kind, that most of the branches naturally come to an issue at a certain time of year, that time is the proper one for making the balance. Otherwise the end of the year, or the least busy time, may be chosen.

49. It is proper, before balancing, to settle as many personal accounts as possible; to clear all arrears and small 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; such a value as you would be willing to present to buy for. It is more proper to value the goods on hand in conformity to the current prices, than at prime cost; for the design of affixing any value is to point out the gain or loss, and the gain is in reality obtained so soon as the prices rise, or the loss suffered so soon as they fall; therefore it is impossible to make up a just state of the affairs, unless the present prices be attended to.

50. These things being done, proceed to make the balance as follows: Prepare two sheets of paper, ruled with money-columns, in the form of Dr. and Cr.; write Profit and Loss as the title of the first, and Balance as the title of the second.

Prepare also some paper for computing the balances, and mark down the folios, titles, and sums of each

account in the leger, in a regular order. If a trial-balance was made, the sums may be transcribed from it. Pass by such accounts as are already closed; also the accounts of Stock and Profit and Loss, which are always the last of being balanced. Then subtract the lesser sum from the greater, and enter the difference on either of the sheets that the nature of the article points out, and on the side of that sheet which corresponds to the greater sum of the account. More particularly,

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

In the cash account, enter the difference, which is the money in hand, on the Dr. side 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 loss, on the proper side of the profit and loss sheet.

If the whole be still on hand, enter the present value on the Dr. of the balance-sheet; and if this be different from the prime cost, charges included, enter the difference in the proper side of the profit and loss sheet.

If part be sold, and part on hand, place the value of the quantity on hand under the sum of the Cr. and add them. The sum is the whole return that will be obtained, if the rest of the goods be sold at the estimated value; and this, being compared with the sum of the Dr. which is the whole expence, shows the gain or loss. Enter the same in the proper side of the profit and loss sheet, and enter the quantity and value on hand on the Dr. of the balance-sheet.

Observe if the quantities in the inner columns be equal on both sides, when the goods are all sold; or, if the difference, when only part is sold, be equal to the quantity on hand. If they correspond, you have a just account of the goods. If the Dr. be greater, there is something amissing, which you must enter on the Dr. of the balance-sheet, and mark the cause of the deficiency, as intake, waste, or the like. If the Cr. be greater, there is an excess, which you must enter on the Cr. of the balance-sheet, together with the occasion of it, as difference of measure, or the like.

In accounts subsidiary to profit and loss, enter the difference on the proper side of the profit and loss sheet.

When there is nothing written on one side of an account, enter the sum of the article or articles on that sheet which the kind of the account points out.

51. When you have collected all the balances, sum up both sheets, and add to the profit and loss sheet the sums of the profit and loss account in the leger: then subtract the lesser sum of each sheet from the greater.

This being done, mark the sums of the stock-account on your computation paper, and add thereto the balance of the profit and loss sheet on the side which corresponds with the greater sum of that account: then subtract the lesser sum from the greater. The remainder will be equal to the difference of the sides of the balance-sheet, if the books be right, and the balances exactly collected.

52. We shall prove that this equality must always hold,

Posting and Balancing the Leger. hold, from the nature of the articles collected. The Dr. of the balance-sheet 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 sides shows what your nett estate amounts to. The profit and loss sheets, when the articles from the leger are included, contain every thing you have gained on the Cr. and every thing you have lost on the Dr.; and the difference of the sides is your nett gain or loss. The stock-account contained your effects and debts at the time the books were opened; and therefore, when the gain or loss is added to the proper side, it must show the extent of your nett estate at present. Thus the stock-account and the balance-sheet both point out how much you are worth at present; the one from your former stock, allowance being made for your gains or losses; the other from a view of your present effects and debts; and they will correspond, because both must be agreeable to the truth, if the books be correct.

53. Though the books must balance, if free from error, yet it is sometimes difficult to adjust them exactly, especially when the business is extensive, and the errors 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 Loss Dr. or Cr. for the same. This introduces an article on one side of the leger, which has none corresponding to it on the other, but is balanced by some undiscovered error.

54. The balance being struck, your next work is to close the books. Every article in the leger should be posted from the journal; therefore, the most regular way of finishing both is by inserting the following articles in the journal, and posting them in the common manner to the leger.

1st, Profit and Loss Dr. to Sundries, for loss, on the following accounts. The particulars are taken from the Dr. of the Profit and Loss sheet.

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

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 respective sides of the balance-sheet.

5th, Profit and Loss Dr. to Stock for nett gain; or Stock Dr. to Profit and Loss, for nett loss.

6th, Balance-account Dr. to Stock for nett stock.

55. When the four first of these articles are posted

in the leger, all the personal, real, and subsidiary 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 sums of every account and every column on the opposite side will be equal.

The only accounts that remain open are, Profit and Loss, Stock and Balance. The fifth post balances the profit and loss account, and the sixth balances the stock-account. It was noticed, § 14. that the whole sums of Dr. and Cr. of the leger are equal; and therefore, if the sides of every account, except one, be balanced, that one will balance of its own accord. The balance-account alone remains open, and, upon trial, you will find that the sides are equal. This affords an additional proof, or, at least, a different view of what was demonstrated, with respect to the balance of the books, in § 52.

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

56. Some choose to insert the particulars of the profit and loss and balance sheets in the respective accounts of the leger. If this be done, it is unnecessary to enumerate them also in the journal.—Some choose to balance the accounts of goods, whenever the quantity is sold off; and we approve of this method, as it lessens the work at the general balance, which is always sufficiently laborious.

57. Thus is the state of a person's affairs brought together, in a short compass, under his view; and the articles of the balance-sheet supply materials for a new inventory. It is convenient, however, to alter the order, and arrange the real accounts together, and the personal ones together.

58. It is not necessary to begin new books, nor open the accounts anew, unless the old folios be full. The accounts may be continued in the former folios; but it is best to begin a new leger, if the old one be not likely to hold all the business of the next year. When one comes to have several sets of books, it is common to distinguish them by the letters of the alphabet. The first waste-book, journal, and leger, are marked A, the second B; and so on.

In the following specimen, the waste-book and journal are placed on opposite pages, that the learner may easily compare them; and the rules are referred to by their numbers.

INVENTORY of ready money, goods, and debts, belonging to James Oswald merchant in Edinburgh.

LIST of debts by the said James Oswald.

Sundries Dr. to Stock for articles belonging to James Oswald merchant Edinburgh.

Stock Dr. to Sundries.

Edinburgh, JANUARY 22. 1789.

Received from Henry Hardy in payment of his bill L.75 — —
And for interest on do. 2 10 — —

Rules II. VII.

77 10

Paid the Royal Bank Rule I. — — — — — 100 — — — — —

Bought from Alex. Sharp. merch. Dundee 500 sp. four-hank yarn, at 1s 11d L.47 18 4
Paid him in part L.15 — — — — —
And the balance due him is 32 18 4

Rules II. III.

47 18 4

Received 150 bolls meal, at 13s 2d L.98:15s, in barter for 6 hds. Port wine, at 16l. L.96 — — — — —
Paid the balance 2 15 — — — — —

Rule III.

98 15

Edinburgh, 2d FEBRUARY 1789.

Sold James Boswell 48 bush. salt, being the rem. at 1s 8$\backslash frac\{1\}\{2\}$d L.4 2 — —
60 sp. five-hank yarn, at 2s 3$\backslash frac\{1\}\{2\}$d 6 17 6 — — — — —
100 stone iron, at 3s. 4$\backslash frac\{1\}\{2\}$d 16 17 6 — — — — —

Rule I.

27 17

Received from James Cuthbert in part Rule II. — — — — — 30 — — — — —

Bartered 22 reams paper, at 12s L.13 4 — — — — —
30 bolls meal, at 13s 6d 20 5 — — — — —
L.33 9 — — — — —

For 334$\backslash frac\{1\}\{2\}$ sp. four-hank yarn, at 2s Rule III. — — — — — 33 9 — — — — —

Taken for the use of my shop the remaining ream paper, value Rule VI. — — — — — 10 6 — — — — —

Received from William Hunter in full L.3 2 6 — — — — —
from James Boswell in part 70 — — — — —

Rule II.

73 2 6

Paid the Royal Bank Rule I. — — — — — 100 — — — — —

Bartered 100 yards calicoes, at 3s 6d L.17:10 — — — — —
For one hd. Port wine L.14 10 — — — — —
Received the balance 3 — — — — —

Rule III.

17 10

Edinburgh, JANUARY 22. 1789.

1. Cash Dr. to Sundries.
2. To Henry Hardy, Rec. paym. of his bill L.75 — — — — —
3. To Profit and Loss. Rec. interest on do. 2 10 — — — — —

2. Royal Bank Dr. to Cash. Paid them — — — — — 100 — — — — —

2. Yarn Dr. to Sundries, for 500 spindles four-hank, at 1s 11d L.47 18 4 — — — — —
1. To Cash. Paid in part L.15 — — — — —
4. To Alex. Sharp. merch. Dundee for bal. 23 18 4 — — — — —

1. Meal. Dr. to Sund. for 150 bolls, at 13s 2d L.98:15s — — — — —
1. To Port-wine. For 6 hds. delivered in barter, L.16. L.96 — — — — —
1. To Cash. Paid balance 2 15 — — — — —

Edinburgh, 2d FEBRUARY 1789.

James Boswell Dr. to Sundries.
2. To Salt, for 48 bush. being the rem. at 1s 8$\backslash frac\{1\}\{2\}$d L.4 2 — — — — —
2. To Yarn, for 60 sp. five-hank, at 2s 3$\backslash frac\{1\}\{2\}$d 6 17 6 — — — — —
3. To Iron, for 100 stones, at 3s. 4$\backslash frac\{1\}\{2\}$d 16 17 6 — — — — —

1. Cash Dr. to James Cuthbert. Received in part. — — — — — 30 — — — — —

3. Yarn Dr. to Sundries. For 334$\backslash frac\{1\}\{2\}$ sp. four-hank yarn, at 2s. L.33:9s — — — — —
2. To Paper. For 22 reams delivered in barter, at 12s L.13 4 — — — — —
1. To Meal. For 30 bolls, at 13s 6d 20 5 — — — — —

4. Charges Merchandise Dr. to Paper taken for the use of shop, 1 ream, value — — — — — 10 6 — — — — —

1. Cash Dr. to Sundries.
4. To William Hunter. Received in full L.3 2 6 — — — — —
2. To James Boswell. — — — — — in part 70 — — — — —

2. Royal Bank Dr. to Cash. Paid them — — — — — 100 — — — — —

1. Sundries Dr. to Calicoes. For 100 yards delivered in barter at 3s 6d L.17:10s — — — — —
1. Port-wine. For 1 hd. L.14 10 — — — — —
3. Cash. Received balance. 3 — — — — —

James Boswell has paid the Royal Bank on my acct. Rule VIII. 25.
Bought from William Ainslie merchant Alloa $\backslash frac\{1\}\{2\}$ share of the ship Hazard, for Rule II. 150
Sold Baillie and Bell, 150 stone Iron, at 3s 7d L. 26 17 6
1 hd. Port-wine 15 5
Rule I. 42 2 6

Royal Bank Dr. to James Boswell. Paid by him 2
Share of ship Hazard Dr. to William Ainslie merchant Alloa, bought $\backslash frac\{1\}\{2\}$ share for 25. 150
Baillie and Bell Drs. to Sundries. 28.
To Iron. For 150 stone, at 3s 7d L. 26 17 6
To Port-wine. For 1 hd. 15 5
42 2 6

Sold for ready money 50 yards diaper, at 1s 11d L. 4 15 10
30 bolls meal, at 13s 7d 20 7 6
1 hd. lint-feed 3 3 0
160 lb. clover-feed, at 7$\backslash frac\{1\}\{2\}$d 5 3 4
30 stone iron, at 3s 6$\backslash frac\{1\}\{2\}$d 5 6 3
Rule III. 38 15 11

Cash Dr. to Sundries. 1
To Diaper. For 50 yards, at 1s 11d L. 4 15 10
To Meal. For 30 bolls, at 13s 7d 20 7 6
To Lint-feed. For 1 hd. 3 3
To Clover-feed. For 160 lb. at 7$\backslash frac\{1\}\{2\}$d 5 3 4
To Iron. For 30 stone, at 3s 6$\backslash frac\{1\}\{2\}$d 5 6 3
38 15 11

Drawn on the Royal Bank for Rule II. 60
Bought for ready money 30 casks train oil, at 22s L. 33
30 bolls meal, at 13s L. 19 10
40 do. at 13s 2d 26 6 8
Rule III. 70 45 16 8 78 16 8

Cash Dr. to Royal Bank. Drawn on them for 60
Sundries Drs. to Cash. 5
Train-oil. For 30 casks, at 22s L. 33
Meal. For 30 bolls, at 13s L. 19 10
And 40 at 13s 2d 26 6 8
70 45 16 8 78 16 8

Sold Will. Ainslie 30 yds. diaper, at 2s L. 3
And paid him 30
Rule I. 33

William Ainslie Dr. to Sundries. 5
To Diaper. For 30 yards, at 2s L. 3
To Cash. Paid him 30

Baillie and Bell have paid Will. Ainslie, at my desire, balance of my share of the ship Hazard Rule VIII. 11

William Ainslie Dr. to Baillie and Bell. Paid him by them on my account, being balance of share of ship Hazard 11

Sold James Boswell 20 casks train-oil, at 27s Rule I. 27

James Boswell Dr. to Train-oil. Sold him 20 Casks at 27s 27

Sold George Gordon merch. Stirling 10 casks train-oil, at 28s L. 14
1 hd. lint-feed 3 5
35 bolls meal, at 13s 8d 23 18 4
L. 41 3 4
Received in part L. 35
and he owes the balance 6 3 4
Rule I. II. 41 3 4

George Gordon Dr. to Sundries. 5
To Train oil. For 10 casks, at 28s L. 14
To Lint feed. For 1 hd. 3 5
To Meal. For 35 bolls at 13s 8d. 23 18 4
Cash Dr. to George Gordon. Received in part 35

Paid Baillie & Bell's bill on me to C. Cowan, at fight Rule I. 38 18 2

Baillie and Bell Dr. to Cash. Paid their bill on me to C. Cowan, at fight. 38 18 2

(6)

Edinburgh, 30th APRIL 1789.

The present article, it is hoped, will appear sufficiently extended for a work of this nature. It contains the general principles of Italian book-keeping; and is sufficient to unfold the nature and design of that art to the speculative inquirer, to direct the accountant in common and easy cases, and prepare him for understanding those that are more complicated. In fact, if he has a clear apprehension of the sense of the transactions, the tendency of the journal entries, and the import of the balances in the leger, he will seldom be at a loss how to proceed.

Though all merchants accounts may be kept by the Waste-book, Journal, and Leger, alone; yet men of great business find it convenient, either for abridging these, or for other ends, to use some others, generally called Subsidiary or Subservient Books; the most common of which are the nine following, viz.

1. Cash-Book. This book is kept in a folio form, like the leger, and serves to abridge the cash-account there. On the left-hand page, or Dr. side, Cash is charged Dr. for all the sums received; and on the right-hand page Cash is made creditor for all the sums paid. Once a week, or, which is more ordinary, once a month, this book is posted to the leger; or, if you please, first to the journal, by two entries, viz. Cash Dr. to Sundries, for all the receipts, and Sundries, Drs. to Cash, for all the payments. By this means the cash account in the leger will be so far contracted as to consist of 12 lines, viz. one for each month in the year.

2. Book of Charges of Merchandise. This book is only paged, and designed to abbreviate the cash-book. It contains particular charges on goods and voyages; such as carriage, custom, freight, craning, wharfage, &c.: as also other expenses that affect trade in general; such as, warehouse-rent, shop-rent, accountant's wages, postage of letters, and the like. At the end of each month the money-columns of this book are added up, and the sum carried to the credit-side of the cash-book.

3. Book of House-expence. This book is also paged, and designed likewise to ease the cash-book. It contains all disbursements for family provisions, servants wages, house-rent, apparel, utensils, &c. The money-columns of this book are also added up at the end of each month, and the sum transferred to the credit side of the cash-book.

4. Invoice-book. This book, which is used chiefly by factors, is paged, and contains doubles or copies of the invoices of goods sent to sea, or of goods received from abroad.

5. Sales-book. This book too is chiefly used by factors; and into it are posted, from the waste-book, the particular sales of every consigned cargo; by which means the several articles of a sale, that lie scattered in the waste-book, are brought together, and represented under one view, and that in a manner more full and minute than they are collected in the leger account. This book exhibits the sales of every consignment separately and by themselves: to which are subjoined the respective charges, such as freight, custom, the factor's commission, as also abatements allowed to buyers, &c. whole sum subtracted from the gross amount of sales gives the neat proceeds. From this book, when a car-

go is fold off, an account of sales is drawn out, in order to be transmitted to the employer.

6. Bill-book. The design of this Bill-book, or Month-book, is to furnish a merchant with a ready way of knowing the time when bills or other debts become payable to or by him. It consists of 12 folios, one for each month in the year. The left-hand page contains the debts that fall due to the merchant in the month on the top, and the right-hand page contains the debts payable by him to others in the same month.

7. Receipt-book. In this book a merchant takes receipts of the payments he makes. The receipt should contain the date; the sum received, expressed in words at large, and also in figures in the money-columns; the reason why; and whether in full or in part; and must be signed by the person receiving. But there is no occasion to mention the merchant's name; for the book being his own, sufficiently implies that.

8. Letter-book. It is very imprudent in any person to send away a letter of business, without keeping a double of it to himself; and therefore to prevent the bad consequence of such a careless practice, merchants are provided with a large book in folio, into which is copied verbatim every letter of business before it be sent off. So that this book, together with the letters received (which must also be carefully kept in files or boxes), makes a complete history of all the dealings that pass betwixt a merchant and his correspondents; which may be very useful and necessary on many occasions.

9. Pocket-book. This is a small book, of a portable size, which a merchant carries in his pocket when business calls him abroad to a tavern, a fair, the country, or other places. In this he sets down the bargains he makes, the expences he is at, the debts he pays, or sums he receives, with every other part of business he transacts while abroad; as also any occurrence or piece of news he thinks worth while to record. And when he comes home to his counting-house or shop, he transfers the things contained in this book, each to their proper places in the waste-book, or book subsidiary.

Factors of great business sometimes keep another small book called the Memorandum-book. Into this book is copied, from letters as they come to hand, short notes of the several commissions for buying goods contained in them; and as the commissions are effected, the notes are crossed, or have some mark affixed to them. This is more convenient in doing business, than to be continually running to the letters themselves.

The above are the subsidiary books most in use: but a merchant is not tied down or restricted to them; he may keep some, and neglect others, or invent more as the nature of his business requires, and he finds convenient.

A new method of keeping books, entitled the English System of Book-keeping, has been proposed by Mr Edward Thomas Jones of Bristol, for which a patent was granted in January 1796.

Three books are required in the English system of book-keeping, viz. a Day-book or Journal, an Alphabet, and a leger. The day-book must have three columns on each page; one of which to receive the amount of

A new Me. debits and credits; one column to receive the debits
thod. only; and one column to receive the credits only; or
it may be ruled with only two columns on each page,
one of which to receive the amount of the debits, and
the other to receive the amount of the credits. On
each page of the day-book, there must also be four
other columns ruled, two on the left side next the
amount of the debits, and two on the right side next
the amount of the credits. These columns are intend-
ed for receiving the letter or mark of posting, and the
page of the leger to which each amount is to be post-
ed. It is not necessary that the alphabet be ruled, but
it must contain the name of every account in the leger,
the letter annexed to it as a mark of posting, and the
page of the leger. The leger is to be ruled with
three, four, five, or seven columns on each page, as
may be most agreeable, for receiving the amounts of
the transactions which are entered in the day-book.
The plan of making up books of accounts, according
to this system is the following:

When a person begins trade, either as an individual
or in company, he must open an account with himself
in the leger. He must first enter in the day-book,
and then to the credit of his account in the leger, the
amount of the property which he has advanced into
the trade. His name only may be placed at the head
of the account, or it may be called stock-account.

When goods are purchased, give the person credit
of whom they are bought; when goods are sold, debit
the person to whom they are sold. When you pay money,
debit the person to whom it is paid, not only for the
amount you pay, but also for any discount or abatement
that may be allowed, and give the cashier credit for the
neat amount paid. When money is received, credit
the person of whom it is received, not only for what
he pays, but also for any discount you have allowed,
and debit the cashier for the neat sum received. In
these entries a plain narrative of the fact should only be
introduced. Technical phrases, excepting the terms
debit and credit should be avoided. These are the
only terms applicable to every transaction, and may
be affixed to every entry.

In the hurry of business, entries may be made to the
debit instead of the credit of an account in the day-
book, and vice versa. To obviate this evil, Mr Jones
proposes to have only one column for receiving the
amount of every transaction, whether debit or credit, at
the time of making the entry; and that the debits may
be conveniently separated from the credits, previous to
posting, which is necessary to prevent confusion, he has
two other columns in the same page; the column on
the left side receives the amount of every debit, and
the column on the right side receives the amount of
every credit. These columns must be cast up once a
month. The column of debits and credits of itself
forms one amount; the column of debits forms a se-
cond amount; and the column of credits a third
amount. The second and third amounts, when added
together, it is plain, must agree with the first amount,
which includes both the debits and credits, otherwise
there must be some error, either in making the entry
or in the addition.

In this manner the accountant may obtain an ac-
curate statement of the transactions recorded in his
books for every month, which will show how much

he owes for that month, and how much is owing to
him; and by subtracting the amount of the credit
from the whole amount of the debits for any given
time, with the value of the stock of goods on hand, the
profits of the trade for that period will at once appear.

The next part of the operation in this system is that
of posting. An account is opened in the leger with
every person to whose debit or credit an entry has been
made in the day-book; and to each account a letter is
affixed, which is to be used as a mark of posting. The
name of the person, his place of abode, and the folio of
the leger, must then be entered in the alphabet, with
the same letter prefixed to each name, as is affixed to
the account in the leger. The next step of the process
is to affix to each amount in the day-book in the col-
umn for that purpose, the page of the leger on which
each account is opened. This will be seen in the al-
phabet. The date and amount of each debit are then
to be posted in the proper columns in the leger, on the
left or debit side of that account to which it relates;
taking care to enter as a mark of posting in the day-
book, against each amount, the same letter that is
affixed to the account in the leger to which said
amount may be posted. The debits of January, Fe-
bruary, March, &c. it is to be observed, must be post-
ed into the column for those months in the leger, and
the credits must also be posted in like manner, each ac-
count being filled up in the centre, at the expiration of
every month, with the whole amount of the month's
transactions. Thus may the whole statement of each per-
son's account for the year be included in a small space.
The columns to the right and left contain the separate
amount of each transaction. The column in the centre
exhibits a monthly statement.

Having shewn in what manner the entries are to be
made and carried through the different books, accord-
ing to this system; the next thing is to describe the
method of examining them, so as to ascertain with cer-
tainty their accuracy; and not only to discover if each
transaction has been correctly posted, with regard to
its amount, but also that it has been rightly entered to
the debit or credit of its proper account. The mode of
examination proposed by this system is different from
those which have been hitherto practised, both in ex-
pedition and accuracy. All that is necessary is to add
together the different sums in the debit and credit col-
umns, through the leger; and the amount of these
columns, if right, must agree with the columns in the
day-book for the same period. This examination
should take place once every month; and if the
amounts do not agree, the posting must be called over,
and when the time allotted to each column of the leger,
whether it be for one or more months, has expired,
the amount of each column should be put at the bot-
tom of the first page, and carried forward to the bot-
tom of the next, and so on to the end of the accounts.
The amount in the day-book for each month's trans-
actions, must be brought into one gross amount for the
same time.

But this process, although it proves that the leger
contains the whole contents of the day-book, is not to
be considered as complete without some mode of ascer-
taining if each entry be posted to the right account.
To discover this the following method is adopted. It
is to be admitted as a rule, that a letter, which may be

A new Method. used alphabetically in any form or shape, is to be affixed to each account in the leger, and the same letter prefixed to the names in the alphabet. These letters are to be used as marks in posting, and affixed to each account in the day-book as it is posted. It is therefore only necessary to compare and see that the letter affixed to each entry in the day-book is the same as that which is prefixed to the same name in the alphabet. If there be no difference, it must be right, otherwise there must be some error.

When the accounts are to be balanced at the end of the year, or at any other time, if the profits of the trade are to be stated in the books, the value of the stock of goods on hand at prime cost, either in one sum, or by specifying the amount of every article, may be entered in the day-book, and an account opened for it in the leger, to the debit of which it is to be

posted. The casting up of the leger is then to be completed; and when it is found to agree with the day-book, and the amount placed at the bottom of each column, subtract the credits from the debits, and the difference will show the profit of the trade; but if the credits be the greater amount, then a loss has followed. To avoid error in taking off the balances of the leger, one rule must be observed. First, find out the difference between the whole amounts of the credits and debits on each page for the year, with which the differences of the outstanding balances of the several accounts on each page must exactly agree, otherwise the balances have not been taken right. Proceeding in this way every page will be proved, and the balances of any number of legers, according to this plan, cannot be taken off wrong without being observed.