HF 5633 UC-NRLF if - CM o UNIVERSAL KEY OOKKEEPING. J PATOTs rNG-MASTim ANU ACCOUNTANT, UiEKDEEN ACADK.MV, EDINB4 \i PRINTED tOIl THE AL'TH01t :f>>yd. UNIVERSAL KEY TO f\ O TT -ITT? -R P T N Gr. I have perused this little Work ; and have no hesitation in saying that it appears to me to possess no inconsiderable merit* -To a young man learning the Principles of BOOK-KEEPING, I should think it would be of essential service. W. KENNEDY. AL. GALEN. Oliver $ Boya. 1820. UNIVERSAL KEY BOOKKEEPING. BY J. PATON, WRITING-MASTER AND ACCOUNTANT, ABERDEEN ACADEMY. EDINBURGH : TRJNTED FOR THE AUTHOR, By Oliver $ Boyd. 1820. DEDICATION TO THE MANUFACTURERS AND MERCHANTS OF ABERDEEN. GENTLEMEN, Permit me to inscribe the following pages to you. Should they merit your approbation, it will confer an honour on, GENTLEMEN, Your much obliged and obedient Servant, J. PATON. P290016 PREFACE. THE science of Book-keeping is a subject, the utility and importance of which are so well known to the commercial world, that any arguments of mine to establish the fact, would be superfluous. Many well di- gested treatises have (particularly of late) appeared on the principles of book-keeping, but a compendious system, adapted to the purposes of teaching, is still a desideratum. It is objected, that young people, at school, " go through book-keeping without under- 6 standing it," and, that " every one has his own way of keeping his books." With re- gard to the first, it cannot be owing to any defect in the nature of book-keeping that renders it less capable of being taught at school than any other branch of education ; for it certainly admits of rules as precise as those of any other science. Were the teacher to give lectures upon the nature and use of book-keeping, the pupils would have no difficulty in comprehending it. First, on the Waste-book, beginning with the In- ventory, next the Journal, which applies Dr and Cr to all the transactions in the Waste- book and Subsidiary books ; then of posting the Journal into the Leger. What the Dr and Cr side of each account in the Le- ger should contain; how each of these accounts should be balanced; and, lastly, how the net profit and stock on hand should be ascertained; analyzing and ex- plaining the whole process from first to last, 6 7 particularly bill transactions, which the in- experienced have the only difficulty in un- derstanding. At the same time, examin- ing them upon all these particulars, as ex- pressed in the following work, which con- tains the rudiments of modern book-keep- ing, arranged in the form of question and answer, which method I have found to be better calculated than any other, to impart an intelligible and rational view of book- keeping. As to the second objection, that " every one keeps his books in his own way," I answer, that books may differ as to titles, terms, forms of arrangement, &c., but the principles on which they are founded are the same. They are all portions of one science, and referrible to the same origin, as radii in a circle to their common centre: so that, whoever understands the principles, must not only understand the subordinate parts depending on them, but will be able to form correct schemes, pro- 8 perly adapted to any branch of business. For, might we not with equal justice ob- ject to the study of arithmetic, because every account which occurs in business is not found exactly expressed in the same manner in any Arithmetical treatise ? Does not the practice of comparing and propor- tioning numbers and quantities enlarge the mind with regard to calculation, and why not the study of book-keeping have the same effect with regard to commercial transactions ? Every science has terms and phrases peculiar to itself, and whoever is ignorant of these, his books must be awk- ward, and often inappropriate. It is al- lowed that the failure of merchants have proceeded from confusion in their accounts, as well as from losses sustained. Could there be a stronger confutation than this single circumstance affords, of the objec- tions to the regular study of book-keeping ? This science is the logic of commerce ; its 9 principles guide, its rules direct, and its reasonings furnish the solid basis of inter- course between man and man, in all the multifarious concerns of business. Were book-keeping, however, properly taught, objections would vanish ; nor would any young man be admitted into the counting- house, unless he were thoroughly instructed in its principles, and their practical applica- tion. To contribute to this paramount ob- ject, is the earnest desire of, THE AUTHOR. CONTENTS. Page OF BOOK-KEEPING IN GENERAL,- , 13 Of Single Entry, ~ - 14 Of the Day-Book, ib. Of the Of] Of Balancing the Leger, . Of the Cash-Book, Of the Letter-Book, , . 19 Of Double Entry, ~ ib. Of the Waste-Book, 20 Of the Cash-Book, ; - ib. Of the Bill-Book, 22 Of the Invoice-Book, 23 Xo Journalize the '. Of the i Xo Journalize the Sales-Book, ~~28 Of the Day-Book, 30 Of the, Goods Bought, 32 33 Goods Bartered, ~~~ , Cash Xransactions, ~~~ ~~~ ~~ 34 Of Bills, Xll CONTENTS. Page Of Protesting Bills; Of Insurance, ---- 37 Of Bankruptcy, -- ---- ib. Of the Leger, -- , --- _ , __ 39 Of Posting the Leger, -- ib. Of Examining the Books, ~~~ - ~~ -- 48 Of Correcting errors in the Waste-Book and Journal, 49 In the Leger, ---- . , --- 50 Explanation of the Principal Commercial Terms used in Book-Keeping, ---- 51 Forms of Receipts, -- 56 Forms of Promissory Notes, - ~~~5 Forms of Acceptances,, --- 58 Forms of Bills of Exchange, - ~~ -- 59 Foreign Bills, --- 60 Form of an Invoice, -- 6l Form of an Account Sales, -- . -- 62 Form of an Account Current,- , ~ - 64 Interest Account, --- - 6^ OF BOOK-KEEPING IN GENERAL. Q. WHAT is Book-keeping ? A. A science which teaches to record mercantile transactions in systematic order. Q. How many kinds of Book-keeping are there ? A. Principally two ; namely, Single and Double Entry. Q. What is Single Entry ? A. It consists of personal accounts, kept in two books, namely, a Day-book and a Leger, and is best adapted to retail trade. Q. Why is it called Single Entry ? A. Because each transaction is only once entered in the Leger. Q. How do you prove that ? A. If I sell A B goods on credit to the amount of 5, I debit his account for the same, but do not credit goods ; and when I receive the payment of said goods, I credit A B's account, but do not de- bit cash. B 14 Q. Wherein is Single inferior to Double Entry ? A. It affords, only to the Merchant, the know- ledge of what debts are due to him, and what he owes to others, without shewing him either the pro- fits or the losses on goods sold, or the quantities of unsold ; besides, it is very liable to errors. OF SINGLE ENTRY. Q. What books are generally used for Single Entry ? A. A Day-book, Cash-book, and Leger. OF THE DAY-BOOK. Q. What is the Day-book ? A. A Register of the particulars of goods bought and sold, narrated in the order of time, in which the transactions occur ; likewise the payments made to and by the Merchant. Q. What does it commence with ? A. An Inventory. Q. What constitutes the Inventory ? A. The first part consists of debts due to, and the last part of debts due by the Merchant. Q. What particulars are to be observed in writ- ing the Day-book ? 15 A. Transactions in trade should be narrated in a plain and simple, but clear and distinct style of language; first, writing the person's name with whom a transaction is made, then specifying quantities, qualities, prices of goods, and terms of payment. Dr or Cr may be applied to the entries, as circum- stances may require, or in the common way, as Bought of A B, Sold B C, &c. OF THE LEGER. Q. What is the Leger ? A. The principal book into which, from the Day-book, all the promiscuous accounts are collect- ed, and placed under their respective titles, for the purpose of presenting to the Merchant, at one view, a full statement of the account of each person with whom he deals. OF POSTING THE LEGER. Q. What is meant by posting the Leger, and how is it performed ? A, First, by opening an account for each per- son, according to the order in which they stand in the Inventory ; allotting such a space for each ac- 16 count as may be deemed necessary for containing subsequent entries. Q. What should the titles of personal accounts express ? A. The names of persons, their professions and residence, which should be written in half-text, and entered in the Index. Q. How do you then proceed ? A. I debit or credit each of these accounts ac- cording as they stand Dr or Cr in the Inventory, by first writing the date on the margin, then saying, To Goods, or To Cash, by Goods, or by Cash, as the circumstance requires ; then inserting in the folio column the page of the Day-book from whence the transaction is posted, and the sum in the money column. Q. When the Inventory accounts are all titled and posted, how do you then proceed ? A. By posting, in like manner, the rest of the Day-book entries into their respective accounts in the Leger ; new accounts being opened in it, in the course of business, as they are required. Q. When the space allotted for an account is found to be too small for all the entries, how do you transfer it ? A. By adding both sides of the account, and writing on it, near where the sums are placed, " Transferred to folio" then opening a new account, and entering the folio in the Index, I then 17 write on the Dr side, " To amount from folio" and on the Cr side, " By amount from folio," inserting on each side the folio from whence the ac- count was transferred, and the sums in the money columns. Q. Should an account be twice opened in the Leger ? A. No ; although transferred for want of room, whatever name it first assumes must be continued. OF BALANCING THE LEGER. Q. What should the Dr sides of personal ac- counts contain ? A. The debts contracted by the persons to the Merchant, or the payments made by him to them. Q. What should the Cr sides contain ? A. The debts due by the Merchant to them, or the payments made by them to him. Q. How should they be balanced ? A. If the total sum of the Dr side exceed that of the Cr, the account is evened, " By Balance," for what the person owes to the merchant ; but if the sum of the Cr side exceed that of the Dr, it is evened by being made Dr to balance for what the Merchant owes to the person. Q. When all the accounts are balanced, how do you proceed to find the net profit and stock on hand ? B 2 18 A. By inventoring, i. e. measuring, weighing, and counting, all the different articles and quantities of goods on hand ; the value of which, when added to the cash in hand, and debts due to him, deducting therefrom all debts owing by him, will constitute his net capital, which, when compared with his ori- ginal stock, will shew the total profit or loss upon the whole. OF THE CASH-BOOK. Q. What is the use of the Cash-book ? A. It affords to the Merchant a clear statement of all the money transactions which he has made in receiving and paying cash. Q. What should the Dr side contain ? A. What ready money he had at, and what he has received since, the commencement of the ac- count. Q. What should the Cr side contain ? A. What money he has paid out since the com- mencement of the account. The difference of the two sides, if any, is cash in hand. Q. Can the sum of the Cr side of the Cash- account, at any time, exceed that of the Dr ? A. No. The Merchant can pay away no more than he had at, and what he has received since, the commencement of the account. 19 Q. Is not the using of a Cash-book a small de- viation from Single Entry ? A. Yes ; but in trade it is absolutely necessary, cash being the circulating medium by which the value of articles in commerce is determined. OF THE LETTER-BOOK. Q. What is the use of the Letter-book ? A. For preserving duplicates of letters, which men in business have occasion to transmit to their correspondents. Q. In concluding bargains, do not missive letters often pass between parties ? A. Yes. And in cases of dispute about former transactions, recourse must be had to these missives, whereby such transactions may be traced to theii origin. OF DOUBLE ENTRY. Q. What is meant by Double Entry ? A. It is so called on account of each transaction being at least twice entered in the Leger. Q. How do you prove that ? A. If I sell A B goods, on credit, to the amount of L.20, I not only debit his account, but I Cr 20 goods for the same ; and when I receive the pay- ment, I not only Cr A B's account, but I Dr cash for the same. Q, How many books are used in Double Entry ? A. Principally three, namely, Waste-book, Journal, and Leger. OF THE WASTE-BOOK. Q. What is the use of the Waste-book ? A. It narrates the transactions in commerce, in the order of time in which they occur, which, with the materials collected from the subsidiary books, constitute the other two, namely, the Journal and Leger. Q. What does it commence with ? A. An Inventory. Q. What is an Inventory ? A. It consists of two parts. First, a list or cata- logue of the effects belonging, and debts owing, to the Merchant. Second, an account of what he owes ; the difference of which is called his Net Stock. Q. What succeeds the Inventory in the Waste- book? A* A simple narration of the daily transactions in trade, in the order of time in which they occur, without pointing out either debtors or creditors. 21 Q. What particulars are necessary to be observ- ed in writing the Waste-book ? A. The names of parties, the conditions of bar- gains, the quantity, quality, and prices of goods, with whatever is necessary to express the nature of the transaction, and no more. OF SUBSIDIARY-BOOKS. Q. Do Subsidiary-books in modern practice greatly supersede the use of the Waste-book ? A. Yes. Q. What are the names of the Subsidiary-books principally used ? *- A. Cash-book, Bill-book, Invoice-book, Sales- book, and Day-book. OF THE CASH-BOOK. Q. What is the use of the Cash-book ? A. It contains an account of the money transac- tions. Q. What does the Dr side contain ? A. All the money received. Q. What does the Cr side contain ? A. All the money paid. Q, How is it journalized? 22 A. For money received, Cash Dr to Sundries. For money paid, Sundries Drs to Cash, pointing out particulars, and classing items of the same kind together. Q. Might not this book be abridged ? A. Yes ; by keeping a petty Charge-book. Q. What should this book contain ? A. An account of small incidental charges on the business. OF THE BILL-BOOK. Q. What is the use of the Bill-book ? A. It contains an account of all the bills payable to or by the Merchant, and saves the trouble of opening accounts for every person with whom he has bill-transactions. Q. How are they arranged ? A. Under two heads, namely, Bills Receivable, and Bills Payable. Q. What does the account of Bills Receivable contain ? A. The particulars of bills due to the Merchant, namely, the number, date, when, and from whom received, by whom, and on whom drawn, to whom, and where payable, term, time, sum, and fate. Q. What does the account of Bills Payable con- tain? >4. Different columns, where all the particulars 23 respecting bills due by the Merchant are marked, namely, the number and date, by whom and where payable, term, sum, and fate. Q. What is meant by the fate of a bill ? A. Whether accepted, paid, discounted, or pro- tested. Q. How is the Bill-book journalized ? A. For all the bills accepted, indorsed, or any way made payable to the Merchant- Bills Receivable Dr to Sundries. For all bills accepted by the merchant, Sundries Drs to Bills Payable, namely, the several persons on whose account they were accepted. OF THE INVOICE-BOOK. Q. What is the use of the Invoice-book ? It contains copies of all the Invoices inward and outward. Q. What does the Invoice book inward contain ? A. The particulars of goods imported ; but this book may be dispensed with by preserving the ori- ginals. Q. What does the Invoice-book outward con- tain ? A* Copies of Invoices of goods shipped on com- mission. TO JOURNALIZE THE INVOICE-BOOK. Q. When you ship goods on commission ? A. The person in the company who orders the goods Dr to Sundries, To Export Goods, " Cash, or Charges on Merchandize for ship- ping charges, &c. " Commission. " Insurance, or Insurance Broker, if insured. Q. When, in consequence of an order from A B in New York, and not being possessed of goods to . answer the demand, you order B C, in Glasgow, to purchase and ship them on board the first ship bound for New York, agreeable to the said order he ships them on board the Sally, Henry Corbet, master, and transmits you an invoice of the same ? A. A B of New York, Dr to sundries, To B C of Glasgow, for value on board, To commission for my commission. Q. When you ship goods on consignment to a Factor, for sales and returns on your own account ? A. Adventure to &c. Dr to sundries, To export goods, or goods by name, Cash or charges on merchandize, for charges. Q. If presently bought for cash ? A. To cash, with charges. Q. If presently bought on credit ? A. To the Seller, &c. 5 25 Q. If a bill be granted ? A. To bills payable. Q. If insured? A. To insurance, or insurance broker. Q. If the goods be shipped by your order, to your factor at some distant port ? A. Adventure, (suppose) from New York to St Kitts, Dr to the seller for amount of the in- voice. Q. If you have them insured ? A. Adventure to &c. Dr to Insurance, or Insurance Broker. Q. If the above were a company concern, how should it be journalized ? A. The same as above, except, that in place of adventure to &c. it must be adventure to &c. in company with A B &c. Q. When several invoices are sent by the same ship, can they be journalized at once ? A. Yes, by making sundries Drs to sundries, as in the following example. f c* o 1 [H QD O I 00 o O g'l E-< a ^ >- QD >. 9 tO i Q H- J 00 o o o Sundries & part for I [goods. J Q. When you receive and dispose of goods shipped to your order, and for your account by a factor Suppose on credit ? .. a bill is drawn or indorsed to you ? - for goods ? ~ for cash ? Dr To sales Drs aT^f per the ship's C-L-T Dr name, - or sales Drs of sugar, tobac- co, &c. per &c. Answers. Dr to A. The buyer. sales of Bills receivable. Goods. Cash. sugar, tobacco, &c. per theship 4 name. 29 Then, sales of sugar, tobacco, &c. per the ship's name, Dr to sundries. To adventure from - &c. for amount of the invoice, unless the ship's arrival bring the advice with the invoice, in which case, To Factor, for cost and charges paid by him ; Cash, or charges on merchandize, for freight and duties, &c. paid at or before landing. The bank, if a draught be given on it. Profit and loss, for net gain, but if a loss, the reverse. Q. If the above sales of sugar, tobacco, &c. were a company concern, how should it be journalized ? A. The same as above, except that in place of adventure from &c. sales of sugar, &c. it must be, sales of sugar, tobacco, Sec. in company with AB, adventure from &c. in company with A B. Q. Could not the intermediate account of sale's- general be omitted. A. Yes, by making the Buyer, or whatever is received for the goods, Dr to sundries, To cash, or charges on merchandize, Commission, Interest on money advanced. Consigner for the net proceeds. Q. When there are sundry Drs and sundry Crs. A Sundries Drs to sundries, viz. 30 Queries. Answers, Q. If on credit? /^ The bv ? ers whett ( more than one. Q. If part on credit, and / A. The buyer, or buy- 1 part for cash. ers, and cash. Q. If part for goods, part f A. Cash, goods, the cash, part on credit, part < buyer, bills re- on bills. ceivable. A. To cash, or charges on merchandize. " Commission, "Interest on money advanced (if any) and when sold, " Consigner for the net proceeds. OF THE DAY-BOOK. Q. What is the Day-book ? A. A book, which some merchants keep for re- cording the particulars and partial sales of goods bought and sold on their own account. Q. How is it journalized ? A. Goods, of one name, Dr to sundries, for the different quantities bought during the month, and sundries Drs to goods, For the sales during the month, Setting forth names, quantity, prices, and terms, of credit. OF THE JOURNAL. Q. What is the use -of the Journal ? A. It is subsidiary to the Leger in ascertaining 31 and pointing out the Drs and Crs of the Waste- book and Subsidiary-book transactions, and thereby preparing them for being posted to their respective accounts in the Leger. Q. What more is it useful for ? A. In correcting errors in the Leger, and it is likewise the principal book from which the learner receives his greatest knowledge of the application of Dr and Cr to the different transactions in trade. Q. What is an entry in the Waste-book called, when recorded in the Journal ? A. A Journal Post. Q. How may these Posts be divided ? A. Into simple, compound, and double com- pound, or complex. Q. What is a Simple Post ? A. That which has one Dr and one Cr. Q. What is a Compound Post ? A. That which has one Dr and sundry Crs, or one Cr and sundry Drs. Q. What is a Double Compound Post ? A- That which has sundry Drs and sundry Crs, which is generally resolved into two Com- pound Posts. Q. How is the Inventory Journalized ? A. It is arranged under two heads, namely : Sundries Drs to stock, Cash, for ready money, 7 Bills receivable, for bills on hand, and Goods, houses, ships, &c. for their respective values, Stock Dr to sundries, Personal accounts, for debts due by the mer- chant, To bills payable for unretired acceptances. GOODS BOUGHT. Queries. When for Ready Money ? . on Credit ? OD Bills Granted ? on Indorsed Bi 1 Is ? for part Money and part on Credit, Part on your own ac- ceptance, Part on an Indorsed Bill, and part for Goods Answers. Goods Dr to Cash. Goods Dr to A B the Seller. Goods Dr to Bills Payable. Goods Dr to Bills Receivable. To Cash Seller a Q Bills Payable - Bills Receivable Goods by name Q. If these Crs, or articles delivered, are opposed to sundry Drs, or articles received ? A. The transaction then becomes doubly com- pound, and although it be practicable to Journalize it at once, by making sundries Drs to sundries, yet the more general method is to Journalize it at twice, bv making The buyer Dr to sundries for the articles delivered. The buyer Cr by sundries for the articles received. Q, When you buy goods for exportation ? -4. Export goods, if on credit, Dr to the Sellerr If paid i to whatever produces the payment. GOODS SOLD. Queries. Answers. When you receive Cash ? Cash Dr to Goods. you receive bills 1 Bills rece i ra ble Dr to Goods. either drawn or indorsed J on Credit ? A B (the buyer) Dr to Goods, Q. As selling is only the reverse of buying, may not the Drs and Crs in the complex cases of the former be known, by comparing them with the complex cases of the latter ? A Yes. GOODS BARTERED. Q. When the value of the goods received equals that delivered ? A. Goods received Dr to that delivered. Q. When one article is received for sundries de- livered ? A. Goods received, Dr to those delivered, 34 Q. When one article is received for sundries de- livered, which affect different accounts in the Leger ? A. Goods received, Dr to sundries, namely, the different articles delivered, for their respective quan- tities and values. Q, When one or more articles are delivered, which affect only one account for articles received, of different kinds, such as tobacco, sugar, rum, &c. which produce different accounts in the Leger ? A. Sundries received, Drs to goods delivered, namely, Tobacco, 1 g { For their respective quantities and ^ % f values, jtvum, &c. j Q. When the articles received, as well as those delivered, produce different accounts in the Leger ? A. The transaction may be Journalized at once, or resolved into two compound posts, as before di- rected. CASH TRANSACTIONS. Q. When you receive cash in payment of an ac- count, some time before it falls due, and have to discount the interest for the time it has to run ? o j T* f if an open account, To the payer. Sundries Drs -{ . f ,. T f ^ ,.fi * ( if a bill, 1 o bills re- ceivable, namely, cash for the net sum received, Interest, or profit and loss, for the interest, 35 Q. When you pay a debt with cash, sometime before it falls due, and have the interest for that time allowed you ? A, The receiver, if an open account, ) Dr to sun- Bills payable, if a bill be granted, ) dries. To cash, for the net sum paid, Interest, or profit and loss for the discount. Q. When you receive freight of ships, rent of houses, lands, &c. if no account had been formerly charged for it ? A. Cash Dr to ship, estate, house, &c. Q, When you receive cash, for which nothing was given out, such as a wager, a legacy, a pre- sent, &c. ? A. Cash, Dr to profit and loss, &c. Q. When you pay charges on houses, ships, &c.? A. Ships, houses, &c. Drs to cash, or whatever produces the payment ; or if unpaid, to the person to whom it is due. OF BILLS. Q. When you draw a bill on A B, to be remitted toBC? A. B C to whom remitted, Dr to A B on whom drawn. Q. When you buy the bill for cash ? A. B C Dr to cash. 36 Q. When you renew A B 1 s bill for a specified time, and add the interest. to the new bill, suppose the old bill is in your own possession ? A. A B Dr to sundries, To bills receivable, for the contents of the old bill. Profit and loss for the interest, if included in the new bill ; but if paid, Cash Dr to interest, or profit and loss ; then Bills receivable Dr to A B for the new bill. Q. When you have discounted or paid away the aforesaid bill, and have to retire it yourself? A. A B Dr to Sundries, To Cash, (when you pay his bill). To interest, or profit and loss, for interest ; then Bills receivable, Dr to A B for the new bill. OF PROTESTING BILLS. Q. When you protest A B's bill, and it in your possession ? A. A B Dr to Sundries, To bills receivable, for the contents of the bill, To cash, for expense of protest. Q. When the bill remains with the holder or indorsee ? A. A B Dr to sundries, 37 To A B to whom the bill was given for the con- tents with expenses, paid by him. To cash, for expenses paid by me. Kt- A bill may first be noted, and is often paid or other- wise settled, without incurring the expense of extending the protest. OP INSURANCE. Q. When you get Insurance effected on your own account ? A. Voyage, or adveature to &c. Dr to the Insurance Broker. Q. When you get Insurance effected on another person's account ? A. A B Dr to sundries, To the Broker, or Insurance, for the Premium, To profit and loss, or commission, for my com- mission. Q. When any part of the premium becomes re- turnable, on account of convoy and arrival ? A. A B the Broker, Dr to the account, or ac- counts, formerly charged. OF BANKRUPTCY. Q. When the failure is a total loss ? A. Profit and loss, Dr to the Bankrupt. D 38 Q. When he pays a composition ? A. Sundries, Drs to the Bankrupt, namely, Cash, bills receivable, &c. according to what you receive. Profit and loss for the deficiency. Q. If at any future period the Bankrupt should pay the balance ? A. Cash, or whatever is received, Dr to profit and loss. Q. If goods consigned for sales and returns, on your own account, to a Factor, be sold, and an ac- count sales of the same sent to you by him ? A, Factor, Dr to adventure to &c. for the net proceeds. Q. If returns be made in goods, directly to yourself, and you receive advice thereof, before the arrival of the ship ? A. Adventure, or voyage from &c. Dr to Factor, &c. Q. If upon receiving advice of the goods being shipped, you procure Insurance on the same ? A. Adventure from &c. Dr to Insurance. Q. When the above goods are received and sold ? A. See the rules for Journalizing the Sales-book. Q. Or if you be remitted directly in bills of ex- change, and you convert the same into cash ? 39 A. Cash. If after acceptance you retain them till v Bills receivable, payment. J If you remit them 1 toyourcorrespondent 1 __ c ondent for acceptance and I payment. J ^DrtoFactor. OF THE LEGER. Q. What is the Leger ? A. The principal Book into which, from the Journal, all the different transactions are collected and arranged, in the order of Dr and Cr under their proper titles. OF POSTING THE LEGER. Q. What is meant by posting the Leger ? A. Having first titled accounts in the Leger for all those in the Inventory, in the order in which they are therein arranged, and entered each ac- count in the index under its proper letter, per- sonal accounts under the first letter of their sur- name, companies by the surname of him who stands first in the firm, and every other account by the first letter of the first word ; I then proceed to post the first part of the inventory. 40 Q. How is that done ? A. By making each account Dr to Stock, for its respective sum and quantity, that is, writing on the first line of the left, or Dr side, directly under the title, first the date on the margin, then saying to Stock, for the quantity, weight, or measure, if any ; inserting said quantity, weight, &c. in inner co- lumns, the folio of the Cr in the folio column, and the sum in the money column; then crediting Stock for the sum of all these debtors ; the folio numbers of which are to be marked on the margin of the Journal. Q. The first part of the Inventory being posted, what next do you proceed to ? A. To debit Stock to sundries, for the sum of all the accounts in the second part of the Inventory, and credit each of these accounts by Stock for its respective sum, inserting the folio-number of the Dr in the folio column, and marking the number of its folio on the margin of the Journal. Q. What more remains to be done ? A. Posting, in like manner, the rest of the Jour- nal entries into the Leger, as they occur in point of time ; new accounts being opened in it, in the course of business, as they are required. Q. How are accounts transferred in the Leger ? A. See the rule given in Single Entry. Q. How many kinds of accounts are there in the Leger ? 41 A. Three, namely, personal, real, and fictitious, Q. What are personal accounts ? A. Accounts kept with persons. Q. What should the Dr sides contain ? A. What they owe to the Merchant. Q. What should the Cr sides contain ? A. What he owes to them. Q. What are the profits or losses that may arise from personal accounts ? A. Interest on money, &c.; likewise from foreign correspondence, when the exchange may fall or rise, and in cases of insolvency, &c. Q. How are they balanced ? A. To or by balance for the difference of their sides. Q. What are real accounts ? A. Accounts of property, such as cash, ships, lands, with every kind of goods or merchandize ? Q. What are fictitious accounts ? A. Stock, profit and loss, voyage to &c. ; * which are used to supply the place of real or perso- nal accounts, when none such can be found, or are improper to be used. Q. What is the use of the Cash-account ? A. It records the money transactions. Q. What should the Dr side contain ? A. The ready money the Merchant had at, and what he has received since, the commencement of the account. 42 Q. What should the Cr side contain ? A. Whatever sums have been disbursed, or paid away, since the account commenced. Q. Can the sum of the Cr at any time exceed the Dr side ? A. No. Q. For what reason ? A. Because the Merchant can give out no more than what he had at, and what he has received since, the commencement of the account. Q. How do you close the account ? A. By balance, for cash remaining. Q. What is the account of bills receivable ? A. An account of bills due to the merchant. Q. What should the Dr side contain ? A. An account of bills accepted, indorsed, or any way made payable to him. Q. What should the Cr side contain ? A- What of these bills are paid or indorsed for value. Q. How do you close the account ? A. By balance for bills on hand. Q. What is the account of bills payable ? A. An account of bills due by the Merchant. Q. What should the Cr side contain ? A. A list of bills accepted by him to others. Q. What should the Dr side contain? A. What of these bills are paid. Q. How is the account closed ? 43 A. To balance for the unretired bills. Q. What is an account of goods ? A- Articles of merchandize, such as wine, spirits, cloth, &c. Q. What should the Dr side contain ? A. The prime cost of the article or articles, with charges thereon. Q. What should the Cr side contain ? A. The sales of said goods. Q. How many cases or varieties can occur in ba- lancing an account of goods ? A. Three. Q. What are they? A. First, when none of the goods is sold. Second, when part of the goods is sold. Third, when they are all sold. Q. In case first, how is the account closed ? A. By balance, for the total quantity and value on the Dr side. Q. In variety second, how is the account closed ? A. By balance, at prime cost, for the quantity unsold; then To or By Profit and Loss, for the dif- ference of the sides. Q. In variety third, how do you balance the ac- count ? A. The goods being all sold, it must be By or To Profit and Loss, for the difference of the sides, if any. 44 Q. What should the Dr side of ships, houses, &c. contain ? A. The original cost and charges of repairs, &c. Q. What should the Cr side contain ? A. If any thing, it must be the disposal of, or profits arising from them, such as rents, freight, &c. Q. How is the account balanced ? A. If the Cr side be empty, it is closed by ba- lance for the difference of the sides. If it contain the disposal, To or By Profit and Loss, for the difference of the sides. If it contain only the freight or rent, &c. By balance for prime cost, and To or By Profit and Loss, for the difference of the sides. Q. If the account of adventure is kept, what should the Dr side contain ? A. The whole cost of the cargo. Q. What should the Cr side contain ? A. If empty, there has been no account of the ship's arrival, and in that case, it must be closed by balance for the amount of the Dr side ; but if filled up with the disposal, then To, or by profit and loss for the difference of the sides. Q. What is the use of the accounts of Commis- sion, Interest, Insurance, and Exchange ? 45 A. Besides shewing the particulars of each ac- count at one view by themselves, they are subsidi- ary to Profit and Loss, in preventing it from being too much crowded, and to which the difference of their sides is carried at balancing. Q. What are the accounts last balanced in the Leger ? A. Profit and Loss, Stock and Balance. Q. Which of these is first balanced ? A. Profit and Loss. Q. What is the use of this account ? A. It collects all the partial profits and losses from the Journal, and likewise from the Leger at balancing. Q. Which of the sides contains the profits ? A. The Cr side. Q. Which of the sides contains the losses ? A. The Dr side. Q. How is it balanced ? A. To Stock, if a profit ; By Stock, if a loss. Q. Which of them is next balanced ? A. Stock. Q. What is Stock ? A. A term substituted for the merchants name, and is likewise the source or root from whence, like so many branches, the accounts in the Leger spring, and for their respective values are either Dr to, or Cr by, the same. Q. What should the Dr side contain ? 46 A. The total amount of the merchant's debts, which comprehends the last part of the Inventory. Q. What should the Cr side contain ? A. The total, or gross of the merchant's subject, namely, his effects, and likewise debts due to him, which constitutes the first part of the Inventory. Q. Is there any more to be added to this ac- count ? A. Yes ; the net Profit or Loss upon the busi- ness since last balance. Q. If there be a profit, to which of the sides should it go ? A. To the Cr side. Q. Why so ? A' As the Cr side contains the gross of the mer- chant's subject, and every gain being an increase of his capital, if he add the total profit to the Cr of this account it must increase it accordingly. Q. If there be a loss, to which of the sides should it go ? A. To the Dr side. Q. Why so? A. As the Dr side contains the amount of the Merchant's debts, the greater proportion that it bears to the Cr side the less the merchant's stock must be, and vice versa. Q. How is the account closed ? A. To balance for the difference of its sides, un- less the Merchant be worth nothing, or worse ; and 47 in the first case, both sides of Stock, and likewise Balance, will be equal ; and in the last place, the Cr side will be least, and then it must be by Bal- ance for the difference of its sides. Q. What is the reason that, when the net Profit and Loss is carried to Stock, the difference of the two sides of that account, when carried to Bal- ance, makes both sides of the Balance account equal ? A. All that the Balance account, or new Stock, can differ from the old, is just the net Profit or Loss made upon the business since the commencement of the books, which, being ascertained by the Profit and Loss account, and carried to the old Stock, will make it equal to the new ? Q. How do you prove that ? A. The Dr side of Balance contains the gross of the merchant's subject, and the Cr side the amount of his debts, the difference of which must be his net capital at balancing ; but the difference of the two sides of his Stock account, at the commence- ment of his books, was likewise at that time his net capital, and as no other difference could take place between his capital then and his capital at balancing, but the net Profit or Loss upon the business, if that be carried to the old Stock, it will make it equal to the new. Q. What is Balance account ? A. A list of the balances of all the accounts in the Leger. which is the source from whence the new books are raised Q. What does the Dr side contain ? A. The gross of the merchant's subject, namely, cash, goods, debts due to him, &c. Q. What should the Cr side contain ? A. A list of his debts. OF EXAMINING THE BOOKS. Q. What is the most concise method of trying if the books have been right filled up. A. By finding the total of all the sums of money on the Dr sides of all the accounts in the Leger, and likewise the amount of all the sums on the Cr sides of the same accounts, and if the totals are alike, the Leger is right posted. Q. If, upon making this trial balance, there should be a difference in the totals, what must be done ? A. I would examine the calculations and addi- tions in the Waste-book. Q. If no errors be found there, how then do you proceed ? A. To examine the Journal by comparing each post with its corresponding en try in the Waste-book. Q. But in doing so, if you do not discover the error, what then must be done ? 4 49 A. I would examine the Leger, by comparing it with the Journal in the same manner as it was at first posted. Q. But in doing so, if the error should still escape your notice, what other method would you try? A. I would examine each Dr in the Leger with its corresponding Cr, pointing, as I proceeded, the referring figures in the folio columns. Q. But in all this search if you fail to discover the mistake, what expedient would you next have re- course to ? A. I would proceed to a more careful and mi- nute research in the former manner, which could scarcely fail in discovering the mistake. OF CORRECTING ERRORS IN THE WASTE-BOOK AND JOURNAL. Q. If a whole post be omitted, how is it supplied ? A. By writing it in a different place, with a re- ference to it from the proper place. Q. If a few words be omitted, how do you sup- ply the defect ? A. By interlining them, or writing them on the margin. Q. If a whole post be repeated, how do you rec- tify it ? E 50 A. By cancelling or crossing the superfluous post. Q. When a word or sentence is repeated, how is it corrected ? A. By cancelling what is superfluous. Q. When there is a wrong figure, how do you correct it ? A. By carrying it right by some referring mark to the foot of the page without cancelling it. Q. If the sum in any addition be wrong, how do you regulate it ? A. By cancelling the wrong sum, and noting it right in the nearest convenient place to the false sum. Q. When an error is immediately discovered, upon making it, how is it rectified ? A. By adding, I say, and beginning again. IN THE LEGER. Q. If a Dr or Cr be omitted, how is the defect supplied ? A. By entering it in its proper account. Q. When the Dr or Cr of an account is charged too little, how is it adjusted ? A. By again charging it Dr to, or Cr by, its cor- responding account for the difference. Q. When the Dr or Cr is charged too much ? 51 A. I make the opposite side Dr or Cr by error for the excess. Q. When the Dr or Cr are both entered on the same side, how is it adjusted ? A. By making the opposite side Dr to, or Cr by, error for the value of the article misplaced, and then entering the article in its proper place. Q. Why are erasements and total cancellations prohibited by law, and discountenanced by mer- chants ? A. Because, if allowed, it would be impossible to trace and detect fraud. EXPLANATION OF THE PRINCIPAL COMMERCIAL TERMS USED IN BOOK- KEEPING. Q. What is meant by the drawer of a bill ? A. The person who writes or makes out one for another person to sign or accept. Q. What is meant by the drawee ? A. The person on whom the bill is drawn, which, when he accepts, and thereby becomes liable to pay the same, he is called the acceptor. Q. What is meant by the payee ? A. The person to whom the bill is ordered to be paid. 52 Q. What is meant by indorsing a bill ? A. The holder, possessor, or payee, by a writing on the back, transferring the property to another person, and thereby empowering him to draw the contents. The person to whom the bill is thus in- dorsed is called the indorsee. Q. What is meant by the remitter of a bill ? A. A person who buys and remits a bill to his correspondent, payable to him by a person residing in the same country or town. Q. What is meant by the remittee ? A. The person to whom the bill is remitted, who, when it comes to hand, presents it for acceptance to the person on whom it is drawn. Q. What is meant by protesting a bill ? A. A notary-public making out a writing, de- claring that the person to whom the bill is address- ed, either refuses to accept, or to pay the same, or perhaps both. Q. What is a bill of exchange ? A. A written order drawn by one person on an- other in a different place, or country, desiring him to pay a certain sum of money to a third person, or his order, i. e. whoever he may empower to receive the payment. Q. What is the use of bills of exchange ? A. For paying debts due in distant countries, without the risk or expense of remitting money. Q. Can you give an example of this ? 53 A. Suppose A of Hamburgh is due B of Glas- gow L.I 00, and C of Glasgow is due D of Ham- burgh 750 merks at 32d. pr M. = L.100 3 who, in- stead of remitting the money in specie to D, ap- plies to B for an order on A. B draws a bill on A to that effect, desiring him to pay the amount to D, or his order, which bill C purchases of B, and remits the same to D. Thus C of Glasgow pays B of Glasgow, viz. A of Hamburgh's creditor, and A of Hamburgh pays D of Hamburgh, viz. C of Glasgow's creditor. And so both debts may be settled by an exchange of Drs and Crs, without the expense or risk of remitting specie. Q. What is meant by the par of exchange ? A. The intrinsic value of the money of one place, compared with that of another, both with respect to weight and fineness. Q. What is meant by the course of exchange ? A. The current price of monies of exchange, as established between different places, which depends on the circumstances of trade, or the demand for bills. Q. Can you give an example of this ? A. If the exports of Britain to France be L.100,000, and her imports L.200,000, the ba- lance of trade is against Britain and in favour of France ; for if Britain remit the balance to France in bills, the price will no doubt rise in proportion to the demand- Suppose A of London is due B of 54 Paris 25,000 livres, and on purpose to pay the same he applies to C of London for a bill on Paris, C sells him a bill of 25,000 livres, payable to B ; but finding the demand for French bills in- creasing, he makes A pay him L.I Sterling for every 24 livres contained in the bill, instead of 25 livres, which he would have received had the ex- change not fallen ; so that, instead of A paying L.1000 for his bill, he pays L.1031 : 13 : 4, by which he loses L.31 : 13 : 4. Q. What are foreign bills ? A. Bills which pass from one country to another. Q. What are inland bills ? A. Bills in which the parties concerned reside in the same country. Q. What is meant by bills at sight ? A. To be paid when presented. Q. What is a bill of lading ? A. A receipt given by the master of a vessel, acknowledging his having received goods on board, also promising to deliver the same as consigned. Q. What is a Bill of Parcels? A. An account delivered by the seller to the buyer, with the particulars of the goods sold with the prices. Q. What is an Invoice ? A. A list or catalogue sent off with goods ex- ported, either on commission, in consequence of an order from the person or company to whom they 55 are addressed, or with goods consigned to a factor, for sales and returns. Q. What is an Account Current ? A. An account of the daily or passing transac- tions between merchants, recorded in a particular and circumstantial manner, with their dates, and interest upon each debt, from the day it becomes due, till the time of settlement ; a copy of which is sent to the person whose name it bears, to shew the state of affairs between the parties at the time when made out, see pages 64 and 65. Q. What do Days of Grace imply ? A. A certain number of days granted to the payer, after the term of a bill is expired, before it can be protested. Q. What is meant by Usance ? A. The term of bills between certain places, such as one, two, or three, months, after date. Double or half usance, means double or half the usual time. Q. What is Commission ? A. A premium per centage, or reward given to agents for transacting the business of others. Q. What is Excise ? A. A duty or impost charged upon certain com- modities. Q. What is custom ? A. A tribute on goods imported or exported. Q. What is composition ? 56 A. Part of a debt paid instead of the whole. Q. What is convoy ? A. Ships of war, accompanying merchants' ships in order to protect them against pirates and other enemies. Q. What is Debentures ? A. A certificate, signed by the officers of the customs, entitling the importer of goods to a boun- ty, or drawback on goods exported. Q. What is Insurance. A. A security given to make good the loss of ships, merchandize, houses, &c. from fire, in con- sideration of a certain sum of money paid, which is called the premium, and the paper or parchment on which the contract is written, is called the po- licy. FORMS OF RECEIPTS. Received of Mr Adam Watt, twenty-five pounds ten shillings sterling, to account, WILLIAM ALLEN. Aberdeen, 6th May 1820. Received (Aberdeen 4th June 1820.) of Mr James Ferguson, thirty three pounds, five shillings, sterling, in full, MATTHEW STEEL. 57 Aberdeen, Itli May 1820. Then received from Mr Abram Laird, on ac- count of Messrs Simpson and Whyte, twenty pounds, sterling, to account, ROBERT WILLIAMS. FORMS OF PROMISSORY NOTES. Aberdeen, May Sth 1820. L.62 : 12 : 6. On demand, I promise to pay to Messrs Walker and Joss, or order at the Aberdeen Banking Company's Office here, sixty-two pounds, twelve shillings, and sixpence, sterling, value re- ceived, JAMES YOUNG. Aberdeen, Sth May 1818. L,44;2:6. Ten days after date, we promise to pay to the order of Messrs Allan and Thomson, at our office here, forty-four pounds, two shillings, and sixpence, sterling, value received, CATTO & HALKETT. 58 FORMS OF ACCEPTANCES. Parkhill, Zd May 1820. L.72 : 4 : 9. Three months after date, pay to me or order, at the Athenaeum of Aberdeen, seven- ty-two pounds, four shillings, and ninepence, ster- ling, value of, HARVEY HALL. - JOHXGH.H.M. Aberdeen, 14th May 1820. 84:11:4. Against the term of Martinmas next, pay to me or order, at my house here, eighty- four pounds, eleven shillings, and fourpence, ster- ling, value of ANDKEW MICHAEL. To William Boyd Woollen} WILLIAM BOYD. Draper, Edinburgh. \ Rosebank, 24th Oct. 1818. 32 : 12 : 9. Conjunctly and severally, nine months after date, pay to me or order, at the Exchange News Rooms of Aberdeen, thirty-two pounds, 59 twelve shillings, and ninepence, sterling, for value delivered you in grain, with the fodder. JASPER JOLLY. To Messrs Robert Scott and William ) . . ROBERT SCOTT. Stewart, farmers in Gramrigs. J c P s WM. STEWART. FORMS OF BILLS OF EXCHANGE. INLAND BILLS. Aberdeen, Jan. 1, 1820. 55. At sight hereof pay to the order of Mr Solomon Silver, fifty-five pounds, value received, and charge my account with the same, as per ad- vice from AND BE w Mo WAT. Accepts Edinburgh, April 26, 1820. 150. Ten days after sight pay to the order of Messrs Raeburn, Johnston, & Co. one hundred and fifty pounds, sterling, value received, and charge my account with the same, as per advice from WILLIAM Ross. * 60 FOREIGN BILLS. 750 M. Glasgow, July 1, 1820. At usance pay this my first of ex- change, (my second not paid) to the order of Mr G. Beckmari, seven hundred and fifty merks, value received, and charge my account with the same, as per advice from BENJAMIN ALISON. To Mr Jacob Poison, \ Mercftant in Hamburgh, f 750 M. Glasgow, 1st July, 1818. At usance pay this my second bill of exchange, (my first not paid) to the order of J. Beckman, seven hundred and fifty merks, value received, and charge my account with the same, as per advice from BENJAMIN ALISON. To Mr Jacob Poison, 1 Merchant in Hamburgh, f N. B. When the term of a bill is expressed in months, calendar months are always understood ; thus, if a bill be dated the 4th February, and made payable one month after date, the term or month expires on the 4th March. When a bill falls due on a Sunday, or holy-day, it must be paid on Saturday or the day before. A bill dated on Sunday is not considered valid. If the holder of a bill, (in case of non-payment) protests it upon the last day of grace, he can have recourse upon the drawers an&indorsers ; but if he neglect this necessary precaution, he has only the acceptor to look to for payment. 61 FORM OF AN INVOICE. Invoice of sundries shipped pr. the London, Gilbert Ross Master, bound for New York, by order and for account and risk of Messrs James Pollock and Company, merchants there, and to them consigned. J.P.&Co. No.l. 2 bales of osnaburgs pr. bill of parcels inclosed, - - L. 54 6 8 3 hhds porter, ditto. - - - 21 4 1 box lawns and gauzes, do. - 158 6 8 1 box containing 64 pieces linen do. 136 2 4 1 bale damask table cloths, &c. do. 80 1 box cutlery, do. - - - - 21000 2 boxes broad cloths, do. - 22S 106 2 hhds qt. 250 pairs pumps and shoes, do. - - - - - 78 9 1 box white goods bo*, for ready -j money, L.62 12s. do. ISO 160 Pack.& Ship, charges, 18 4s. J 5 per cent, ad vance on 80 16s. 409^ Commission at 2% per cent. - 21 3 10 L.1072 19 10 Errors excepted. WALTER WREN. F 62 FORM OF AN ACCOUNT SALES. Sale of 155 hhds, containing 151145 Ibs tobacco, per the Lapwing, Captain Carlow, for account of Robert Herron, merchant in Virginia. 1820. Feb. 23. 28. 29. Ibs. By Messrs Burns, per bill at 9 months, ... 1520 Peter Purdy, for France, per do. at 4 months, ... 90749 A. Bryce, for do. per do. at 6 months, - - - 58876 151145 60 13 4 793 16 8 582 10 6 1437 6 Feb. 22. To Freight on the above To- bacco, - - - 250 Postages and other inci- dents, - * - - 4 10 Cellar rent, - - 546 Export charges,. - 16 12 Interest on old subsidy, &c. and extra charges, 40 3 4 Commission, at 7s. per hhd. - 54 5 Aberdeen 1st April, 1820, net proceeds, errors and bad debts excepted, 370 14 10 1066 5 8 W. SHEPHERD. 64 FORM OF AN Dr. Mr Walter Pollock, Jamaica, in Account 1820. March 1 0. To net proceeds of sun- dries, per the Speedy, L.1200 9 16. cash paid your draft in favor of J. Dundas, 200 25. sundries for the expe- dition, 1310 8 1 28. premium of insurance on ditto, - - 65 10 6 May 21. cash paid your draft in favour of J. Brent, 379 postage of letters, - 196 _ . discount on Preston's bill on Priestly, 1 16 _ balance carried to new account, - - 882 9 6| L.4041 2 7f Aberdeen, 2]st May. Errors excepted. ALEXANDER GIBBON. 65 ACCOUNT CURRENT. current with Alexander Gibbon, Aberdeen. Cr. Feb. 1. By 18 puncheons rum, per the Trusty, L.338 5 March 1. By goods per the Speedy, 596 17 6 April 4. By do per the Lark, - 1900 19 26. By do per the Mariner, 800 6 6 May 1. By your bill, Preston on Priestly, due June 3d, 400 9 6 21. By interest per account, 4 5 If L.4041 2 7| 66 INTEREST ACCOUNT. Feb. March April May 10. 16. 25. By interest on ditto on To ditto on ditto on ditto on 26. 21. 28. ditto on By ditto on ditto on ditto on 465x 1310 338 X 597 935x 1200 265X 200 1775x 66 1841 X 1901 60X 800 860X 380 480X 400 880 Dys, 22 30 Dr. 1560 4185 5325 12887 Cr. 9464 8415 1320 21500 14370 23987 ! 55069 23987 73,00 | 310,82 4,25T6=4:5:if IN computing interest on accounts current, add and subtract the sums paid and received in the order of their date ; and if the balance be sometimes due to the one party, and sometimes to the other, ex- tend the products in different columns as in the above example. The odd shillings and pence may be omitted. Syracuse, N. Y. Stockton, Calif. UNIVERSITY OF CALIFORNIA LIBRARY BERKELEY Return to desk from which borrowed. This book is DUE on the last date stamped below. UI 40c'56JLg Rt-C'D UD SEP 24 1956 CD ,: vV". ; iD 21-95m-ll,'50(2877sl6)476