SECTION VI.

J. Book-Keeping.

352. BOOK-KEEPING is the method of recording a systematic account of mercantile transactions.

Every mercantile transaction consists in giving one thing for another. This change of property should be distinctly recorded in a book, or books, prepared for the purpose, so that the man of business may at all times know the true state of his affairs.

FARMER'S BOOK-KEEPING.

FIRST METHOD.

353. By this method but one book is necessary, which should be ruled with four columns on the right hand side of each page, two for debtor columns, and two for credit, and one column on the left hand side for the date, as in the following example.

On account of its simplicity, the above method is probably the best which can be recommended to farmers and country mechanics. In keeping books in this way, it will be necessary to leave a considerable blank after each man's account, that it may be continued without transferring it to another part of the book; and also to have a list of the names with the pages standing against them for the more convenient reference to the several accounts.

354. The person who receives any thing of me is Dr. to me, and the person from whom I receive is Cr. Or, the person, who becomes indebted to me, whether by receiving goods or money, or by my paying his debts, &c. must be entered Dr. and the person to whom I become indebted, whether by receiving from him goods or money, or by the payment of my debts, must be entered Cr.

355. By this method the debt and credit are entered on separate pages facing each other, with the debt on the left hand, and the credit on the right hand, as in the following example.

356. Either of the foregoing methods may answer for farmers, and for mechanics generally, but to the retail merchant, and others whose business is extensive, an acquaintance with book-keeping by the day-book and leger, called SINGLE ENTRY, or by the day-book, journal and leger, called Dou BLE ENTRY, is indispensable. The latter is much the most perfect system, and far best for wholesale dealers, but as it is more complicated and seldom used, we shall confine our attention to the former, which is generally adopted by merchants and others in this country.

BOOK-KEEPING BY SINGLE ENTRY.

Single entry requires two principal books, the day-book, or waste book, and the leger, and one auxiliary book, the cash book.

1. THE DAY BOOK.

357. This book is ruled with two columns on the right hand for dollars and cents, one column on the left, for inserting the folio or page of the leger to which the account is transferred, and a top line over which is written the month, date and year. The articles are separated from each other by a line drawn across the page, and the transactions of one day from those of another by a double line, in the centre of which is the day of the month.

This book commences with an account of all the property, debts, &c. of the person, and is followed by a distinct record of all the transactions in trade in the order of time in which they occur, with every circumstance necessary to render the transaction plain and intelligible.*

In entering accounts in the day-book, the following order should be observed: 1, the date; 2, the name of the person, with the abbreviation Dr. or Cr. at the right hand as he is debtor or creditor, by the transaction; 3, the article or articles with the price annexed, and the value carried out into the ruled columns, with the amount placed directly under, when there is more than one article charged; and 4, the page to which the account is transferred in the leger. For the better understanding of the day-book, see the specimen annexed.

* As the day book is the decisive book of reference, in case of any supposed mistake, or error in the accounts in the leger, it is of the greatest importance that every transaction be noted in it with particular perspicuity and accuracy.

2. THE LEGER.

358. Each page of the leger is ruled with a top line, on which is written the name of the person, and marked Dr. on the left hand for receiving the debited articles, and Cr. on the right for receiving the credited articles of the day-book. On the right hand of both Dr. and Cr. sides, are ruled two columns for dollars and cents, and on their left, two columns, one for the page of the day-book, and one for the month, and for the date. The leger has an index, in which the names of persons are arranged under their initial letters, with the page in the leger, where the account may be found.

359. Rule for Posting.-Under the name of the person, enter the several transactions on the Dr. or Cr. side in the leger, as they stand debited or credited in the day book. When several things are included in the same transaction, they are distinguished by the term "sundries." Some accountants enter in the leger only the page of the day-book and the amount of the transaction, without specifying the items, but the former is thought to be the most correct method.

360. Balancing Accounts.-When all the articles are correctly posted into the leger, each account is balanced by subtracting the less side from the greater, and entering the balance on the less side, by which both sides are made equal. The excess of all the balances on the Dr. over those on the Cr, sides, being added to the cash on hand and the value of the goods unsold, the sum is the net of the estate, which, compared with the stock at the commencement of business, exhibits the merchant's gain.

361. When the place assigned to any person's account is filled with items, the person's name must not be entered the second time, but may be transferred to another page in the following manner, viz. Add up the Dr. and Cr. columns and against the sums write, Amount transferred to page - here inserting the page where the new account is opened. Begin the new account by entering on the Dr. side, To amount brought ftom page —, inserting the page of the old account, and on the Cr. side, By amount brought from page, inserting the page of the old account, placing the sums in their proper columns.

As several day books and legers may be necessary in the progress of business, they should be distinguished by lettering thein, as follows: daybook A. day-book B. &c.-leger A. leger B. &c. and in posting accounts into the leger, there must be a reference to day-book A. or B. &c. as the account is found in one or another.

3. CASH BOOK.

362. In the cash-book are recorded the daily receipt and payment of money. For this purpose it is ruled with separate columns, one for money received, and the other for money paid, in which should be recorded merely the date, to or by whom paid, and the sum. The cash-book is convenient, but not absolutely necessary. Other auxiliary books are sometimes used, and are important in some kinds of business, but the accountant will readily form these for himself, as circumstances render them necessary.

By single entry, goods bought are entered, either in an invoice book, kept for the purpose, or posted immediately into the leger from the invoices, or bills of parcels. This method is not, however, adopted here; but the goods are credited the seller, and afterwards transferred to his account in the leger.