MASTER NEGATIVE NO. 94 COPYRIGHT STATEMENT The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted materials including foreign works under certain conditions. In addition, the United States extends protection to foreign works by means of various international conventions, bilateral agreements, and proclamations. Under certain conditions specified in the law, libraries and archives are authorized to furnish a photocopy or other reproduction. One of these specified conditions is that the photocopy or reproduction is not to be "used for any purpose other than private study, scholarship, or research." If a user makes a request for, or later uses, a photocopy or reproduction for purposes in excess of "fair use," that user may be liable for copyright Infringement. The Columbia University Libraries reserve the right to refuse to accept a copying order if, in its judgement, fulfillment of the order would involve violation of the copyright law. Author: Carter, Frederick Hayne Title: Practical l> 3 > CD o m CfQ Q mam # I ^kMP'''lHlBB>* * O -p' r-l- ^ 5 O (TiX ^-< OOM o ^5 O 00 X ^J X N rsi ^ 1» ~ »^^ n^jRi oV- ^ r^^ ^, ^j 10 o o 3 i o i i s 3 3 O1 O c> 00 b K) ro bo 10 01 1.0 mm c ^^,-^> > 1.5 mm 2.0 mm ABCOEFGH I JKLMNOPQRSTUVWX YZ abcdefghiiklmnopqrstuvwxyz 1 234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxy2l234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghiiklmnopqrstuvwxyz 2.5 mm 1234567890 %:0 'f%. # "4^2^ 4^ €^ LX'' <«>" ^c> ^ ^ \r 30 O O ■oEU "O o m I > Ca> "TJ 30 w' 3D o m # '^^ m miit0 3 'mam mmm y 'CP 3 I 3 r- O ^' < o Si 5 O VIM V I **■' ^ ?i Colunrina WUiititxHitp tntdeCttpof^tDl^orfc A 1> V LtlDJxIXIx. I #cf»ool of littietineKiBE Wit iKontipmietp lifitarp of jactoniitaiicp PRACTICAL BOOK-KEEPING ADAPTED TO COMMERCIAL AND JUDICIAL ACCOUNTING. J!^ EDINBURGH : PRINTED BY MOULD & TOD. FOB JOHN MENZIES & Co. LONDON . DUBLIN . GLASGOW LIVERPOOL simpkin, marshall and co. m'olashan and gill, john menzies and co. geo. philip and son. l.r' J " 'i! PRACTICAL BOOK-KEEPING ADAPTED TO COMMEMAl km JUDICIAL ACCOUNTING, WITH SETS OF BOOKS AND FORMS OF ACCOUNTS FOR DIFFERENT PROFESSIONS AND TRADES ; TO WHICH ARE ADDED TREATISES OX ENGLISH AND SCOTCH BANKING, AND BILLS OF EXCHANGE, ALSO, OUTLINES OF BOOK-KEEPING FOR LEARNERS, AND AUTHORITIES RECOMMENDED; BY F. HAYNE CARTER, MEMBER OF THE SOCIETY OF CHARTERED ACCOUNTANTS, EDINBURGH ; FELLOW OF THE FACULTY OF ACTUARIES IN SCOTLAND. Gfetonb ibition, |lc(riseb anb €nlargeb. EDINBURGH AND GLASGOW: JOHN MENZIES & CO. MDCCCLXXIV. /isyv \i'"f \3 2 ^^ ¥"SiB'^S "Upon a pebfect knowledge and eight appbeciation OP DETAILS, THE SETTLEMENT OF GeEAT QUESTIONS MAINLY DSPBMDB " —Disraeli. TO CHARLES M. BAESTOW, ESQ., THE SECOND EDITION OF THIS "w^oi^k: IK RESPECTFULLY DEDICATED. '■F™i:»«H F'nii;:''iiiiPrTisiiiifii^ «"|'ji|pT«i]pitji™7.r..... ■■'" ■ in ! I;:!!™ m«i«i"iii|l«"™|III||illl!|||lP«ii|iilipilipfll«iii«|ili!!ii||ilil^ ■iiil||iili!|i||i]!||i|i» " Although the bvisine>s of keeping book.% is extremely easy when once the accounts are properly arranged, yet the adaptation of the principle of Double Entry to extensive and complicated transactions, so as to receive the full benefit of the System, is a process which requires the most complete knowledge, not only of the Practice, but also of the Science, of Book-keeping. " Book-keeping, like all other arts, can only be mastered by industry, perseverance, and attention. l*hc learner must think for him.self, and endeavour to understand the wAy and wAere/ore of all that he does, instead of resting satisfied with vague notions and words cltivoicl of sense " The Study of Book-keeping affords an excellent means of intellectual discipline ; that is, when its principles are exhibited as well as their appUcation. When the reasoning powers are called into exercise as well as the memory, the Student who has carefully attended to the instructions, and who is the master and not the slave of Rules, will ex- perience no difficulty in unravelling or adjusting any set of accounts, however complicated or diversified." {B. T. Festers Doubk Entry elucidated. ) " There is a near connection between bad book-keeping and bankruptcy,— all bad took -keepers are not bankrupts, but, with few exceptions, all bankrupts are bad book- keepers. They manage things better in France, where few keep their books otherwise than by Double Entry, and where bankruptcies are comparatively rare." (C y. Kain's Solicitors Bo0k-keeJ>iH£.) PKEFACE TO THE SECOND EDITION. The favour with which the first edition of this work was received, and the urgent recommendation of many professional friends, have induced the author to re-issue it in an enlarged and amended fonn. The ohject of the first edition, was, as stated in the Introduction, to offer to the Mercantile and Professional worlds, " a recognised and approved System of Book-keeping for each particular profession, which system should give a modernized Set of Books to professions, manu- facturers, and trading companies, and to retailers a simpler form, so framed that the exigencies of their calling could he appropriately met." In other words, the Book was expressly written for those only who were thoroughly acquainted Avith the science of Book-keep- ing. It has been suggested, however, that the usefulness of tliis volume would be very much increased, could a Chapter be introduced giving a concise outline of the several recognised systems of Book- keeping for the information of beginners or learners, — or those wJw really knew nothing tvhatever of the science, — and that the definitions should be such as would enable young students, by a reference to the other portions of the Book, to perfect themselves in this particular branch of Commercial Edu?;ation. Tlie suggestion has been adopted in Appendix, Section III. Many applications have also been made for a re-print of the Book, with the aiKlition of the Accounting connected with Limited Liability Comjyaniesy—'diid also, of a simple Scheme of Book-keeping for Privdte individuals, Inresfors or Dealers in Stocks and Shares, by which they would easily be enabled to keep a correct record of their transactions. These recommendations have also Ijeon adopted and fully carried out in Part L, Section /F., and Part III., Section V, VUl PREl'-'ACB. It will thus be seen that the volume has been much enlarged, and, indeed, might be considered almost a new work, embracing several new schemes of Books, an Outline of the Science, and Commercial Definitions and AnthoTities, which the author, in a long experience of thirty-five yeare, principally devoted to this particidar branch of his profession, has considered i^ost nsef ul and of the greatest importance. The author cannot close these prefatory remarks without expressing his best thanks to many friends, distinguislied in their several pro- fessions, for valuable advice, and in some instances for the careful revisal of certain sections of his volume; without which it would certaiidy have lacked that completeness it is humbly conceived to poesess. Especially to Messrs William Moncrieff, Accountant to the Court of Session ; James Syme, Manager of the British Linen Co. Bank ; William Bell, Stock and Share broker, Chairman of the Edin- burgh Stock Exchange ; J. Vary Campbell, M.A., & LL.B., Advocate ; T. J. Wilson, S.S.C. ; Charles Prentice, C.A. ; and Oliver & Boyd, Publishers, Edinburgh ; also to Messrs Eeekie & Christian- i©n, Leith; and to Mr Adam Gray, (of A. B. Fleming & Co.,) Granton; and should success attend his present efl'orts, he will always feel that it has been mainly attributable to the reliable information and friendly assistance which have been so kindly afforded by them. 8, Eton Tib'r^vce, Edimbuech, October 1874. CONTENTS. Introduction, Page. 1 IPatt I. Section I. The principle of DOUBLE ENTRY, .... 6 II. Books for Wholesale Trade, . . ... 10 III. Life Assurance Company's Books, 37 IV. Limited Liability Companies, with Improved Register of Shareholders, 44 V. Shippino Company's Books, . 54 VI. The Cost Book System explained, 66 VIL Vowel Index for Ledgers, 75 IPart 3EI. The principle of SINGLE ENTRY, with illustrative set of books for Retail Trade, 81 art lEE Section L The MIXED METHOD of Book-keeping, .... 91 II. Solicitors' (Scotland) Books, with forms of account current, and interest accounts by the scotch and English Methods, . 93 III. Judicial Factory and Curatory Accounts, to which are ADDED forms RECOMMENDED BY THE ACCOUNTANT OF Court, 122 IV. Newspaper and Printing Business, 142 V. Private Books for Investors, or Dealers in Stocks .vnd Shares, 150 VI. Books for Charitable or Public Institutions, . . . 168 J%. CONTEXTS. SECTTOif I. On Bnolish and Scotch Banking, II, On Bills of Exchange, Inland and Foreign, . HI. OuTLiNis OF Book-keeping for beginners, .... IV. Dbpinitioms of Commercial and other Terms, . V. Authorities on cobimercial and other kindred subjects BICOMMENDED BY THE AUTHOR, VT. Advice to toting book-keepers and jonior clerks. . Page. 179 199 216 223 231 237 INTRODUCTION. WiTH SO many writers on Mercantile siil)jects already l)eforo the Public, the Author commences his present undertaking with much anxiety, knowing the severe test to which his lal)ours are likely to bo subjected. Under the belief that the methods in general use have been, and still are cumbersome, elaborate, and intricate, he has T)een induced to prepare the following Treatise, in tlie hope of furnishing to the Com- mercial and Professional worlds systematic Manuals of Book-keeping, simple in form, accurate, and self-checking, — adapted to every variety of business pursuits, — calculated to aflbrd the utmost security to prin- cipals, — confidence to correspondents and clients, — to economise the time of Book-keepers and Cashiers, — and finally, to affortl the greatest facility of extracting a Balance sheet. As there is no man engaged in commercial or professional pursuits who is free from monetary anxieties, or who is not desirous of ascer- taining the state of his atlairs, the exact amount of progress that he may have made during a given peiicjd, or, in time of reverse, the extent of losses sustained, it cannot lait be advantageous; to curtail the heavy burden of a system which condemns him to spend much of his valuable time on intricate operations, which are in reality uimeces- sary, and might be avoided, were a more simple and accurate system adopted. There are few evils which do not work their own cure, and altliough the constitutional disorder prevalent in ill-regulated concerns is almost incurable, still, of lute years, there has been a, change for the better. Accountants are now breaking througli the conventional trammels of useless recapitulation in book-keeping, and arii\e l)y concise methods at statistical results, more satisfactory to the parties interested, and more agreeable to the executives themselves. Although in numerous instances the move has been made in the right direction, by the with- drawal of an unwieldy process, and the substitution of sim]^)ler machi- INTRODUCTION. nery, tliero still reiruiins very miicli to be accoiiiplislied, prejudices to 'be conquered, and aiitiqtiated systems, if pO'Ssiblo, to bo done away l)resi'iit day, the gravest impediment in the pathway of the coiinting-hottse reformer, is the peculiar infatuation which seems to poBsess the majority of book-keepers of tlie old school, that " their system being l/ic/r omn, they will not change it for any man ;" that '* it u :^iiperior to any other," and so on. In the author's experience of many years devoted to the subject, these mueh vaunted styles are, in nine eases out of ten, the patclied up descendants of the tirst heavy parents of Book-keeping, without their respectability, aud certainly without their' integrity. If this delusion could be dissipated, and if, instead of the ponderous plan hitherto inculcated by authors on Book-keeping, the mercantile and professional worlds could be induced to adopt a rmffffiimd and approved sfjiimn for each purtieuktr pro/mum, which system should give a 'Modernised Set of Books to Professions, 'Manufacturers, and Tra'ding Companies,— and to fietaileis a simpler fonn of books, so framed that the exigencies of their 'Calling could be appropriately met, the community at .large would unquestionably reap u decided ad- vantage. The object aini«i at in Book-keeping is to exhibit a correct and diBtiEct state of one's ailairs, to enable a man to see at any time the nature of his buainess, the number of his transactions, the amount of 'his income or profits, and the extent of his losses. It regulates monetary negotiations by detining the funds available forpie pur- pose,— it expedites settlements w'Mch might otherwise te protracted,-- it facilitates scrutiny, when such is r«iuired, and defeats dishonesty and peculation w'lieiiever they are susi>ected or attempted. Book- keeping when conducted upon sound principles is invaluable ; it not only sliowa the g*.*iieral result of a Commercial career, but admits of aual)'M:s l>y whicli tlie success or failure, ^w value or woiihlessness of it.^ w.uiiionent parts, or each particular transaction, can be easily ascer- Udned. In a word, on the one hand it promotes order, rcgidarity, fair deaMug, and honourable enterprise, — on the other, it defeats the miichination.s of dishonesty, and preserves the integrity of man wh n deal„.ing with his follows. Tlii.s deaaition can with propriety be ext(;nded to the accounts of kiugiloius, estates, farms, factories, or families ; and when one is well acquainted with the principles of the Science, and its application INTRODUCTIOX. to a particular branch of business, the transition to any other will not be difficult. (See Gordon, vol. 2, 1770.) Tlie origin of Book-keeping is involved in much doubt, and were its elucidation of any importance, there would be no lack of enthusiasts to make researches into the musty records of bygone trading communi- ties ; but up to the present time, the inquisitive, or rather curious in such matters, ha^'e merely indidged in conjectures. Some, bolder than others, have given the ancients credit for a knowledge of Double Entry, quoting Plin. Lib. 11. Cap. 7 ; and P. Kelly assumes, that the in'iuciple of Book-keeping might liave been deduced from tlie Axioms of I'^uelid, or the properties of an Algebraic E([uation. He also informs us, that the first European who translated Algebra from the writings of the Arabians, is also supposed to have written the first treatise on Book-keeping. It Avas published in the Italian language, at Venice in 1494-5, by Lucas di Borgo, a friar, who likewise wrote several useful works on mathematical subjects. From»the year 1543, when Hugh Oldcastle of London wrote his ** Treatise on the EngUsh Language," down to the present day, when Messrs W. & R. Chambers have issued the most concise and perfect volume of the kind, there have been many ^vriters on the Science of Book-keeping, possessing more or less merit. In 1565 Valentine Meidier de Kempten wrote a short treatise on " Double Entry," en- titled " Pi-acticque pour brievement apprendre a ciffrer, et tenir livre de comptes, avec la regie de Coss, et Geometric." In 1569 we have James Peek's work, supposed to be on *' Single Entry ;" — and in 1652, John Collins, an eminent accountant and mathematician, published a large system whicli he called " An Introduction to Merchants' Ac- counts," which long served as a standai*d book on the subject. In 1588 John Mellis " Renewed and revised an auncient old copie, printed in London the 14th of August 1543; then collected, pub- lished, made and set forth by one Hugh Oldcastle, Scholemaister." Augustus de Morgan declares this to be the earliest English book on Book-keeping, by double entry. John Mellis, in his title page, de- scribes his book as " A brief instruction and mamier how to keepe Bookes of Accompts after the order of Debitor and Creditor, and as well for proper accompts, partible, &c., by the three l)ooks named the Me7nortaII, Jounudlj and Leayer, and of other necessaries apper- taining to a good and diligent marcliant. The which of all other reckoninges is most laudable : for this treatise well and sufficiently know en, all other wayes and maners may be sooner discemed, learned * 4 mTBODUCnON. and knowen. Newely aiigmeuted and set forth by John Mellis, S«holemaister, 1588. Imprinted at London, by John Windet, dwell- ing at the sign of the White Beare, nigh Baynard's Castle." Nicholas Petri in 1596, published an example of Book-keeping at Amsterdam, the " Practique omte Leeren, Rekenen, Cypheren, ende Boeckhouwen met die Beghel Coss." Simon Steviniis in 1607, (date of Preface,) translated a work on Book-keeping from the Latin, — ^although some attribute the translation to WiOebrord Snell, (See Peacock Encyc. Metrop. 'Arithmetic,' p. 464) TMs work wliich was called, " Tomus Secundus Iklathemati- comm hypomnematum de Geometrice praxi," contained the celebrated Latin Treatise in which Book-keeping is called " Ajmlor/Ish'ea/' the Ledger, ** Codex aceepH Expemiqm" the waste-Book, " Lihei' Dele- tifim," the Stock Account, "Sors;" and the Balance Account ^' El)ilogimim" &c. Terms expressive perhaps in themselves, but lather staggering to practical men. John Collins wrote "An Introdijction to Merchants' Accompts" in 1674, and ten years later, Alex. Liset published his " Aniphithalami, or the Accountant's Closet," a work on Book-keeping by Double Entry. In the same year (1684,) Ricli. Daiforne translated "the l^Ierchant's Minor" from the Dutch. These works were but little thought of, but Htttton in 1726 published "The Merchants Magaziup," a work of some celebrity. In 1730 Malcolm wrote a book extending to G40 quarto pages, so erudite in fact, that as De Morgan expresses it, " The union of such masses of Scientific and Commercial Arithmetic, made the book un- isaleable for either purpose." Webster wrote on this subject in 1740, and James Dobson in 1750 applied Boole-keeping hj Dovhle Enfri/, to retail trade, in "The Acfcountant, or the method of Book-keeping deduced from dear prin- ciples." It is supei-fluous to add, that Retailers did not take advantage of the opportunity thus afforded of simplifying tlieir systems,-— and that the clear principles here laid down have never been reduced to practice, John Mair, a schoolmaster at Perth, published in 1768 his " Book- keeping Modernized," being an improved reprint of his " Book-keeping Methodised," (1736) a work elaborate, and now almost unintelligible. Such are the changes effected by time and the course of events. Who could wade through 600 pages of small print to acquire a knowledge of "Debitor and Creditor"? The writers contemporary with, and INTRODUCTION. 5 following John Mair, were Doun, 1758; Weston, 1760; Dowling, 1768; Perry and Scruton, 1777; W. Taylor, 1783, (600 pages)! DHworth, 1784 ; Booth, 1789 ; Jones, 1796. This last Author pub- lished his " English Book-keeping by Single Entry," under the firm belief, that the Italian Method by Double Entry would be thereby superseded ;— and although he failed most signaUy in his object, still he deserves very great credit for the introduction of certain checks, which have been adopted by, and proved most useful to the Com- mercial world. Jones was succeeded by P. Kelly, 1805 ; Lorraine 1807 ; JMorrison, 1809 ; (one of the best authorities on the subject^ especially in his later editions,) Hutton, 1811 ; Ritchie and Cronlielm* 1818, (the latter an ingenious and clever writer) ; Hamilton, 1820 • Tinwell, 1828 ; and the usefid volume by Chambers of Edinburgh' of more modem date, to wfiich particular allusion has been ah^^y made. Having thus given the reader an opportunity of studying every variety of system, in many European tongues, modem as well as ancient, the author begs humbly to submit the following work, ex- planatory of Book-keeping by Double and Single Entry, in the earnest hope that a Science hitherto considered difficult of attainment, may be better understood and more highly appreciated, w^hen its real simplicity is made apparent. ■' If J i jl a, JCii' X ~"^ X» SECTION L THE PRINCIPLE OF DOUBLE E^^TRY. Thi Terj title of this system is descriptive of its nature : as every transaction in 'business being a transfer between two partieH, or between two accounts, there must necessarily be an entry to the debit of the one, and to the credit of the other — the total debtors being equal to the total creditors. The great advantage derived from a double entry of the same trans- action is tlie certainty of being able at any time to ascertain— /zr^f^j^, the position and nature of separate personal accounts.— wroHtZ?;/, the profit or loss on your stock or property accounts; and, third/ f/, to have the correctness of your books and the state of your affairs proved beyond a doubt by the mere inspection of one record, namely, the Gbneral Ledoeb. In double entry every transaction must be journalised — that is, entered in the Journal from other daily records, such as the Cash, Sales, and Pufcbase or Invoice Books, 'and posted direct therefrom to the Ledgers. The Journal can only be correct when it includes Debtor entries exactly corresponding in amount with the Creditor entries ; and, as a matter of course, if these are correctly transferred to their proper places in the Ledgers, the Books of the concern must balance. The Books required in a Merchant's Counting House are, for double entry, divided into three classes. Ist, The Pbimary Records, viz.— The Cash Book, Day Book, sometimes called Waste Book. Bill Books, (Receivable and Payable.) There are subsidiary primary records, such as Sales Book, Invoice Books (outwards and inwards). Petty Cash, De- bentures, Account Current, Warehouse, Order, and Ac- couEt-Sales Books, but these are neariy all auxiliary. THK PRINCIPLE OF DOUBLE ENTRY. 7 2nd, The Journal, or Posting medium. 3rd, The Ledgerh. With this set of books, the book-keeper proceeds to make his daily entries, whether of cash or credit transactions. The primary records speak for themselves. The cashier makes entries in his Cask Book of actual receipts and payments, being care- ful to give such explanations of each transaction as shall make the entry intelligible to every one. He next enters the bills granted by, or for which his principal is liable, in the " Bills Payable Book ;" and those received from others in the " Bills Receivable Book," also using every precaution in giving a scrupulous history of each document. The same with goods sold or purchased, — the former being entered in the Invoice ' outwards,' and the latter in the Invoice * inwards' books. But the Day Book is a register of every transaction, including all purchases and sales, with their concomitant entries of commission, exchange, charges, &c. With these materials, the book-keeper can construct a succmct and intelligible fabric, built upon sound principles, and perfect in all its parts ; but to enable him to do this with exactness, there must be some intermediate Book into which his daily registered facts can be collected with regularity and order, and that medium is, as before explained, the Journal, a book invaluable in itself, and which alone constitutes and perfects the system called double entry. Weekly or monthly the book-keeper arranges in this volume the events and transactions already noted in the primary records. This is called " Journalizing" and requires both care and practical ex- perience. Theory is essential in Book-keeping, but without practice it is of little avail, and a book-keeper's qualifications may always be tested l)y his efficiency in writing up this book. There are several methods of Journalizing, but the simplest is that which is given tliroughout this work in more than one of the Systems recommended, and consists of two columns, as shewn in the following example. In the left hand or Debtor column are entered such items as must be posted to the Debit of accounts in the Ledger, and in the right hand column those that are to be posted to the Credit of accounts. On the Journal l)eing thus " written up," the columns are added, and if they agree in amount are held to be correct, and their contents can then be distributed in the Ledger. A few examples from a Journal, however, will answer our purpose better than the most lengthened attempts at description or explanation. ii Led. FoL BOOK-KEEPING. J0URNAI.,-31st January 1874. Dp. 1 2 4 it, V 6 Cash Acct. for Sums received this month, £ To James Brown, cash paid by him, . . . Simon Harris, do. ... Collins & Co. do. . . . E'atioual Bank, sundry cheques, . . . Eae, Pearson & BeU, cash paid by them, 480 7 Philipsou & Cole, cash paid to them, . 8 Andrew Thomson, do. 9 Private Account, sundries this month, . 10 Charges, do. 1 1 M'Kenzie & Thorn, cash paid to tlieni, . 1 12 To Cash Acct. for sums paid this month, 75 14 10 45 332 13 14 15 20 21 99 Bills Eeceival)le, bills received this month, To Smith & Gray, Their Note, No. 32, . . Wni. Campbell, His Note, No. 33, . , James Fillans, do. No. 34, . . 25 ^0 John Adamson, bill to him, No. 10, James Curor, do. No. 11, White & Brown, do. to them. No. 12, . To Bills PayaT)le for the above, . . . 730 75 45 314 Cotton Acct. for purchases, 22 To White & Brown for so many bales, . . 33 Thomson & Bunlop do. . . 13 14 2 30 Smith & Gray, for so many bales of Cotton, Wm. Camiibell, do. do. . . James Brown, do. do. . . To Cotton Acct. for sales as above, . . . 1100 434 205 100 3968 Cr. 47G /. 434 205 100 434 . 314 7861 . 739 3968 100 // II 43 n II 39 II II 200 It n 98 n ft THE PEINCIPLE OP DOUBLE ENTRY. % It is needless to observe that the sketch now given is merely a skeleton form, the entries being shorn of all explanatory matter, dates and details ; but it is perhaps better adapted in that shape to convey a just idea of douhle entry. On examining it with attention, it will be seen that the Primary Eecords have answered their purpose. Tlte Journal hcis become the depository of every transaction, either of Cash or Credit from the other Books, and to prove its correctness, the summations of the Debtor and Creditor columns assimilate, the double entry is recorded, every entry has its equivalent, every account maintains its equilibrium, and if properly posted to the Ledger, the Books must, as a matter of course, be correct. But to ascertain this, the usual process is to make what is called a " Tried Balance," which is done by adding up the debit and credit sides of each account in the Ledger, and bringing down the swnma^ iions on a Sheet. (See Outlines of Book-keeping, Part III.) Wlien these are added up, they should agree in amount, and if not, the Books are wrong, and must be checked ofi'. Assuming the " Trial Balance" to be correct, the Book-keeper then strikes the Balance on each Ledger account, deducting the lesser sum from the greater, and brings down the Balance either to the Debit or Credit of a " Balance Sheet proper." This is the system kno\\Ti as«" Double Entry," than which nothing can be more simple or satisfactory, and which,''it is hoped, the sets of Books that follow will sufficiently illustrate. B WINE MERCHANT S BOOKS. 11 SECTION 11. BOOKS FOR WHOLESALE TRADE BT DOUBLE ENTRY. For the merchant having an extensive Foreign and Home connec- tion, and trading upon a large capital, tliere can he no question that Double Entry is the only system on which liis Books should he kept. A positive return upon the whole may he satisfactoiy to a certain extent, hut without possessing the means of ascertaining the results of each adventure, the merchant or trader is hut groping in the dark or speculating at random, with a hundrjjd chances to one against his ultimate success in business. To effect this vital object, the system he should adopt for recording his commercial operations, must be sound in principle, self-checking, and perfect in details. With such machinery the largest concern goes on with the greatest regularity, and what appears at first an intricate problem, becomes ere long a simple matter of routine, requiring nothing more than ordinary at- tention, a little method, and the necessary application to render arrears of work impossible. The following system of Books is neither novel nor simple, hut has been selected as the one best adapted to the majority of Commercial pursuits and is placed before the student of Book-keeping complete in aU its parts. It has been assumed in the following scheme that A. II., CD., E.F., and G.H., have entered upon the going business of Y.Z. & Co., Wine Merchants, taking over the stock at a valuation of £25,000, for which they have conditioned to pay in instalments. The new firm have different interests in the concern, A.B. representing 3-8ths, CD. 2-8ths, E.F. 2-8ths, and G.H. the remaining l-8th. The Books required are :— 1st, Principal Books — Cash Book. Journal. Ledger. 2nd, Subsidiary Books — Invoice Book. Inventory or Stock Book. Bill Book. Bond Book. Duty Book. Delivery Book. Bin Book. Order Book. Day Book. See styles. See style. In common form^ as gene- rally sold to the Trade See styles. Effect having been given to the conditions of the Contract of Co- partnery by debiting Stock, and crediting the outgoing firm therewith in the day book, the usual transactions of business commence, and the routine of keeping the set of books is as follows. For all goods received into Stock (in this instance wines and spirits,) make an entry of Invoices, copying the same verbatim into the In- voice Book. These are afterwards credited the parties, at the end of the month, in the Day Book. For all goods ordered make particular entries in the Order Book, stating whether orders are verbal or written. For all goods delivered, register the same in the Delivery Book, describing from whence the wine is taken, whether from cask or bin, the mark or seal, to enable the clerk to post up the Bin Book. This book should also check the runs of the casks when bottled, and also record the wines returned. It is made up from a Book kept by the cellarman, and its entries carried daily to the Day Book. The remainder of the Books need no further description than is already given in the Section on Double Entry. 1 O' AM BOOK-KEEPING. HflTOICE BCX)K.-Jaly 1874. 6 13 22 99 «Mill dd 29 Bought of Sandeman & Co., Oporto. Port, as per Invoice, - - - - . Do. Barton & Guestier, Bordeaux. Claret, as per Invoice, - - . - Do. Perrier, Jouet & Co., Epemay. Champagne, as per Invoice, - Do. Gonzalez, Duhosc & Co., Xerez. Sherry, as per Invoice, Do. Deinhard & Jordan, Coblenz. Moselle and Hock, as per Invoice, Do. Renault * Per Verbal Order of 4th inst. C. D., Esq., Broomlaw. 4 doz. very old superior Port, Bin. 90. Per Telegram of 18th inst. BIN BOOK. Bin No. 25. Port, (sealed red) GB // Date when stored, &c. Description of Wine, &c. Out. In. Balance. 1874 Doz. Bots. Doz. Bots. Doz. Bots. July 25 From Sandeman 8z Co. - // II 40 9 40 9 July 31 By John Bro-wn, - - Balance in Stock, - - 6 34 40 II 9 9 // II 34 9 40 9 // 1/ Tn SfnnV . « _ _ - // II 34 9 XU OHJUJV, - m - - m I 14 BOOK-KllPllfG. DAY BOOK-Snd July 1874. £ 8. d. 2 Debit Sundries to Y. Z. & Co. for Wines, «fec., pur- chased of them, being vahie of their Stock in Trade, as per Inventory, viz. : Port Account, for Port, 5070 H II White Wine Account, for Sherries, Rhenish Wines, &c. 7750 If II French Wine Account, for Claret, Champagnes, &c. - 9973 II II Spirit Account, for Brandies, &c., - - - - 1997 II If Trade Charges Account, for Office Furniture, Casks, Bottles, Corks, &c., 210 n H II 25,000 II Debit Sundries to Capital Account. A. B. his Capital Account (or Account in Company), for his share of Capital as per contract, | ths, - 7500 H H C. I). do. do. gths, - 5000 II n E. F. do. do. fths, - 5000 II It G. H. do. do. |th, - 2500 II H 20,000 II II Sold James Blair, Esq. of Mayfield, Dunfermline, and sent per rail, carriage paid, 6 doz. Port, Bin 110, - @ 54/ £16 4 12 „ Sherry, - - . 36/ 21 12 6 „ do. - - - 45/ 13 10 4 „ Claret, - - - 84/ 16 16 3 „ Champagne, - - 78/ 11 14 Cases, 10 ■ 80 6 It Sold William Mitchell, Esq., Edinburgh, 40 doz. Port, Bin 320, - @ 40/ £80 50 „ do. - . - 38/ 95 175 II H WINE merchant's books. DAY BOOK.-6th July 1874. 10 Sold Alex. Tulloch, Esq., Edinburgh, 20 doz. Port, - @ 48/ 36 „ Sherry, - 32/ 20 „ do. E. I. - 54/ 20 „ Claret, - 75/ 12 „ Light do. - 30/ 6 „ Hock, - - 84/ 3 „ Brandy, - - 63/ 4 bots. Cura9oa, 11/ £48 57 12 54 75 18 25 4 9 9 2 4 Sold Sir John Glass, Bart., Bock Castle, Dumbarton, and sent per rail to Glasgow, carriage paid. 20 1 Butt Sherry (run 53 doz.), for 1 Hhd. Claret (run 23 doz.), @ 50/ 50 doz. Port, - - 50/ 12 „ Sparkling Moselle, mj 12 „ Champagne, - 72/ 6 „ Brandy, - - 76/ 24 Cases, &c. - . - _ £115 57 10 125 39 12 43 4 22 16 3 18 Sold C. D., Esq., Broomlaw (one of the Partners), 4 doz. very old superior Port, Bin 90, @ 60/ 25 31 ^ Debit Trade Charges to Sir John Glass. For 10 cases returned, - - - Debit Sundries to Interest Account. A. B. Capital Account for Interest on £3500 Balance of unpaid Capital, from 2nd to 22nd July, E- *'• do. do. £2000 do. Debit Port Account to Sandeman & Co. For Port, per Invoice Book, 15 s. 289 9 407 12 110 7 4 12 13 7 1 5 8 350 ■ I I I I I HII li i I 16 BOOK-KEEPING. DAY BOOK.— 31st July 1874. M Debit White Wine Account to Smidries. Gonzalez, Dubosc & Co., for Sherry, X500 Deinhard & Jordan, for Sundries, 94 Debit French Wine Account to Sundries. Barton & Guestier, for Claret, X200 Perrier, Jouet & Co. for Champagne, 249 8 Debit Spirit Account to Renault & Co. For Brandy, Debit Trade Charges to Sundries. The Edinr. & Leith Glass Co. for Bottles, £40 12 John Veitch & Co. for Corks, 30 Debit Sundries to Bills Payable. Gonzalez, Dubosc & Co. for our acceptance @ 4 m/d., due Kov. 25, No. 33, - - - ^£500 Renault & Co. for our acceptance @ 2 ni/d., due Oct. 2, No. 34, - - - 111 18 9 Debit Sundries to Trade Charges. Port Account, for Bottles and Corks, doz. Bottled, White Wine Account, do. do. French Wine Account, do. do. Spirit Account, do. do. £ 594 449 111 70 611 30 50 40 10 130 s. 18 12 18 9 WINE MERCHANT S BOOKS. IT DAY BOOK-3Ist July 1874. Debit Balance to Sundries. Port Account, for Stock on hand per Inventory, White Wine Account, do. do. French Wine Account, do. do. Spirit Account, do. do. Trade Charges Account, do. do. Debit Profit and Loss to Sundries. Trade Charges, for Balance transferred, £35 10 2 Abatement Account, do. 6 3 Debit Sundries to Profit and Loss. Port Account, for Profit, - £31 18 White Wine Account, for do. - 60 1 2 FrenchWine Account, for do. - 29 8 Spirit Account, for do. - 4 10 3 Interest Account, for Balances transferred, 12 1 1 Debit Profit and Loss to Sundries. A. B. Capital Account for f ths of Profit, C. D. do. for gths of do. E. F. do. G. H. do. for |ths of for ftlis of do. for |th of do. £36 2 24 1 4 24 1 4 12 8 Debit CD. Capital Account to CD. Account Cur- rent. For Sundries transferred, --..-. Debit G.H. Account Current to G.H. Capital Ac- count, For Amount at Credit transferred, - - . , £ 5193 8097 10,269 2089 152 25,801 41 137 s. 10 6 12 2 10 d. 13 18 96 17 15 14 c 18 BOOK-KEEPING. Br. CAS H. 1874 Abate- ment Account. Cash Sales. Banks and Accounts. £ s. d. £ s. d. £ s. d. July 2 To A.B. Capital Account to acct. * 4000 tf KF. do. toacct. u 3000 II u 4 CD. do. in full, 5000 If G.H. do. in full, U n ft 2500 tt „ Bank of Scotland, 65 ,/ Port Acct. for 3 doz. Port, 7 4 It Bank of Scotland, II 10,000 6 William Mitcliell, in full, 8 15 175 22 „ A.B. Capital Account in full, ff 3500 E.F. do. infuU, II n 2000 24 // G.H. do. Current for Sundries paid, II 15 14 6 31 Bank of Scotland, Abatement Account, Dis- » 35 8 15 7 4 It counts received, ^ con. 2 12 Cash Sales this month. 7 4 1874 30,300 10 6 July 31 To Balance brought forward, H 41 4 11 WINE merchant's BOOKS. 19 CONTRA. Cr. 1874 July // 6 22 24 31 By Bank of Scotland, „ Wliite Wine Account, „ Y. Z. & Co., paid them first instalment to account, „ Bank of Scotland, „ C. D. Account Current, paid him to account, „ Bank of Scotland, ^ do. „ Trade Charges for Station- ery, &c. - - - „ Edinburgh and Leith Glass Co. in full, „ Trade Charges, paid Salaries, £20 Incidents, 4 3 9 „ C. D. Acct. Current, paid Incidents, ,/ Abatement Account, Dis- counts allowed, *^ con. - ,/ Trade Accts. paid this mo. // Bal. carried to next month, Abate- ment Account. S. 12 Trade Accounts £ 64 // 15 s. // 14 d. // 10 // // // Banks and Accounts. 14 6 24 12 £ 7000 10,000 7500 5 150 5450 40 a d 12 // 8 104 41 30,300 6 15 13 4 10 1 11 11 ill ! BOOK-KEEriNG, i Aa) J0URNAI..-2nd July 1874. S 8 9 10 11 12 1 1 1 9 7 15 7 7 1 9 15 9 7 3 8 12 3 8 9 / 15 8 Port Account for Port, f inventory White Wine Account for Sundries, f do. * French Wine Account for do. do. Spirit Account for do, do. Trade Charges Account for do.- do. To Y. Z. & Co. for the ahove Wines, &c. A. B. Capital. Acct, for share C. B. do. for do. JLitt JC. tt UltJi* XUL CIO* G. H. doi for do. To Capital Account of Capital, | do. f ClO. -g- do. I Caeh Account ------ To A. B. Capital Acct. for pajTnent to acct. io K. i?. do. for do. Bank of Scotland To Cash Account for sum lodged - Cash Account ----- To C. B. Capital Acct. for share of Capital T<3. 6. H. do. for do. To Bank of Scotland for Cheque - White Wine Account To Cash Account for duty on Sherry James Blair of MayfieM To Port Account To White Wine Accoimt To French Wine Account To Trade Cliarges Account for Port for Sherry for Sundries for Cases WilJiain Mitchell, Edinburgh To Port Account for Port. To White Wine Account for Sherry Cash Account .... To Bank of Scotland for Cheque - To Port Accou.nt for ready money sales Carried forwawl, •LAJOB. 5070 i i ou 9973 1997 210 7500 5000 5000 2500 7000 M tt 7000 H 75 C5 u tl ■ 80 u n It 175 It ft 10,007 It tl It tt n ft It tt 1/ It ft ft It II It It It tl II It tt It 14 u 6 II n II II II II II II tl II II If ft 11 tt It tt 10 tl II II M II It 70,892 410 Crs. 25,000 20,000 4000 3000 7000 5000 2500 65 64 16 35 28 80 95 10,000 'G,892 14 4 2 10 10 4 // II 10 10 ' WINE merchant's BOOKS. (2.) JOURNAL.-4th July 1874. 6 Q O 10 1 15 7 7 3 2 15 7 3 8 9 10 11 Brought forward, Y. Z. & Co., for first instalment paid them as agreed, - - - - _ Bank of Scotland for sum lodged - To Cash Account for above payments. Cash Account, To William Mitchell for payment in full, C. D. Acct. current for pajanent to acct., Bank of Scotland for sum lodged, - To Cash Account for above payments 20 22 24 3 8 9 10 11 12 2 8 7 1 1 Alexander Tulloch, Edinburgh, To Port Account, for Port, lo \\ hite Wine Account for Sundries, io J^rench Wine Account for Claret ToSpirit Account for Sundries Sir John Glass, Bart., Eock Castle. To Port Account for Port To White Wine Account for Sundries To French AVine Account fJr do ' To Spirit Account for Brandy, for Cases, To Trade Charges 25 15 fmt i i 2 12 7 1 aJ 3 C. B. Account Current, To Port Account for Port Cash Account, - - - . . To A. B. Capital Acct. for bal. of his Capital^ 10 K. h ,1« *.. ^^^ for Bank of Scotland, To Cash Account for sum lodged, Cash Account, - - . . To G. H. Acct. Curt, for payment of sundry accounts, - - - . Trade Charges, To Cash Acct. for Stationery, &c., paid by \x. xi., - - - . Trade Cliarges, Il^^!_^^J^^^_Gl^ Cases returned, Brs. 76,892 10,000 7500 It 175 410 150 289 // It tl If II It It II II 11 9 // II It tl 407 tt It It II II It It It It It II 11 II It II II It II ft It 12 5500 II tl 5450 15 15 1 14 // // 14 6 10 21 Crs. 76,892 17,500 175 10 155 48 136 93 11 125 154 100 22i 16 // 13 12 14 16 318 12 3500 2000 5450 15 15 1 14 14 10 CaiTied forward, ||l06,413ll2ho||inn n^o 10 ■ .■■■i iii mii ■■■ 11 BOOK-KEEPING. (3b) JOURNAI. -31st July 1874. Is n 1 1 ill 8 9 Brought fopwarcl, A. B. Capital Account for Interest, E. F. do. for do. To Interest Account, Drs. 106,413 Port Account, To Sandeman & Co. for Port, White Wine Account, - To Gonzalez Duhosc & Co. for Sherry, To Deinhard & Jordan for Sundries, 10 4 5 5 12 5 .5 French Wine Account, - To Barton & Guestier for Claret, To Perrier, Jouet & Co. for Chanii>agne, Spirit Account, To Renault & Co. for Brandy, - Trade Charges, - - - - " To Edinburgh & Lelth Glass Co. for Bottles, To John Veitch & Co. for Corks, 6 7 It) 1 o 5 2 12 13 7 Gonzalez Duhosc & Co. for our acceptance @ 4 m/d. due Nov. 25th Eenault & Co. for do. @ 2 m/d, due Oct. 2, To Bills payable, . - - . - Cash Account, To Bank of Scotland for Cheque, - ^ - To Abatement Acct. for Discounts received. Edinburgh & Leith Glass Company, m fuD, C. D. Account Current, paid Incidents, - Trade Charges, paid Sundries, - - Abatement Acct., for Discounts aUowed, To Cash Account, Carried forward, 350 12 13 7 594 TTTti/ 10 5 8 Crs. 106,413 12 rt 111 8 18 9 70 tl 12 ft 500 111 18 3712 II 40 24 8 12 5 3 15 6 9 108,72419 8 350 12 10 500 94 200 249 HI 8 18 9 40 30 12 611 18 35 2 12 73 16 108,724|19 8 WINE MERCHANT S BOOKS. 23 r4.) JOURNAL.-31st July 1874. 31 ^=2 8 9 10 11 12 8 9 10 11 12 14 12 13 8 9 10 11 13 14 14 1 1 1 2 Brought forward, Port Account for Bottles & Corks, White Wine Account for do. French Wine Account for do. Spirit Account for do. To Trade Charges, Balance, To Port Acct. for Stock on hand ^Inventory, To White Wine Acct. for do. do. To French Wine Acct. for do. do. To Spirit Account for do. do. To Trade Charges for do. do. Profit and Loss, - - . - - To Trade Charges for Balance transferred, To Abatement Acct. for do. Port Account for Profit, White Wine Acct. for do. French Wine Acct. for do. Spirit Account for do. Interest Account for Balance transferred, To Profit and Loss, - , - > Profit and Loss, To A. B. Capital Account for f ths of Profit, To C. D. do.. for |ths of do. To E. F. do. for fths of do. To G. H. do. for |ths of do. C. D. Capital Account, - - - - To C. D. Acct. Current for Sundries tmnsf., G. H. Account Current To G. H. Cap. Acct. for amount at Cr. transf. Drs. 108,724 30 50 40 10 25,801 It n II II II 41 II II 31 60 29 4 12 96 17 15 134,965 19 II II u H It 10 13 II II 18 1 8 10 1 8 14 6 Crs. 108,72419 130 5193 8097 10,269 2089 152 35 6 137 36 24 24 12 17 15 134,965 10 6 12 2 10 3 18 14 8 2 4 4 8 I ii ' 24 BOOK-KEEPING. (1.) LEDaER. Dr. Y, Z, ^ Co. 18741 July 4 31 To Cash paid them first instal- ment as agreed, - tf Balance, - - _ . 2 10,000 15,000 25,000 Dr. A. B. " Ciqyitfd" Account. 1874 July 31 _ To Capital Account for liis share of Capital, - - - _ » Interest Account for Interest, tf Balance, - - - . 7500 7 28 13 8 5 7 753G Dr. C. D. " Capital " Account. 1874 July 2 u 31 It To Capital Account for his share of Capital, // C. I). Account CuiTent transf. // Balance, - - _ _ 5000 17 6 5 15 6 10 5024 Dr. E. F. " Cajntal" Account 1874 Jul}' 31 To Capital Account for his share of Capital, - - - . // Interest Account for Interest, ff Balance, - . - . 5000 4 19 13 5024 WINE MERCHANT S BOOKS. >,, 25 LEDGER. (1.) Edinburgh^ Cr. 1874 July 31 By Sundries, ^ Journal, - By Balance, 25,000 15,000 25,000 Contra. Cr. 1874 July 2 22 31 By Cash to account, // do. in full, // Profit and Loss for his share of Profit, - - - - By Balance, 4000 3500 36 28 8 7536 2 Contra. Cr. 1874 July 4 31 By Cash in full, // Profit and Loss for his share of Profit, - - - - „ By Balance, 5000 24 15 5024 4 10 Contra. Cr, 1874 July II 2 22 31 By Cash to Account, II do. in full, - // Profit and Loss for his share of Profit, - - . . '/ Balance, D 3000 2000 24 19 13 5024 8 ■^ai 2'€ BOOK-KEEPING. WINE merchant's BOOKS. 27 .. I (2.) Z. IS D a E R. Dr, G. IL " Capital " Account 1874 July IT 2 31 To Capital Account for his share of Capital, » Balance, - - - - 1 2500 27 1/ 15 II 2 2527 15 2 Dr. CAPITAL ACCOUNT. Dr» C. D. Account Current. July 6 20 31 To Cash paid him to account, - „ Port Account for Port, ff Cash paid Incidents, - 2 If 3 6 12 fi . n II 5 6 17 5 6 Br. G. H. Account Current. 1874 July 31 To G. H. Capital Acct. transferred, 4 15 14 6 (3.) Dr. JAMES BLAIR, Esq. 1874 July 4 To Sundries, 1^ Journal, - 1 80 6 H Dr. WILLIAM MITCHELL, Esq. 1874 July 4 To Sundries, ^ Journal, - 1 175 U LEDGER. (2.) Contra. Cr. 1874 July 4 By Cash in full, - - - // 31 „ Profit and Loss for his share of profit, . > . u „ u G. H. Acct. Curt, transfd., - K „ II By Balance, - - . 1 4 4 250C 12 15 II 14 1 8 6 - 252715 2 27 15 2 Contra. Cr. 1874 July 2 By Sundries f Journal, 1 20,000 // II Contra. Cr. 1874 July 31 By C. D. Capital Acct. transfd. 4 17 5 6 17 5 6 Contra. Cr. 1874 July 24 By Cash paid sundry Accounts, 2 1514 ( of Mayfield, Dunfermline. Cr. (3.) Edinburgh. Cr. 1874 July 6 By Cash in full. 2 175 // H ■ ■an ■ I I I mil lip ■■ ■I, BOOK-KEEPING. (3.) LEDGER. Dr. ALEXANDER TULLOCH, Esq. 1874 July 6 To SuTidries ^ Journal, - 2 289 9 // Dr. SIR JOHN GLASS, Bart. 1874 July It 10 31 To Sundries ^ Jom-ual, - * Balance, - - - , 2 407 // H 407 tt 1 405 10 (4.) Dr. SANDEMAN ^ Co. Dr. GONZALEZ DUBOSC ^ Co. 1874 July 13 To Bills Payable for our accept- ance @ 4 m/d., due "Nov. 25, 3 500 // H Dr. DEINHARD ^ JORDAN. Dr. BARTON 4' GUESTIER. WINE merchant's BOOKS. 29 LEDGER. (3.) Edinburgh. Cr. Rock Castle, Dumbarton. Cr. 1874 July 25 31 By Trade Charges for Cases, ,f Balance, _ - - . 2 1 405 10 10 " II 407 // // Oporto. Cr. (4.) 1874 July 31 By Port Account for Port, 3 350 // II Xerez. Cr. 1874 July 31 By White Wine Acct. for Sherry, 3 500 // II Cohlenz. Cr. 1874 July 31 By White Wine Acct. for Sundries, 3 94 It II Bordeaux. Cr. 1874 July 31 By French Wine Acct. for Claret, 3 200 II It "♦91 III • il Ill I iJ'U BOOK KEEPING. C5.) LEDGER. Dr. PERRIER, JOUET, ^ CO. < Dr. RENAULT ^ CO. 1874 July 31 To Bills Payable for our accept- ance, @ 2 m/d., due Oct. 2, 3 111 18 9 Dr. THE EDINR. ^ LEITH GLASS CO. 1874 July 31 To Cash in fuU, Discount 52/, 3 40 12 Dr, JOHN VEITCH ^ CO. (6.) Ih. BILLS PAYABLE. (7.) Ih. CASH. 1874 July » It 1874 July 2 4 6 22 24 31 31 To Sundries, fl Journal, - Do. do. // Do. do. . William MitcheU, * Sundries, ^ Journal, - G. H. Account Current, paid Sundries, - - - . // Sundries, '§ Journal, - // Balance brought forward, 1 II 2 // // 3 7000 7565 10,007 176 5500 15 37 It 4 fi It 14 12 H It 6 30,300 10 6 II 41 4 11 WINE merchant's BOOKS. 31 LEDGER. (5.) Epernay. Cr. 1874 July 31 By French Wine Account for Champagne, 3 249 8 Cognac. Cr. 1874 July 31 By Spirit Account for Brandy, - 3 111 18 9 Leitli. Cr. 1874 July 31 By Trade Charges for Bottles, - 3 40 12 — Leith. Cr. 1874 July 31 By Trade Charges for Corks, 3 30 // n Contra. Cr. (6.) 1874 July 41 By Sundries, ^ Journal, 3 611 18 9 CONTRA. Cr. (7.) 1874 July // II 2 4 // 6 22 24 31 By Bank of Scotland, // White Wine Account duty on Sherry, // Sundries, ^ Journal, - It Do. do. // Bank of Scotland, // Trade Charges for Sundries, - Sundries, ^ Journal, - n Balance carried forward, 1 // 2 H 3 7000 64 17,500 155 5450 15 73 41 14 II II 14 16 4 10 // It 6 3 11 30,300 10 6 1 1 jl II t>j8 BOOK-EEEPING. liEDQER (8.) Dr. POET ACCOUNT. 1874 Jiily 2 31 To Y. Z. & Co. for Port f Inveii. „ Sandemaii & Co. ,. Trade charges for bots. & corks, » Profit and Loss for Profit, - „ Balance per Inventory, 350 30 31 18 (9.) Ih'. WHITE WINE ACCOUNT. 1874 Jidy 2 4 31 To Y. Z. & Co. for Snndries - ,, Cash paid duty on Sherry, - „ Sundries per Journal, - „ Trade charges for hots. & corks, ,/ Profit and Loss for Profit, - Balance per Inventory, 64 594 50 60 14 10 (lO.) D-r. FRENCH WINE ACCOUNT. 1874 July 31 To Y. Z. & Co. for Sundries per Inventory, - - - - „ Sundries per Journal, - „ Trade charges for hots. & corks, „ Profit and Loss for Profit, - 1 3 4 4 „ Balance per Inventory, 449 40 29 8 // 8 (11.) Dr. SPIRIT ACCOUNT. 1874 July 2 31 It To Y. Z. & Co. for Sundries per Inventory, - - - - „ Kenault & Co. for Brandy, - „ Trade charges for bot«. «fe corks, Profit and Loss for Profit, - Balance per Inventory, 111 10 4 18 10 5070 411 5481 18 . 18 519310 7750 768 8518 16 8097 16 . 6 9973 518 10,491 10,269 16 16 12 1997 126 2123 9 . 2089 ti // WINE merchant's BOOKS. . LEDGER. Contra. 1874 July It 4 6 10 20 31 By James Blair, . - - ,/ William ^Mitchell, ,/ Cash, Ready ^VFoiioy Sales, - ,/ Alexaiider Tullocli, ,/ Sir John Glass, - - - u C. I). Account Current, // Bal. for Stock on hand ^ In v. Confra. 1874 July 6 10 31 By James Blair, - _ . /, William Mitchell, // Alexander Tullocli, ,/ Sir John Glass. - // Bal. for Stock on hand, p. Inv. Contra. 1874 4 6 // 31 By James Blair, - - - I, Alexander Tulloch, n Sir John Glass, - // Balance for Stock on hand per Inventory, 28 93 100 10,269 10 // 14 12 33 (8J Cr. 1 16 4 // n 80 // II n 7 4 II 2 48 // M 11 125 // II If 12 // II 4 5193 10 II 5481 18 Contra. 1874 July 6 10 31 By Alexander Tulloch, II Sir John Glass, - - - // Balance for Stock on hand per Inventory, 11 22 2089 13 16 1 Or, (9.) 1 35 2 II II 95 II II '1 136 16 II ft 154 12 II 4 8097 6 II 8518 16 Cr. (lO.) 10,491 16 Or. (II.) 2123 9 w 1 II li j . i i 34 BOOK-KEEPING. (12.) LEDGER. Dr. TRADE OHARGES ACCOUNT, 1874 July 2 To Y. Z. & Co. for Sundries, - ] „ 24 » Cash paid for Stationery, - ' ,/ 25 ,/ Sir John Glass, - - - * ,/ 31 ^ Sundries, per Journal, - - i „ „ n Cash paid Sundries, - - $, „ To Balance, . - - - I 151 11 J 701 24 ' H 4 6 . 2 , 3 9 210 „ . 112 „ 3 322 . 3 152 2 1 (13.) Dr. INTEREST ACCOUNT, 1874 July 3 1 To Profit and Loss transferred, - 4 12 1 1 Dr, ABA TEMENT A CCO UNT 1874 July 3 1 To Cash for Discount aUowed, - 3 81 15 ,/ 815 * (14 ) Dr. PROFIT and LOSS, 1874 July 2 \\ To Sundries, per Journal trans- ferred, - - - . u Bo. do. do. 4 41 96 13 2 5 4 13718 6 WINE merchant's BOOKS. 35 LEDGER. (12.) Contra. Cr. 1874 July 4 10 31 By James Blair, - - - . Sir John Glass, - // Sundries, per Journal, - If Profit and Loss for difierence transferred, // Balance for Stock on hand, - 1 w 10 // 2 3 18 // 4 130 // // 4 35 10 2 II 152 2 1 322 // 3 Contra. Cr. (13.) 1874 July 31 By Sundries, per Journal, 12 1 Contra. Cr. 1874 July 31 % By Cash for Discounts received, // Profit and Loss for diff'erence transferred, . _ - 12 3 8 15 Contra. Cr. (14.) 1874 July 31 By Sundries, per Journal, for Profits, - - . - 137 18 137 18 6 M BOOK KEEPlNli. LEDGER. (15.) Dr. BANK OF SCOTLAND, Edmhurgh. Or. 1874 July It it Ml Tt" 6 M' illlH' To Cash lodged, do. ClOt ^ 31 To Balance broiiglit down, 7000 7500 150 5450 20,100 10,000 „ 1874 JuIy H n 4 31 By Cash drawn, n do. n do. „ Balance carried forwartl, 05 10,000 35 10,000 20,100 Dr. BiiLANCE SHEET. I il To Port in Stock, - w White Wiuc ihj. » French Wine do. ,/ Spkit Acct. do. „ Trade Charges, - „ Bk. of Scotland, n Customers, viz. : Jas. Blair, £80 6 A.Tulloch, 289 9 SirJ.Glass,405 10 £ 5193 8097 10,269 2089 *5* 10 6 12 11 25,649 8 152 2 10,000 Cash in hand, 775 41 36,618 11 By Y. Z. & Co. - „ Capital, - „ Handeinan, Oporto, ,, Beinhard and Jordan, „ Barton and Guestier, u Perrier, Jouet, &Co. - „ John Veitcli k Co. u Bills payable, - ,/ Partners' Accts.: A. B.£28 8 7 CD. 6 15 10 E.F. 19 13 8 G. H. 27 15 2 Cr. £ 15,000 20,000 350 94 200 249 30 611 18 82 36,618 . 13 SECTION III. A LIFE ASSUPvAXCE COMPANY'S BOOKS. It is neither the author's object nor intention to enter very particularly into what is styled " the importance of Life Assurance," as this is well understood by the community, and has been most ably treated by a score of writers. The subject is exhausted, so f^ir as tlie principle is concerned, — ^its advantages have been presented in every light and every form,— appeals have been made to infants, to adults, to middle life, and to old age; husbands are constantly entreated to consider their dependent partners and unprovided offspring ; — wives urged to economise out of the res aiujusta dorni, so that the essential annual XJremlum be forthcoming ; guardians inundated with reports and pro- spectuses, and men of a particular age, untrammelled with incumbrances, are initiated into the mysteries of Life Assurance, and made to waste much precious time in ascertaining the best office in which they can sink their money, or, in other words, purchase an annuity. A few remarks explanatory of the classes into winch Insurance Companies are divided, and the different kinds, of transactions that they facilitate, may be interesting to those who have not as yet paid attention to the subject. There are tln-ee classes of offices,— 1st, Proprietary Offices, in which the whole reahsed profits are divided among the stock-holders, and the assured are relieved from all risk ; 2nd, Mutual Offices, in which the insured bear the whole risk, and are entitled to the whole profits; and 3rd, Mixed Proprietary or Participation Offices, where there is a body of responsible proprietors, but the profits are divided in certain proportions between the stock and policy holdeiu As each and all have their merits, and are more or less attraotive to insurers, it would be invidious to recommend any particular class, but a quotation from Mr G. M. Bell's work on the subject may not be inappropriate. He says, " AVe need scarcely remind the reader BOOK-EEEP'ING. A LIFE ASSURANCE COMPANY'S BOOKS. d" I that security against loss is the first object to be aimed at in effecting an insurance of any kind ; tbat profit is a secondary consideration in tbe matter of insurance, and that that Company, therefore, is the most eligible, as far as insuring goes, wliich to a large capital adds a system of judicious and well tested management." The advantages of Life Assurance are too numerous to be here de- tailed, but the legal and commercial worlds reap the most Important benefits from the opportunity it offers for carrying out transactions which, without it, would be impracticable. For example, we may ad- duce the following cases, where the most important objects in life are facilitated : — The providing for one's family by settlement, of which a Life As- surance Policy may fonn the principal, if not the only feature. The giving security for loans, or to Cautiomrs on a cash credit^ and in assuring to trustees, guardians, or even parents, the repayment of outlay or advance, for their wards or cliiklren, in the event of pre- matuie death. 'The securing payment of debts. The enabling landed-proprietors, under entailed restrictions, to pur- chase up life interests or burdens of junior members of the family. The furnishing means, in situations of trust, where a regular Gua- rantee may not be required, of depositing, by assignation or othei-wise, a poMcy in security for intromissions. This last example is, of course, attended with specialties, such as an undertaking to re-assign, &c., but it is here referred to, merely to show the peculiar advantages possessed by Life Assurance in cases where its utility might never have been contemplated. An immense variety of exaoiples might be given, illustrative of the benefits to be derived from Life Assurance, but neither >nll space admit nor is it essential to the matter in hand. Before proceeding, however, to the system of books, the author would quote a paragraph from the prospectus of an old established Scotch company, showing the absurdity of the too common idea that individuals can accumulate their income with the same advantages as those possessed by Insurance Companies. ** It is an erroneous view of the subject, although com- mon, to suppose that, instead of disposing periodically of a small surplus, by paying it to an Assurance Company, it would be equally advantaaeous for an individual to lay it aside for his own behoof. The contingency of sudden death-the difficulty of finding inyest ments, and the length of the time that must necessarily elapse before any considerable amount can be accumulated, render such an attempt to make provision for a family, full of anxiety, and all but hopeless ; whereas, by assuring his life, he is from that moment secured in the benefit of a sum as large, and perhaps larger than he could have ac- cumulated in a long life. Suppose, for example, a person aged 27, possessing an income of £200 per annum, were to lay aside annually £20, and carofuUy improve it, even at 4 per cent, comjyowid interest ; at the end of 15 years he would find himself possessed of X400 ; whereas, by insuring his life, the same payment would have secured £1000, and that from the payment of the first j^remium of £20." There is still a wide field open for Life Assurance ; it is as yet in its infancy, and millions of our fellows remain uninsured. It is satis- factory, however, to know that the short-sighted policy which woidd throw obstacles in the way of rising institutions, with the expectation of increasing the business and swelling the revenues of old offices, is now beginning to give way ; for it is an undoulsted fact, that every new office, when based upon sound piinciples, in no way detracts from the profit of others, but, on the contrary, tends greatly to the advan tage and prosperity of Assiu^nce Institutions in general, in more widely disseminating the principles and advantages of Life Assurance, by which they one and all derive a benefit. AU this has been most ably advanced in many pamphlets, and duly disseminated through countless channels ; but as yet no Treatise has appeared upon the Book-keeping of Life Assurance Companies — ^no vade mecum for Assurance Book-keepers — no recognised and approved system of books published for the benefit of young offices and the en- couragement and guidance of Actuaries, who, however talented and conversant with figuring and calculation, may be at a loss perhaps for styles and systems in Book-keeping. To old established offices, possessing long tried, although in some cases rather cumbersome, systems, there is no desire to suggest any change; but to .younger offices, or to any companies that may yet be started, it may be advantageous to consult a Manual which gives a concise yet sufficiently explanatory system of Book-keeping, not founded on theory alone, but which has stood the test of many years in an existing office. To the simplicity, and at the same time comprehensiveness of this system, the author can bear testimony, having himself been practically conversant with its working, and fuUy assured of its completeness. -'flBP"**'" 40^ HA AVT-ir wilt wn LIFE INSURANCE OOMPAXY's BOOKS. 41 ■ i The Set of Books for a Life Office may be classed under two heads : — 1. Pbiwcipal Books for direct transactions at the Head Office. 2. SuBsmiiiRY Books, for Agency hiisintjss, 'Tlie first daaS' comprehends — 2. DAILY CASH BOOK. 3. GENERAL CASH BOOK. 4 PRINCIPAL JOURNAL. 5. GENERAL LEDGER. 6. INVESTMENT LEDGER. 7. REGISTER OF POLICIES. The second class is represented by — 8. AGENT'S MEMORANDUM BOOKS. a AGENT'S DEBIT JOURNAL. 10. AGENT'S CREDIT JOURNAL. 11. AGENT'S LEDGER, and CONTINUATION BOOKS. 1. Ebgistee of Keciipts.— In this Eegister are entered, all sums falling due in every month during the course of the year, in the order of dates on wHch they are paj^ahle ; and embrace Eenewal-premiums, Mew Premiums, Interest, Dividends on Stock, Annuities, &c. 2. Daily dysH Book. — ^lliis Book needs no description. The simpler the form the better, but every entry should have a corres- ponding heading in the Ledger, to which it is jiosted from the General Cash Book. A column for liank transactions is also recommended. 3. General Cash lk>oK, — This is simply kept for the classification of entries coufcained in the Daily Cash, and which are^ posted direct from this to the General Ledger. 4. Pbincipal Joubkal. — Althoiigli the principle upon wliich this book is kept, has been particularly ex])lained in former chapters, to make the present system complete in itself, as applied to life assurance business, a further i ted with the amount falliiigdue under tliat head in th<3 inoatli in question, and the counter- lulance is preserved 1j\^ ereiliting Premiu.ms A, and Premiums B, for their respective aiiiouuts, as embraced tlierein, A and B being the classi- fication under wliicli they are^ recognised in the Ledger, and denoting their participation or non-participation in the profits of the Company. " Annuities Receivable," " Self - redeemino Annuities dub," " Heritable Interests due," and " Dividends on Stock due," are then debited with the gross amounts appearing under their respective heads in the Register. All these debits having been made in the Journal, the counter-entry must be made, which is a simple credit of the whole amounts to "Interest Account," thus exhausting the Register of Receipts, and completing the double entry. The several accounts having been thus debited with the monthly a"iounts falling due, the relative Credits are carried out from another channel, namely, the Abstract Cash Book, whence the sums actuaDy received for premiums. Self-redeeming Annuities, Heritable Interests, and Dividends on Stocks, are posted to their respective accounts ; and should there be a difference or balance thereon, it must necessarily arise either from sums in arrear, or from premiums dropt, which are written off by a cross entry to the debit of Premiums A and B, and to the credit of " Head Office Premiums." The remainder of the principal Books require no particular descrip- tion, as they are of the form in common use and speak for themselves. To proceed, therefore, with an explanation of the system, we will now take the transactions with the agencies. The Agent's Debit Journal supplies the place of the Register of Receipts, in affording materials for the Principal Journal. The agents are debited with the total sums as detailed in their Debit Journal, these sums embracing A and B Premiums, Interests, Annuities, and Sundry Charges, which accounts are in their turn respectively credited with the same. Thus, it will be observed, that the whole working of the establish- ment is concentrated in the principal Journal, and the only thing re- quired to render the system of Books complete, is the cross entry at the end of each month of " Cash Dr. to Sundries," and vice versa to act as a check upon the annual balance. A writer on this subject (unpublished), explains the utility of this apparently superfluous entry, thus :— - By taking the balances on the Ledger at the end of one year, and adding the total summations in the Journal for the following year, it wHl give what ought to be the balance at the latter date. This arises from aU sums faUing due being debited and also credited in the Journal, and the cash requires to be brought through the same way, in order that it may coiTespond with the sums posted to the Debtor and Creditor sides of the Ledger. But I should consider that its utility is best developed, in operating as a very efficient 't i vS BOOK-KEEPING. * 1 ; i check upon the posting to the Ledger, from both Journal and Cash Books, and also upon the summation of Journal columns ; and enables us at once, by a comparison, to detect any error that may have occurred during the year, and operates very favourably in facilitating its cor- fection." It is almost superfluous to add, that the General Ledger, on receiv- ing the whole contents* of the Principal Journal and Abstract Cash Book distributed throughout, becomes the sole depositary of the Com- pany's transactions, shewing on its credit side, the source from whence the funds have been derived, and on its debit side, the maimer in which those means have been applied. The foregoing directions may be considered sufficiently explicit with- out further illustration, as a set of Books for a Life Assurance business would occupy too large a space in such a work as this. Simplicity in the style of returns for the inspection and information of the Direc- tors, is, however, a great point to be aimed at, more especially when investment at critical periods is of vital importance. Elaborate state- ments are calculated to defeat the object of making boards acquainted with the position of affairs ; so that, the Office-bearers of Insurance Companies, should study the easiest methods of making their current operations intelligible ; above all, the Cash transactions upon which any accumulation may arise. The following style of an " Abstract of Cash," for the guidance of a Board of Directors, gives a very simple analysis of the working of a Company. 10 00 iH ^ life assurance COMPANi's BOOKS. 43 '^ S fl "■ aw a; y . - EP ^ ee pq 2^:§ g b a d O CZ2 HH fii a O u •i-l a c5 iH CQ 03 CO 0^ GO 33 a ^ s pL, <^ ^q ■ a) ' ' S rt-1 03 H 2 © « a tp 5 o fe [■■■■^ ^■wf ^^^ ''^^ CO lO CO ^ 5jCO J.O j.CO'^OO O lO ,.00 .00 ..OiCOt^ rH ^ 1-H * ^ I— 1 1— ( o OOOOxOOiOOCi "^lOOlC^flCOOOOCMlO I— 1 pH CM •4^ QQ •^ ^ 'tis o 00 — I O l>- '<^ I-H o iO 00 (M o o o o 00 '^i^ lO CO ft ^ ■ ■ I-H CO 2'e^ .2 ^ ^--^ 2 ^ O 00 O CM I-H t^ CO CM t^ ■^ Oi I— • rH CO rt pq 3 ^^ £? • Ph ^ ' 1 f: i I Ik I I SECTION IV. LIMITED LIABILITY COMPANIES. In the present day when so many schemes are launched in the Com- mercial world more or less attractive, offering inducements for specu- lation in the shape of large prospective Dividends, which are based on the ascertained profits of a going business, and backed by the satis- factory assurance that the lAahility of Shareholders is limited to the amount for whtch they suhmrlhe, it is of some consequence that the investing public should be made acquainted with the accounting pre- scribed by the Act 25 & 26 Vic, cap. 89, by which the true position of the Companies* affairs must be exhibited and made patent to every Shareholder. The following definition of Limited Liability taken from BelVs Lectures^ vol i, p. 397, may be instructive : — " In regard to companies with liabOity limited either by shares or guarantee, it may be useful to notice tliat the members are not severally liable to contribute to the assets for payment of the debts of the com- pany to the extent of the aggi'egate amount of the subscribed capital not paid up. When the limitation is by shares, each member is liable only for the unpaid portion, if any, of the shares subscribed for by himself. When the limitation is by guarantee, each member is liable only to the extent of the unpaid portion, if any, of the siun he himself has undertaken to contribute ; and the limitation holds in either case, although by the failure of co-partners a portion of the debts lawfully contracted by the company from tliird parties may remain unpaid." It is obligatory (see First Schedule, Table A of the Act above re- ferred to), to present certain accounts to Shareholders, as follows : — ** Accounts. " (78). Tlie Directors shall cause true accounts to be kept of the Stock in Trade of the Company ; Limited liability companies. 4S " Of the sums of money received and expended by the Com- pany, and the matter in respect of which such receipt and expenditure take place ; and " Of the Credits and Liabilities of the Company. " The Books of Account shall be kept at the Registered Ofifice of the Company, and subject to any reasonable restrictions as to the time and manner of inspecting the same, that may be imposed by the Company in General Meeting, shall be open to the inspection of the Members during the hours of business. " (79)- Once at the least in every year the Directors shall lay before the Company in General Meeting, a statement of the Income and Expenditure for the past year made up to a date not more than three months before such meeting. " 80)- The Statement so made shall show, arranged under the most convenient heads, the amount of Gross Income, distinguishing the several sources from which it has been derived, and the amount of Gross Expenditure, distinguishing the expenses of the estab- lishment, salaries, and other matters : every item of expenditure fairly chargeable against the year's income shall be brought into account, so that a just balance of Profit and Loss may be laid before the meeting ; and in cases where any item of expenditure which may in fairness be distributed over several years has been incurred in any one year, the whole amount of such item shall be stated, with the addition of the reasons why only a portion of such Expenditure is charged against the Income of the year. " (81). A Balance-sheet shall be made out in every year, and laid be- fore the Company in General Meeting, and such Balance-sheet shall contain a summary of the property and liabilities of the Company, arranged under the heads appearing in the form an- nexed to this Table, or as near thereto as circumstances admit. " Audit. " (83). Once at least in every year the Accounts of the Company shall be examined, and the correctness of the Balance-sheet ascertained by one or more auditor or auditors. "86). The Auditors may be Members of the Company; but no person is eligible as an Auditor who is interested otherwise than as a Member in any transaction of the Company, and no Director or other officer of the Company is eligible during his continuance in office. i 46 BOOK-KEEPING. " (92). Every Auditor shall be supplied mth a copy of the Balance- sheet, and it shaE be bis duty to examine the same, with the Accounts and Vouchers relating thereto. « (18). Every Auditor shall have a list delivered to liim of all Books kept hy the Company, and shall at all reasonable times have access to the books and accounts of the Company. He may, at the expense of the Company, employ accountants or otlier persons to assist him in investigating such accounts, and he may, in re- lation to such accounts, '©3camine the Birectors or any other officer of the Company. ** (94). The Auditors shall make a report to the Members upon the Balance-sheet and Accounts, and in every such" report they shall state whether, in their opinion, the Balance-sheet is a full and fair Balance-sheet, containing the particulars required by these regulations, and properly drawn up so as to exhibit a true and correct view of the state of the Company's affairs; and incase they have called for explanations or information from the Direc- tors, whether such explanations or information' have been given % the Directors, and whether they have been satisfactory ; and such report shall be read, together mth the Report of the Direc- tors, at the Ordinary Meeting." The Shareholder of a Limited LiabiHty Company under the above recited Act, has thus full and free opportunity of studying the financial position, success or failure, of the Com|fany in which he is interested. He learns certain facts, which must show its progress, and by wliich in a great degree he can test its stability and sufficiency ; moreover, before the statement is put into his hands, it must bear the impress of mi auditor's certificate, which is an additional assurance that all reason- able means have been adopted to insure a fair and correct account of the Company's affairs. The Act recommends for adoption a form of " Balance-sheet," or as near thereto as circumstances admit, and it is now submitted below, but followed by "Balance-sheets and Statements" of an existing Company, of course adapted to^ another locality, which show to what extent the suggestions or requirements of the Act have been complied with, and how the great and important points, which it was imperative to mention, have been dealt with. 'CO B.^ P4 no B Q W H >4 < Oh :^ o u M w pq CO h to Q < m Pi o W h PQ < Q LIMITED LIABILITY COMPANIES. ^^ :^ "5 ki"^ •w .g -^ ^ ■SI S S )v i? § ? '* t3 IS §.a § "^ a •!. "« "^ ?? '^ -S "^a "»j c to 55 t^ % «o >4 la -v. ^ "o S C "^ ■** "^ '**» ON O M > a B> >\ S* W 0) ta M w Q O S^ bO p. .SB ■ % o > oU a z < a en < U >' ^ ^ k, ^ Ji^l Co pi I .1 ■Q ! ^ 3 .!•§ J -Si s S 2 -a ">« a a ? ••I ■O .4 a s ■^i J"" t a ^ « ."«§«&> 81 ts*^ f- •»5 -Co s Si •Na *•* ''^ ^ h 5^ ^-..""^ ^ & a s II ■S a -2 ^ I I is 2i •I - i 5 ■^ in vd .J < < u « J e S J o 50 < « td > K U v _ — Id Ph o OS Q kJ z a .p*-i z > > 47 a ■S 1 •2 r .c3 •* 3? 2? .**' li s s z S "■C^li'^ BOOK-KEEPma 00 ]L*' 00 ^ 9 wCSt ^ JO 00 '^JW Hlj^J ■^ »o 09 00 O '»*« Ol O CO O O »0 OJ q: »0 CO »0 O CI Cl M* »0 f— 1 lO OS -^ as r-t oi o ^ €0 i-H Oi £41,490 QQ i 03 O CD "*t3 .1 ® «> ^ 3 Sd ffi o O Q ® d •0' Ofl W CO 0} a o M 9 4S5 S§ h g^ L* ^9 6 r3 a> a a jS J2 bl! ci OQI LIMITED LIABILITY COMPANIES. 4$ PROFIT 6c LOSS ACCOUNT of the " Deepbore Colliery Company (Limited)," as at 31st December 1873. I. Eevenue or Eeceipts during year 1873 } Coal Sales, £121,361 14 // Cottage and other Eents received. ■> - . 744 1 7 "Waggon Hire received, - - - • « - 785 14 5 Transfer Fees received at Head Office, II. Payments, &c., — Boring I^ew Fields, - - . . 68 5 // £122,959 15 K £980 15 2 Machinery purchased, _ - . 4432 14 2 Pit Eails and Hutch Wheels, 1306 10 ff Expenses incurred on Eailroad, - 2303 6 5 Sinking, 6308 16 2 6 3 14,332 Wages paid, 52,350 9 2 Do. Outstanding 31st Dec. 1873, - 1832 9 8 Iron, Wood, &c., used, - - . 5061 11 7 Oil, Grease, and Waste, 476 7 3 Eopes, 620 19 // Lordship, - 8299 8 1 Surface damage, . _ , _ 101 12 1 General Charges, - - . . 3095 6 11 Do. at Head Office, 221 7 6 Salaries, - - - _ . 2022 1 5 Stationery, 199 19 3 General Eepairs, - _ . . 110 12 6 Taxes, 241 11 3 Interest, 1773 8 2 Discount and Commission, - 1222 6 7 Petty Expenses, _ . . . 762 6 7 Law Expenses, 16 ff 11 Discount on Book Debts outstanding Less £382, lis. 6d. (1872) recouped. 49 19 11 Bad Debts estimated at, - 132 1 9 Sum set apart for Contingent Claims, - 3000 // ff 95,912 1 9 Nett Profit Deduct Interim Dividend paid in June, Balance for Add Profit for year 1872, for 1873, - year 1873, - X £27,047 11,180 13 3 5 £15,867 12 10 33,3451011 Less Dividends paid, Surplus, per Balance Sheet, 31st D 26,221 17 7 7123 13 4 J ec. 1872 ^ - £22,991 _6 S. J. B., Auditor, mmm ■■■■I BOOK-KEEPINO. LIMITED LIABILITY COMPANIES. 51 [ I o CO QD 'GO cq ^ '^ O" 'iO CO CO 5 CJ CT CO CI O CO O 00 iO O' lO CI 00 00' 00 CI CS| CjlI 00 o CI I :;3 00 O' 'Od' S 5 5 o o ce f-4 QQ P DQ O O 9 ^ O la 3 o 'oO o t^*-.' *' ^j '-• o _; "-S o 25 , ,, . * ^ CO CO' O' o „ >— ' . CI Cl * r^ * 1^ " ^f-^-^iO'CD >.•-•• fcCO CO * ^ ^ • r-l * 1— • O Oi CI CI CI O CI O' I—* o O'OO'^i— t iOCiOO 00 o o o « o a> "t** Q-CO CO ^"c^" o O rH CI ^ CI CI ^ «+< ■« I 1 1 I ) < < > o ® m o , O' O o oi fcIO '•~* O o - |p | . i 'O' •■-< s f^ i h — i CI '00' 'GO 00 r-i' 1-4 3 p 5 ;3 5 0) o 0) Q 80 o o m » H a a o o S S ^' P — ^ .—I ■ r-" • ^^ ^^ <— t ..-» r "■) '-^ ^ r-i C» ("'1 tso a .S*C3 O '■*^ tj Q § § ?^' X' S o o -^ C 2 o P P3 © o d CD '»^ Q rft O o ■o O (-3 C e 00 '00' a 1—1 CO 'Q s S h4 o O w O O o 3 m o H w. w o pq 05 &^ O 00 -^ I-H "^ CO CO O CO 00 CO CO -"ff CO t>. CO '^i^ O^ CO CO Oi CI CO CO **l I— • i£ • o © SI 5 _ o el o _M 5 tj '05© .s OS 00 I ^ CO O ijC3 I— I CO m o -c O CO r<-« 43 o o o <1 © © W4a ■^ ^ o o o © © c5 O © o^ 43 © p pW o B ■X3 ^r^ 43 o . CO >. 'I ^ g t * 10 CO 00 o r-( 00 00 00 05 t-- 5, 1-H CO 00 '«** OS r-< ^ CO I"""'' »o ^ C> Ci Cl CI CO CI |>- »0 1— 1 CO CO f-t JO e^:j 00 i-< "-J, 00^ I— I Cl CO 00 I— • eo r ^ © _0 m 1 The " Deepbore Colliery Company (Limited)," is assumed to liave Collieries situated at various places, but the books of the works are kept at the village of " Deepbore," and the financial operations are recorded in the principal books which are kept at the Registered Office of the Company— say, in Newcastle-on-Tyne. The Colliery Books merely record the working operations of the Company, showing the cost and value of produce, and the debts due to or by the Company in connection therewith. They are kept by dovhle entry in the usual form ; the books in use being " Cash Book," " Dav Book," " Purchase Book," " Sales Book," " Bill Book," " Jour- nal " and " General Ledgers;" and, at time of balancing, the difference on this set of books must agree with that on the books kept at Head Office, after giving effect to the " Profit and Loss " account. The Head Office books, on the other hand, embrace the " Share Capital," " Loan Operations," " Dividends," " Reserve Fund," " Profit and Loss," and " Property " Accounts ; and, as explained above, the difierence thereon must agree with that at the Collieries. The books used are " Cash Book," " Journal," and " Ledger." The " Trial " and " Final Balance " sheets now submitted, exhibit the method pursued at a glance, and the Profit and Loss account shows — (1), the Revenue derived from every source; and, (2), the charges aftecting it, bringing out a Surplus or divisible Fund, all in terms of the Act. It will be observed by an experienced accountant, on a revisal of the Profit and Loss account, that in this case, nothing has been written off for depreciation of property, or tear and wear of plant, which con- tingency should always be provided for; but it so happens in this case, that the plant, machinery, &c., are all new, and the Directors of the Company hold, that there is no necessity for such writing off at present, seeing that so large a sum as £14,332, 2s. 3d. had been carried against Revenue for Expenditure, which might have been charged to Property or Capital. J 02 BOOK-KEEPINO. KEGISTER OF MEMBERS/ Ore of the most important; Records required under " The Company's Act, 1862," is a " Register of Members " (see sec. 25), with its relative ** Share Ledgers" and " Transfer Books." These books form primary Records upon which the Company is founded ; therefore no erasure should be made upon them. There are many forms in use, several being private copyrights, and very clever productions ; but the author annexes a specimen, which is perhaps the most complete, as well as the most concise, he has come in contact with in his varied experience. It combines all the books above mentioned in one volume, and, with sundry additional requisites, forms a multum -hi pitrvo. The particular merits of this style consist : — 1st. In the absence of numerous date columns, so common to most systems, me column alone sufficing for every kind of entry, there- by shewing the daily progress of each Member's Share Account. 2nd In the extreme facility which is afforded at any time (1) of tracing transfers ; (2), of seeing at a glance the Balance of either Shares or Cash, whether in advance of, or in arrear of, Calls ; (3), the effect of transfers on Calls ; (4), the Balance of Interest at Shareholder's debit or credit ; (5), the total number of Shares issued by the Company, which is found by adding up the last Balance on each Member's Share column ; and (6), of calculating a Dividend, whether on the Balance of Shares, or according' to the progressive dates on which the Calls are paid. On reference to the specimen page, it will be observed that as the ** Baie " column forms the basis of every entry, in recording a trans- action, the Book-keeper should /r«^/// in tM date, and then proceed to distribute the other matter to the left or right of the date column. The " Kumber of Shares " and the " Cash " columns are worked on the progressive or balance principle. All " Transfers," whether from, or to, must be entered in red ink. The Interest on Calls in advance or arrear, which can be allowed or charged at any rates fixed under the Articles of Association, may be extended and squared off at any time, whether at Payment of a Call or Declaration of a Dividend ; and, in conclusion, a fttil description of each transaction should be given in the "Description" column, so as to make the book as com- plete as possible, and prevent unnecessary explanations. I , II SECTION V. A SHIPPING COMPANY'S BOOKS. Having for some years acted as Auditor of an extensive Steam Shipping Company, the Ixjoks of which have been kept at the Head Office and tenninals in a manner that has often eHcited his special approbation, the Author has received pennission from the manager to give a speci- men of these books, as a model which he can strongly recommend in every respect. For obvions reasons, the name of the Company and the pecuHar trade have been altered ; and the forms of books which are now given M© more to illustrate the system, by a few entries, than to show the whole operations of the concern — that is, the entries which follow will not be found to bring out the Balance Sheet with which the series closes, but are merely introduced m specimens of the system. Of all commercial companies there are none which require gre^iter regularity and attention in the management of their books than Ship- ping Companies ; every entry must be made without delay, and the day's work must be brought up before the day closes. To ensure this it is essential that only the best clerks should be employed, possessing a thorough knowledge of Book-keeping, backed by energy and per- severance. In the Company above referred to, the whole books at the Head Office can be balanced, and a Balance Sheet laid before the owners in the course of a few hours, although its operations are very extensive, involving many thousands of pounds of annual revenue. So simple is the system — and it is not by any means a new one, having been adopted by the Company Jijfy years a^o— that it is hardly possible to make an error, unless with a fraudulent intention, and that would be easily detected by the system of audit which has been pursued. With such official machinery as is possessed by this Company, an experienced manager, efficient clerks, trustworthy masters of ships, and energetic agents, it is satisfactory to find that transactions SHIPPING company's BOOKS. 55 are recorded in so simple a manner that credit is conferred upon one and aU ; whUe, at the same time, the duties of an Auditor, although onerous enough, when the heavy responsibilities involved are taken into consideration, are made easy and pleasant to perform. So much for a good system of Book-keeping. This set of books consists of the followin •s U U m a ^ CO 00 4 8 -§ s ^ ■fc. MI'S OS'S o> M 13 CO •ojioj CQ V V > O So V) M boo f4 bO 4) 3 C 2 6 4S cti I in I u a 4) ."2 ft) .1 'en S O U IS CO Cfl 00 a. to lO (M oo C4 00 «D b- OS ;;oo CO «o t^t^ eo Or-l(M 00 "Oi •^d -^ CM CO *a - CO QO t- f-t CO CO oo CO kO 00 i-r Oi CO •v CO "OS «o (N to CO CO (N ^ t Ph ID OB a, o 03 OD a> Q o^ in m ■*» 03 M o O » to 00 o •3 02 o o PQ OD « r— I p; O Oh o hi O O o O o o 02 o Q P^ a o m a w ^ oJ a r-l Q o Q c8 PQ a 09 o u PQ a> 1^ o Q •a o .3 S3 P4 Q O ■ ■ eo U GO CO Q o <» QQ •la c3 '^ €0' 00 SO bo CD © O eo Oh |piH|. piilill "'"■""1 OS'S uifa (O 00 - f-« -* s S 00 oc 1 fa - s S IS 8 S r-i CO OO (M Ol ID »o CI Wharf Dues, 00 M n •* 00 CD to "^^ CO eo 1-1 ij:; •o o o O CI CO o (M a pq X ■ o I-H I— < cf i ^ <^ P 1 1 1 1 1 1 m o 1 I I 1 1 1 1 ) N -•l o ^ Q • , o , , " 5 , O El OQ 1—1 CO e o O o o dation a/c t, Son, & C tn Nixon, Innes, Brothers & Aitkeu & Vilson, a <3l It o ►-; el c3 o • h '^ ^ Oi s g s t: 1^ ,J2 a fi s ^ ^ ^ cS 1 o •F-t hi PL, • « S. ^ CO VO ro t^ VO C* lO t^ vO 00 PS KLt in t^ On M CO -"t to "'t m a s n3 M M M w w c« N CO CO g >.- OP T G COMPAN !ES ^ 00 '"^ lO «x> Ci CO O T— 1 00 * 1— 1 "** T— I ^ ^ ^ «o CO CO o c^ t^ 1—1 Oi % 1— 1 1—1 l4 o iCi CO (M t^ a -^ r-^ (M o '<+' CO ^ o CO C^ CO CO CO 00 1:^ CO rH (M lO ;z; o iO r-t lO '^ o n Pk w o (M l-H , ' k; ' ' 1 1 1 1 1 , CZ2 § {2; o 1 ' 00 ' 1 1 p 6 ■ M ■ ■ s i" q 1 , , Hi Q ft 1 -5 Furniture, onian Banki Eeceivable, on Agency, ard Ledger Outward F cd Ledger ay CD o Pi ^* § 'S ^ ^ sa ^ 3 g Outw Petty Inwai 1^ c3 O O PQ 1-1 Ph t-3 O g q - N 1 O O O lo w ■^ to N VO 00 s W M N fO lO t>» ON M ^ VO ■i M M N letawamwff- .ji" t 1-1 64 BOOK-KEEPING. FORM OF JAMES FEMGUSON, Merchant, Bate. Shares Transferred to. No. of Shares. Particulars of Nos. Registry No. Journal Folio. Original Value. EGBERT FINLAY, Agent, Date. Shares Transferred to. No. of Shares. Particulars of Nos. Registry No. Journal Folio. Original Value. 1 WILLIA M FGREESTEB, Factor, Date. Shares Transferred to. No. of Shares. Particulars of Nos. Registry No. Journal Folio. Original Value. .-■ ir'c SHIPPING COMPANY S BOOKS. 65 SHARE LEDGER. Peterhead. Date. 1874 Mar. 2 Shares Transferred to. By Stock a/c No. of Shares. Particulars of Nos. 10 135/144 Registry No. 23 Journal Polio. Original Value. 100 Peterhead, Date. 1874 Mar. Shares Transferred to. By Stock a/c No. of Shares, 15 Particulars of Nos. 145/159 Registry No. 24 Journal Folio. Original Value. 150 Peterhead. Date. 1874 Mar. 2 Shares Transferred to. By Stock a/c No. of Shares. Particulars of Nos. 20 160/179 Registry No. 25 Journal Folio. Original Value. 200 SECTION YI. THE "COST BOOK" SYSTEM FOR MIKES, QUARRIES, &c., FULLY EXPLAI]rai). Thi author cannot conclude tMs part devoted to Double Entry, with- ont giving an explanation of a system wMcli, if combined witb a good set of books, bids fair to prove an invaluable boon to that part of the community which invests its capital in Mines and other concerns of that nature. The author is not aware who is the originator of the " Cost Book " system, but it must have emanated from one who had much practical knowledge, and was thoroughly experienced in the subject, as it is, without doubt, one of the cleverest systems of check introduced into modem Book-keeping. It is especially adapted to Mines, Quarries, Colleries, &c., in which there are several workings, galleries, or levels ; but at same time, there can be no doubt that it might also be easily applied to any business where " labour employed " forms a large element, and " raw materials " aie used in the manufacture of finished goods ; and it would be seen to much greater advantage in a concern where several staple manu- factures were carried on in separate departments, but under one management, involving a constant expenditure varying only in amount. Its practical advantages, to the Mining public especially, are so patent and numerous, that the author has no hesitation in advocating its use in all concerns of the above description ; feeling confident that, when once in operation, a trader could at all times ascertain, monthly, the exact " cost " of each article manufactured by him, as well as to check waste, bad management, or even fraud, with facility. From the peculiar construction of the Book, some of its pages re- quiring to be cut to a particular pattern, and from the limited size of this volume, the author is unable to give a full and complete working THE " COST BOOK " SYSTEM FOR MINES, ETC. 67 specimen ; but it may be described, generally, as a Tabular Statement shewing six months working on tlie face of each sheet. Each page, except the first one, is cut in such a manner that it is half an-inch shorter at the foot than the one immediately preceding it, thereby ex- posing the summation of that page. In this way, supposing a Colliery has eleven workings or galleries, and allowing one page to each work- ing, on turning up the twelfth page, the summations of the eleven preceding pages are exposed to view ; and they, along with the sum- mation of the twelfth or last page, which is always devoted to what is called '* Oncost," can then be summed into one grand total for the whole Colliery. The word " Oncost " is used to express all expenses not directly incurred by any one department or section of a business ; such as management, office expenses, rates, taxes, rents, wharfage, carriage, freights, &c., which are common to the ickole work.— /See specimen annexed, page 73. Again, down the left hand margin of the Jirst page, are written the different articles used, labour employed, or charges incurred and paid (formmg items of " Cost "), all arranged under special branches ; but each item being placed on a separate line, and the margins of the suc- ceeding pages being cut away, these branches, and their sub-divisions, are exposed to view, and serve for all the eleven pages without repe- tition, which not only economises labour to the Book-keeper, but insures uniformity and regularity. Specimens of the first and twelfth pages of a " Cost " Book, appli- cable to a Slate Quarry, are annexed to this section; and although they can only convey a superficial idea of the use and value of the system, still to the experienced Book-keeper, they cannot fail, when studiedalong with this explanation, to shew sufficient good points to recommend it. On reference to them, the reader will note that each Monthly Column is divided into four sections, viz. : — (1.) Folio of Subsidiary Book kept at the work or place of business, from whence the sum expended is taken. (2.) Amount expended. (3.) In such concerns as Mines, Quarries, Colheries, &c., where rock, earth, or other substances known under the name of "dead work" of no value, require to be removed in the ordi- nary working of the concern, this column shews in decimals of one penny sterling, the rate per ton which the amount expended (No. 2 above) bears to such dead work ; and, . (4.) This column shews also in decimals of one penny, the rate per BOOK-KBBPIMI} ton, wMch the amount expended (No. 2 above) bears to the article produced, wMch, in the specimen annexed, is Slate. These last two columns (Nm. 3 and 4), are calculated so minutely, that the decimal is subject to a variation of om hundredth part of a penni/f so that the slightest change in the decimal tells to a certainty whether the cost of removing dead work, commonly called "un- topping," or the cost of " production " is increasing or decreasing. Although in the specimen annexed, the decimal of every individual item is extended, in many cases it would suffice merely to extend the decimal of the summation of each branch, such as that applicable to Total for ** Quarry Labour," " Quarry Tools," " Tramways," " Wag- gons," &c,, m€trked with an asterisk (*) in qyecimen annexed (see page 72), which would, doubtless, save the Book-keeper a great deal of work, aad probably sufficiently suit the Tradei-^s requirements. On reference to the Specimen {page 72), the reader will see that the "cost" of "Blasting materials" used in January 1874, in the par- ticular gallery and quarry, No. P, represented by that page, is £31, Ss. 8d. ; which, being put against 5794 tons of " rock removed " (see top of column), gives a rate per ton of l.SOd., being "cost" of dead work, and the same sum being put against 1370 tons of " Slates produoecl," gives 5. 5 Id, per ton, or "cost" of the manufactured artickf so far as blasting materials aione are concerned. Perhaps the infonnation thus obtained, when taken by itself, will be of little, if any, use to the trader ; but when he begins to compare one month with another, say January with February, and February with March, it is then that the true value of the Cost Book asserts iteelf, and places in Ms hands a certain means of detecting mismanage- meni, extravagance, or fraud. Continuing the Statistics specially relating to the one item of " Blast- ing Materials " commenced above, for four or five months, we have— A noun t Bock Slates BxiMSBded for ilMtiiif Mfttariab. Bemoved, or Bate Per Ton. Produced, or Bate Per Ton. Dead Work. Output. £ 1. d. Tons. Tons. January 1874 31 ^ 8 §794 1-30 1370 5-51 February » 29 4 3 4520 1-55 1542 4-54 March # 34 5 3 4942 1-66 1530 5-37 April * 26 14 1 4256 1-50 1600 4-00 .May 27 2 1 3974 1-63 1575 4-13 June '" 22 18 4 4098 1-34 1723 3-19 THE ^' COST BOOK " SYSTEM FOR MINES, ETC. 69 Upon analysing these figures, it wUl be observed, that the " Dead work " has decreased, while the slates made are on the increase ; and that the rate per ton on the latter is decreasing in an inverse ratio to the " Output," thereby proving, beyond a doubt, that this particular quarry and gallery is doing well, so far as Blasting materials are con- cerned, either by economy, good management, or purchasing the materials required at a cheaper rate. On the other hand, had the Output been decreasing, and the rate of Blasting materials increasing, the Trader might then have entertained just suspicions of mismanagement, or waste, as the decimals of a penny are susceptible of the slightest variation in the sum expended. In this way a Department, GaUery, or . Special Article of manu- facture, may be scrutinized monthly, and on the first appearance of a change, to such an extent that the ordinary equilibrium of the decimal rate is seriously disturbed, the Trader has it in his power to request an expknation from his manager or foreman. For example, in the specimen annexed, the « Waggon " branch, which in January amounts to £2, 7s. Id., suddenly rises to £54, 4s. lOd. in February; but an explanation is offered, that in the beginning of February several waggons were precipitated over an embankment, which necessitated rather heavy repairs, hence the increase. Should a special department be seen at any time to be working month after month at a loss, the Cost Book affords the Trader an op- portunity of either altering the management, or expenses of manu- factui-e, and carefully noting the result, or perhaps entirely stopping that branch of manufacture, before he is half ruined, or finds out, when too late, that he has from the commencement been attributing the loss to some other branch, which, by the Cost Book, would have been clearly proved to have been actuaUy a source of profit. Where the Concern is managed by a Board of Directors, such as in a Limited Company, the Cost Book is invaluable, as each Director may obtain a perusal of it monthly at the Board Meetings, so that he cannot faU to be kept advised of all the statistics, however smaU, re- lating to expenditure. The author may as weU mention, that the Cost Book forms a valuable addition to a good set of Double Entry Books, though not of Itself necessary to insure a balance. It certainly forms an exceUent preparatory medium for " Journalizing " the monthly expenditure, and on reference to the annexed specimen, " Abstract of Cost Book " (P^e 74), it will be seen that the upper portion is merely a remme of TO BOOK-KEEPING. .1 I . the Cost Book itself, and when Journalized, each sum is carried to the Dibit of the several Quarries or Galleries, each of which has a separate and distinct Ledger Account. The under portion, which forms the Credit Side of the Journal Entry, represents the leading Ledger Accounts, influenced by Expen- diture. These accounts having in the first place been debited with the Stores purchased for cash, or credit, taxes, charges, and wages actually paid, per Pay Sheet, the Cross Entries, above described, taken from the Cost Book, transfer all these items of cost to the debit of the respective departments, in which, or for the behoof of which, they were incurred. Therefore, the final result of this system is, that where m most ordinary systems, expenses of every kind are debited direct to " Wages," " Charges," " Discount," and other ordinary accounts ; the Cost Book system debits the Department, Gallery, or Special Article of Manufacture, with all wages, stores, and charges specially incurred in the manufacture of the same, so that each department, or section, stands entirely on its own basis ; and any Gain or Loss thereon can be immediately detected, and at the end of any stated period, a single glance at the Ledger Balances tells at once, whether a department is gaining or losing, or doing better or worse than its neighbour ; and this, without interfering in the slightest degree with the General Balance of the whole books of the Company. In order to understand the Specimens annexed, it may be explained, that in a working copy of the Cost Book the summations marked with an asterisk (♦) are entered in red ink, so as to interfere as little as possible with the general summation of the columns. Each Sheet, consisting of two pages, is ruled with seven monthly columns, which suffice for half a-year's work, and provide a "Total" column, by which the several departments may be compared. Specimen of pages 1 and 12 only are here given, but pages 2 to 11 inclusive are exact counterparts of page 1, each being devoted to a par- ticular gallery, the same marginal branches, however, applying to all. Although the Cost Book annexed is only adapted to eleven depart- ments, the system may easily be extended to any number, so as to suit most ordinary Businesses. SPECIMEN PAGES OP A WORKING "COST" BOOK. ( i: li !• QUARmT, Nd. I. OAI.1.BBY, flo.a. Book MmoTed, - Sliiiw 'PraiiiMd, ¥idd of Kock, - aist Jaamry 1874. fODI. 5794 1370 Q. One in 4'2 Amount per Ton of 8 o f "^ OQ S 28th February 1874. Tons. 4420 1542 0. One in 2*9 Amount per Ton of •8 M S» II S CO g I ; Boolmien, •^ KnliWemen, •^ } anltton k 'Dresaen a apt TiphMclmen, Tool Oaifrien, Aigirae DriTer, C*iT8i / foto?, Mto 73 '25 73 Amount Bxpended. £504 22 14 5 11 S58 Ici 14 10 3 3 9 "s Dec, of Id. 20*88 ■61 •23 •46 23-11 Dec. of Id. 88-31 3'98 2-67 •97 1*92 97-75 Folto. Amount Expended. £518 22 13 6 11 572 15 17 13 8 11 3 7 Dec. of Id. 27-51 1-20 •73 •35 •58 30-37 Dec. of Id. 80-64 3-54 2-16 l-OS 1-71 89-08 o o Eh Bliiating Matemls, Iron and Steel, - Laljonr, Total, 74 80 31 1 3 36 9 8 12 10 1^30 •06 15 1*51 551 •24 ■68 6-38 29 1 5 35 4 13 1 19 2 11 3 155 •09 •26 1-90 4*54 ■26 •79 5-59 i Iron unil Steel, • • j Sleopew, !« t Otlier Timber, pr I '0«niniil FnrnisMngs, - :iAlKiiir, Toial, '• • • 94 10 'i m » • • • •41 i*75 75 2 •01 '*»* ■ ■ M « • « *■"* • •'* ... .... « H* • ... « a ■< 42 « « * 2 w 10 •08 •35 ... 15 10 10 •04 12 •49 210 ■■WW 17 •05 •02 •12 •14 I Iron and Steel, - 'Ttmber, W Ounerai FnrnisMngs, • liilMmr, 28 60 3 18 •05 • *« •01 •04 10 •22 •03 •16 79 •411 16 9 8 •82 10 2 6 •54 5 3 8 •27 23 9 ... 1-24 54 4 10 2-87 241 1-57 •81 3-64 8-43 m General Furnishings, > Iron and Steel, - Timber {not Sleepers), Sleepers, Ooiili, ... Oils, . - - . MecbanicS' k Labourers, Bofidty, Hoiw Brorendor, Sflpaim^ by Ttedesmen, Total, 72 .. •• 1 6 si 83 ■ « « • • • 15 1 WW* io • • • "2 96 100 82 137 2 • • » io 4 "2 156 5 10 •00 •62 •06 5-67 •10 •01 6*46 •01 2-62 •26 24-00 •43 •03 27-35 76 85 73 5 17 • • * 3 154 2 183 10 15 6 4 10 8 •00 •27 '•93 •04 17 818 •13 9*72 •00 •79 272 •12 •52 24-00 ■39 28-54 Hi' J9 Ctaneral Oncost, Incline Tramway, Bttckigb Rock Drill, • 5» (Tunnel), 5* (Sikk»), - - - 5* Sink!) . 5* (Cnt and Tunnel), - 5* (Quarry), 5* ' (do.), 5» (' ' 5* 1» ;do.l, (do.), (do.),, Obaf D Total, Pafc. 12 11 10 9 8 7 6 5 4 3 2 1 765 £3923 6 17 6 31*67 25-75 133 99 149-25 846 £4392 19 II 44-91 27-00 131-78 147 GENERAL EXPENSE S or ONCOST. Note — /« a regi^lar working copy of a Cost Book, this page {12), aswellasall the nitennedjate pages, wmdd not be placed opposite to page i, as shewn above, but they tvotdd co-oer and conceal page i, with the exceptions of the bummattons at the foot and in the case of this page, the portion within this dotted hue xvouldbecut away, thereby exposing the words *' Gatei-al Oncost" on page I, which would be in line with, and opposite to the Summations of this page. K 1 Page 12. 31st January 1374. 28th February 1874. Tons. Q. Amount — per Ton of Tons, c ■ Q. Amount 1 Rock RemoTed, _ ... 9000 ... - per Ton of !l II 1 ^ Slates Proditced, & Yield of Rock, - ... 4500 .. ... Mt g 2 Slates Produced Bock Removed Slates Produced. One in 2 One in General Furnishings, - li [ • 1 Iron and Steel, - 1 Timber (not Sleepens), • «• H Oils, Grease, &c., ■ Sleepers, 1 Blasting Materials, \ H Coals, - - . . 63 3 10 ■09 •18 H Lime, 19 3 ... 9 -08 -16 1 1 Surface DamageB, Rates and Taxes, 66 90 20 ... 14 6 •53 8 "38 1-06 •76 1 1 Stationery, &c., - 81 15 16 2 -42 •84 1 1 1 ji H Charges, 40 54 ...] 10 1-44 2-88 Ij H Office Expenses, - 33 3 ... •08 16 1 Management, 93 90 3 1 2-40 4-81 ' ' (! 1 Loading and Removing 1 Slates from Quarries I H to Incline, 30 40 1. 1-06 2-12 ,1 H Transit of Slates to 1 Siding, 65 20 ... 8 -53 1-07 H Loading do. at do.. 13 30 2 6 -80 1-61 1 Mechanics and Labour. 1 1 era Jobbing, - 18 30 ... 4 -80 1-60 1 ■1 Wharfage, 12 329 ... . 1 . 8-77 17-54 •1 i \ i ■i 1 i « P.12 . £653 2... 17 -SS 34 -79 £644 6 9 74 THE COST BOOK SYSTEM FOR MIXES, ETC. I ! I Page 13. ABSTRACT OF COST BOOK. rolls. DEBTORS 31 January, 1874. 28 Febraary, 1874. 1 No P Quarry (see Sperhnmy page 72), £765 6 6 £846 19 6 2 51 do. ----- 9 6 8 14! 3 2 3 *. 5a do. 1468 2 1 1300: . 1 4 /, 5^ do. ----- 34 3 230j . 6 5 ,, 5** do. W ff H » ' ,1 H 6 ., * do. (Cut and Tunnel), H "* " " i » H 7 » do. (Sinking Shaft, Ho. 1), - 559 9 11 32211 9 8 , . do. (Sinking Shaft, No. 2), - 256| 4 n 60119 u 9 . 53 do. (Tunnel) 40 II 9 150 . II 10 Burleigh Rock Drill, 101 ti tf 28119 7 11 Incline Tramway, - - - - 37 9 1 // // II 12 General Oncost (see Specimenf p.' 73), - Total Cost, 653 1 2 fi 644 6 9 £392317 ! 2 £4392 w 4 CREDITORS. - Stores : — Timber, Iron, Steel, Oil, and General Furnishings, as per Warehouse Book, £421 >i 1/ £562 4 1 Sleepers, - - . . 45 II 4 3 II // Blasting Materials, - 157 6 2 231 4 8 Coals, - - - ., - 57 10 1 40 » # Tiime, . - - - - Tot(fI Stores, m Charges : — Stationery, Postages, &c., 3 » 9 4 * u £683 17 £836 8 9 £15 16 2 £10 t/ // Sundry Charges, - Total CImrges, Wharfage, - 57 n 10 13 6 10 £72 17 u £23 6 10 £329 tl £300 1/ II Bates and Taxes, - - - - - 14 6 8 // u II Surface Damage, ----- 20 ti H » tl II Royalty, - - - - 429 10 tl 597 II II Wages (Fet), 2374 6 2 2 2635 4 9 4 Sum equal to Total Cost, £3923 17 £4392 II SECTION Vll. IMPROVED OR VOWEL INDEX FOR LEDGERS. The annoyance of having to wade through a long string of names in the Index commonly in use, when referring to a Ledger Account, has given birth to many improvements of late in Houses where an extensive business is carried on in Town and Country. The Index which ap- pears to the author to be the simplest and most convenient was in- cluded in his First Edition, by the kind permission of the North British Colour Company of Leith, who favoured him with the form. Its originator is not known, but the principle is very ingenious— the usual Alphabetical Index being divided into six columns or parts, each division being headed by one of the vowels, and the name inserted according to the voivel which first appears in it. Thus—" Thoinas Brown " opens an account in the " Town Ledger "—the Book-keeper turns up the letter (B), and in the (0) column enters the name, that vowel being in fact the only one in the name. " Jaines Cameron;' of course, would be in the vowel (A) column of the letter (C), so thit all the Book-keeper has to bear in mind is, the initial of the name, and the vowel which first appears in it. So much for the Towii Ledger. The Country Ledger is classitied on the same principle, but instead of the Alphabetical Index referring to names of persons, it denotes the names of places. For instance, goods are sent to " John Baker of Aherdeen." The Book-keeper first turns up (A) for Aberdeen, and enters Bal-er's name in the vow^el (A) column, as he would enter Henderson in the (J^;) column, and Monro amongst the (O's). This may, at the first glance, appear rather intricate, but it is extra- ordinary witli what fiicility and rapidity any name can be picked out, after a very short study and a Httle practice. The addresses should also be inserted, but space will not admit of it here. 76 BOOK-KEEFING. f !■ liF ' VOWEL INDEX FOR LEDGERS. 77 INDEX TO (A) (E) (I) Allan, Alexander Adamson, D. M. Allardyce, John 1 4 6 Anderson, James Andrews, William Alexander, Thomas Affleck, WiUiam 5 11 14 7 Ainslie, Robert Alison, Archibald Aitken, George Aird, Mrs • 2 16 31 34 Barron, T. & C. Ballantyne & Tod Baines, John Baillie, William Baird, Thomas Barstow, Jolm Barlow, Charles 15 25 35 39 53 51 65 Beale & Co. Brewster, Andrew Begbie, C. & W. Beith, Alexander Beatson, Dr Bell, WiUiam 13 24 33 5'4 64 67 Bigg, Charles Bishop, Henry Binnie & Co. Bisset, Mrs 17 32 55 63 Cameron & Co. Campbell, Jn. & W. Craven, Oliver Carew, Charles Calder, John Chalmers, Edward Catt-anach & Co. Canongate Faroe. B**- 22 2G 40 41 44 52 58 68 Chester, Smith & Co. Crewe, David Clements, William Clephane, S. mil 27 38 51 92 Ciceri & Co. Chirnside, Andrew City Bank Christie, Eobt. 23 42 84 93 TOWN LEDGER. (0) Alston, Charles AUshorn, John 8 18 (U) Ancram, Robert Auchie, Charles Anld, John 3 9 87 (Y) Asylum, Blind 10 Aytoun, Simon 12 Boag, C. & M. Borthwick, Thomas Brown, David Broughton, Abraham Brodie, Simon Boyle, John Bogle & Co. 21 29 36 49 62 66 70 Bums, James Burness, Thomas Bruce & Hill Burton, Dr Butters, David 19 37 47 69 71 Connel, Robert Cowan & Co. Cobden, James Coutes & Co. Cochrane & Co. Cockburn, William Connolly, Mrs 28 43 45 48 50 56 60 Cunningham & Co. Curie & Addis Cutlibertson, Edward Cumniing, A. & E. 30 46 57 59 Byron, Edward 20 Byers, Thomas 90 Byrne, Wm. 91 B f I : 78 BOOK-KEEPING. (A) ABERDEEN. Baker, Jolin Maxton, Eobert Napier, William Saunderson, James Hay, John Hamilton, John M'Tavish, Eoderick 3 5 6 8 13 19 20 (E) Henderson, Alex. Emerson, Richard M'Keil, Alexander Henry, John Sellar, Henry Tenby, 0. H. BEjujf'ORD • BailHe, John Saunders, Samuel Tait, William WaiTOnder, John 12 21 37 48 Merricks, Charles Neville, John Bentley, James Bell, William Stevenson, Charles WAluKJjXDXiJb • Wainwright & Co. Aitken, J. & Co. Barron & Kerr Yardley, Stephen 11 20 41 52 INDEX TO Levison, Andrew Melville, W. 1 4 7 14 26 38 (I) Inglis, WiUiam Middleton, James Nisbet, Charles M'Nish, Donald Dickson, Alexander 22 36 47 50 Singleton, John Wingate, Charles Gibb, C. & F. 43 93 Winchester, Mrs Nivon & Co. Livingstone & Co. 2 15 16 39 55 24 27 34 33 42 96 VOWEL INDEX FOR LEDGERS. COUNTRY LEDGER, (0) Monro, David I Bonar, James I M'Cowan, Charles Donaldson, William Ormskirk & Co. Morris, Anthony Moon, Thomas Scoresby, William Brown, AValter Dowell & Son Dobson, J. Morson, Alex. 10 17 25 49 (U) Hutton, W. Hume, David 28 35 46 51 53 Upton, James Muir, Andrew Surenne, Thomas Murray & Co. 72 80 81 Sutton, Abraham 55 56 (Y) 30 31 45 54 Bryden, H. 40 79 Wyllie, Andrew 9 Mylne, James 18 Fyfe, Andrew 23 B 58 { Byles, C. & Co. 32 I |« ! h PAR T— II. THE PRINCIPLE OF SINGLE ENTRY. The system of Book-keeping designated by the term of "Single Entry," is more generally in use than that by " Double Entry." It is better adapted to meet the requirements of Retail Trade, and sup- posed to be less complex in its nature. As already stated, Double Entry is so called from every Debit Entry requiring a credit posting, and vice versa, whereas in Single Entry only the debts due to and by the trader can be ascertained from the Ledger. A common error prevails in the supposition, that retailers, from the number and minuteness of their sales, cannot keep their accounts with the same regularity as wholesale dealers. Now this is quite absurd, seeing that the cash transactions are of the same description under both circumstances, that is, they consist simply of receipts and pay- ments ; so that the impediment, if any, wiU be found in the quantities and varieties of stock in trade. There can be no question that Double ■ Entry is better suited than Single Entnj to give a merchant an idea of his position at any time, but in retail trade, a smaU grocer's for instance, the transactions are so intermixed, that the former system, however excellent, is almost impracticable, and a constant stock-taking would paralyse the business. In Single Entry the Ledger contains nothing but personal accounts, and is so far imperfect, that a trader can never know the result of his dealings in any particular article, nor the pro- fit or loss on any special department of his business. There is also a laxity in the system, by which private expenditure is unchecked. When a man wishes to ascertain the exact position of his affairs, — his Ledger by Single Entry tells him only to whom he is indebted, and who are his debtors,— he then has to take stock of his goods and cash in hand, — and the difference between his assets and liabilities is his CapiTxVL, or as may be the case, his uncovered debt. It does not teU I 82 BOOK-KEEPIKG. ' i I III ^' I I him what he has spent, nor what his business has cost him in conduct- ing it, hut hringa out by a process, simple enough, the actual fact of either a surplus or a deficiency. It cannot therefore, as a system, be compared with that of Double Entry, which sliould not conceal any tiling, but exhibit the whole work- ing of a business, however large ; and yet, as already stated, the system of Single Entry may be the best adapted to a small retail business. The following Scheme of Books is not entitled to any credit for aoTelty, as Book-keeping by Single Entry admits of no change nor improvement, unless it is allowed to merge into what is called a mixed or modified method, which again approaches so closely to Double Entry proi)er, that Single Entry only loses its simplicity and integrity and can no longer be so designated. The Books necessary are a Day Book and Ledger, and a Cash Book is also used to register the daily drawings and payments, by which a check is kept on the cash in till or hand. A short description of these books may be useful. 1. Dat Book.— This is ruled with one money column, and a nar- rower column on the left side for insertion of Ledger folios. As its name implies, it is entered up daily, and in this manner every sale or purchase for credit must be inserted with such ample par- ticulare as will enable the tradesman to make out his customers' accounts, or check those of the dealers when rendered to him. Any sums received from customers (not Cash Sales) and payments made to parties supplying goods, as appear in the Cash Book, must also be entered in this book. There is no necessity for any addition of the column. At the the close of the day, when fully entered up, the sums are posted to the personal accounts in the Ledger, and the purposes of the Day Book are served. (See Stijle mmexed,) 2. Ledger.— This book may be ruled with a money column on each page, or with two contiguous money columns, the former is pre- ferable. (See Styh' annexed.) Personal accounts are opened, and into these are posted the entries in the Day Book. The sales into the left hand columns, the purchases into the right hand columns. When a customer pays his account, the sum is entered in the right column, — ^when a trader is paid for goods, the entry is in the left column. THE PRINCIPLE OF SINGLE ENTRY. 83 At time of balancing, the differences on these personal accounts are brought down into a Balance Sheet (See Style annexed), and the ob- ject of the Ledger is obtained. 3. Cash Book. — As already stated, the sole use of this Book, in Single Entry, is to check the cash on hand. It will be observed on analysing the following scheme with the Cash Book, that only items affecting personal accounts are entered in the Day Book, and transferred from thence to the Ledger. The remainder are held to be charges against the business and are disregarded, so far as not being posted to any account. Of course the balance on this book, if any, must appear in the Balance Sheet. balajsce sheet. This is merely a statement made out at certain periods in order that the tradesman may know how he stands with the world. The balances are brought down out of the Ledger. The sums due to him, in the left hand column, to which he adds his stock-in-trade, after valuing what is on hand, — the value of his furniture, and the cash balance appearing on his Cash Book. The Ledger balances due by him, are entered in the right hand column, and to this he adds the money or capital he had when commencing business, — the difference is Profit or Loss. r PEOFIT AKD LOSS. Perhaps it is superfluous to offer an explanation as to how Profit or Loss are ascertained, but it may be of use to learners to know the principle involved. If the debts due by the Trader, including his Capital, as entered on the right hand side of the Balance-sheet, exceed in amount the debts due to him, his stock in trade, furniture, and cash, as appear on the left hand side, it is plain that he has intrenched upon his capital to the extent of the difference ; whereas, if the amount of the left hand column exceeds that of the right, it is evident that a profit has been realised equivalent to the difference exhibited. I» \i IF"" 1 l-H OS pa O o PQ m o o P5 El] O CO p < M o o n tu BOOK-KEEPING. * fe % ». »o ^ 0s o O^ % % % k % % % "^ ^ « CO 0^*000 .'^{MJOi-iCl CO O * 6 •4^ P 5 o CO p^ e8 Pi I O 5 ^^ <-> 5 ps ^ e8 ^ il q" X O CO O p^ * % » * o Q © •c I ft ■ "» I 0) . S da fl R d3 g S)_ o CO eo ^ io lO Ol i*-t f— I CO «+* C3 I -^ ° m d nS *d "^ -3 g fl « Ci |JC« j ii C J f"^ 3 CO 03 Ow oo o CO r*s * cd .0'« 0^ ^ O o3 . © '^ CO O *Eg OQ ••^ T3 cj 'S *W r.-t y» ni c^ _5 QQ r^ • «£& V C3 OD Q © fi a HO * % ft -g ^ S 2 •£7 CO fio ■** % t i^ 00 ^ O) r-i G^ CI CO 00 P-4 "^ C3*^**»**» O) o> 00 I— t ■1^ Oi II OS 00 I— I -«4< ^ BOOKS BY SINGLE ENTRY. 8d DAY BOOK.— Edinburgh^ January 1874. Colvin ^ Co.y Crs. For 200 lbs. Eice @ 2d., bought, Messrs Beveridge, Crs. For 100 lbs. Cheese, bought @ 7d., Thos. Carr, Dr. For 6 J lbs. Cheese @ lOd., sold, Mrs Strachany Dr. For 4 lbs. Crushed Sugar @ 6d., sold, Beveridge ^ Co. Crs. For 2, 3, 16 lbs. of Sugar @ 5d. per lb., bought, 8 Charles Beechcroft, Cr. For 600 lbs. Tea @ 4s., bought, „ 1 box Maccaroni, do. James StapleSf Cr. For 220 lbs. of Coffee @ Is. 8d., bought, Thomas Carr, Dr. For 80 lbs. Tea @ 5s., sold. -lo- ci^. Beechcrofty Dr. Cash paid him. Thos. Carry Dr. For 6 lbs. Sugar @ 7d., sold ■14- Thos. Carry Cr. Cash from him, 13 18 d. 4 15 120 18 20 10 8 100 6 20 8 11 oil oil BOOK-KEEPING. BOOKS BY BINQLE ENTRY. 87 i: BAY BO OK.- January 1874. -16- 3Irs Strachan, For 6 lbs. Tea @ 5s.^ sold, R, Hope, Dr. For 46 lbs. Tea @ 6s., sold, „ 1 box Maccawni, „ „ 100 lbs. Rice @ 3d., sold, -18- Tlios. Carr, Dr. For 15 lbs. Tea @ 5s. 6d., sold, -21- Mackenzie ^ Datmon, Crs. For 50 lbs. Soap @ 5d., bought, - -22- Mrs Rattray, Dr. For 20 lbs. Soap @ 6-|d., sold, „ 50 lbs. Sugar @ 7d., „ Capt. Smithers, Dr. For 14 lbs. Soap @ 6^d., sold, -23- James Mortimer, Dr. For 100 lbs. Tea @ 5s., sold, „ 125 lbs. Sugar @ 7d., „ „ 6 lbs. Soap @ e^d., „ -29- Mackenzie Sf Dawson, Drs. For Cash paid them. £13 10 . It kZ H 1 6 „ £. 10 10 £27 10 „ 3 12 11 w 3 3 1 15 s. 10 10 31 6 2 10 LEDGER. Drs. COLVIN Sf CO. Crs. 1874 Jan. 5 By2001bs. Rice,at2d. £ 1 13 4 Dr. ROBERT HOPE. Cr. 1874 Jan. 16 To Sundries, £15 7 II Dr. CHARLES BEECHCROFT. Cr. 1874 Jan. H 10 31 To Cash, . £ Balance, - 100 20 7 II 10 1874 Jan. II 8 II By 600 lbs. Tea, at 4/, £ II Maccaroni, - £ // Balance, - £ 120 II 120 It 7 7 II 10 10 120 7 10 20 710 Dr. JOHN STAPLES. Cr. • 1874 Jan. 8 By 220 lbs. Coffee, at 1/8 - £ 18 6 8 Drs. M'KENZIE tj- DAWSON. Crs. 1874 Jan. 29 To Cash (dis. lOd.), £ 1 II 10 1874 Jan. 21 By 501bs.Soap, at 5d. £ 1 // 10 Dr. Mrs STRACHAN. Cr. 1874 Jan. 6 16 To 4 lbs. Sugar, at 6d. II 6 lbs. Tea, at 6/ 1 £ 1 2 10 12 H M Ill \p ( 88 BOOK-KEEPING. , 1* 1 I J ^f jjj g^ , Dr. THOMAS CARE. Jan. ir 6 8 10 18 31 To6f lbs. cheese, lOd. £ „ 80 lbs. tea @ 5/ // 6 lbs. sugar at 7d. - a 15 lbs. tea at 5/6 - To Balance, 1874 n 5 5 Jan. 14 20 9f # It 31 ,r 3 6 4 2 6 24 11 5 4 2 6 By Cash, ,/ Balance, Dr. Mrs HA TTTIA Y IfJ I a JX£\. A J. JLl/x J t X O i % Jan. 99 To Sundries, Dr, CAPTAIN SMITHER8. 1874 Jan. 99 To 14 lbs. soap at 6kl. £ Dr. JAMES MORTIMER, 1874 Jan. 23 To Sundries, 9 D'i'fi. BEVERIDGE cj- CO. 1874 tl an. By 100 cheese. Cr. 20 4 24 11 11 6 Cr. Or. Cr. Crs. 18 15 13 O o H ill BOOKS BY SINGLE ENTRY. 89 O PQ 00 N W o OQ qi lO lO CO 00 1— I 8 »? Ha CO 13 . CI «rt o 8 S t ^ CO ?J d 'tS i 8 03 ss U o a «;j o c+J eg O CO O H § Ft o P-» ■B G^l o> -<;^ II CO CO CM CO CO Kept by Clerks. 5. DISBURSEMENT BOOK, ' ^ "^ 6. POSTAGE BOOK, Before proceeding, however, to exhibit the working of the whole system, a particular description of the above books is essential, and as the principal books are entirely dependant upon those subsidiary to them, it is as well to commence with the latter. I. SUBSIDIARY BOOKS. ATTENDANCE OR TIME BOOK. This, a volume not too large, should be kept by the principal, or in the case of a firm, by each partner employed, and is a daily register of their various occupations, concisely stated for the guidance of the book- keeper ; attention being given to four points, viz., date, name of client, nature of business done, and the time occupied. PROCESS BOOK. Where a Parliament House clerk is kept, this book falls expressly under his charge, and the entries are made similarly to those in the Attendance Book. Where there is no clerk for this particular depart- ment, and the duties devolve on the principal, of course the x\ttendance Book embraces all entries for Court business. As the book-keeper is not necessarily expected to be conversant with Process Business, it is 96 BOOK'KISEFI cI g* of oomeqiieiice that all entries should he sufficiently explicit to enable him lo post his Day Book succinctly, in order that every step of a process may he clearly defined and recorded. CLEEKS' WEITINGS BOOK. This hook speaks for itself, being simply a register of all copyings done in the office, under their proper dates, with the number and de- seription of gheets, and initiah of eierk From this, the writing-clerks' accounts are collected, and moreover, the book-keeper in posting the copyings, is enablod to make a correct charge for drawing deeds and papers, the usual system of entering in the books from drafts bemg very objectionable. THE LETTER. DISBUBSEMBNT, HID POSTAGE BOOKS, Need no description, as they are in common use in every business, aad invariably of the same form. THE CROSS ENTRY BOOK, Is merely used for recording cross-entries in the Ledger, preparatory to a balance or adjustment of accounts. Having thus sketchwi the nature of the Subsidiary or Elementary Begisters required in an Agent's office, the principal books may now be' described, II PfflNCIPAL BOOKS. CASH BOOK. This does not differ in any essential point from Cash Books in gineral use. On the left hand page is entered aU the money received, and on the right hand pc^e the payments made ; great care, however, being taken, that the ledger headings of accounts are properly attended to, in oilier that the posting may be facihtated. To free the Cash Book from a midtiphcity of small outlays in con- nection with Court fees, &c,, advances should be made from time to time to the Parliament House clerk, as. also to the clerk keeping the postage book, for which they are responsible and must account. The author would recommend, where O'uly one bank account is kept, (•irrespective of trust deposits,) that the following simple plan should be. adopted. To ^have an outer column on both sides of the Cash Book, in which all sums paid into or drawn out of iku bank, should be again entered. (See stifle.) solicitors' books. 97 By this method, an admirable check is put upon the Bank Book, ena- bling the cashier to see the daily state of the bank account ; and as the opening of such an account in the ledger is unnecessary, the labour of the book-keeper is rather lessened than increased by its adoption. The Cash Book, if not under the charge of the principal or a partner, is, of course, kept by the head book-keeper, and should be balanced daily ; the monthly balance, of course, being struck on the last day, and the book ruled off. The urgent necessity for constantly balancing and correctly keeping the Cash cannot be sufficiently impressed on book-keepers in a set of books where much outlay, in the shape of fees to counsel, &c., is constantly occurring, which outlay must be duly posted with the Day Book entries; a single day's arrear might occasion infinite trouble. (For Farm of Cash Book, See style.) DAY BOOK OR BUSINESS REGISTER. There is no book of more vital importance, nor upon which greater care should be bestowed than this. According to the system now sub- mitted, it is a complete register of every transaction of the office, whether for attendances, correspondence, court or factory business, or conveyanc- ing. It shows the da}'h/, mrmfhhj, and annual gross j^rofits, (supposing the clients are of good credit,) and by the insertion of a column to con- tain the expenses of the business, the fixad net profits can be ascertained at a glance. The peculiar feature of this joiu^al, is the scrupulous exclusion of Cash Outlay as charguhle ayauist clients. All sums paid to, or on account of clients, being posted to their debit at once from the Cash Book. The entries in this book, therefore, are purely remunerative charges, emanating out of the business, and as such are clearly gross profits. This, again, being subjected to a deduction of the cash pay- ments or "charges" incidental to the office, for rent, taxes, clerks, licenses, stationery^ &c., gives the actual net profit of the business. The Day Book, as inferred from its name, is made up day by day fronitbe "Attendance," "Clerks' Writing," "Process," and "Letter Books." It is ruled with three columns ; the inner one for charges, posted daily from the Cash Book, the centre column, for the daily entries received from the above mentioned books, — the outer column being merely the recipient of the daily summations of its neighbour column, and thereby the book becomes self-checking, as the two outer colmnns, if correct, must agree in their summations. Thus the principals, by referring to this invaluable book, can trace N I JS_- 08 BOOK-KEEPING. 11 i the progress of their business, and check, if necessary, the expenditure by which it is affected. (See style.) LE:D'G£RS. The plan of keeping two Ledgers for Cash and Business is now very generally adopted where the business is extensive, and there are intro- missions witli funds of heavy amount. But when this distinction is made, the postings to the Casli Ledger should never include outlay actually necessary for the conducting a case or litigation, such as fees to counsel, witnesses, court dues, &c. These, although undoubtedly Cash, should be posted in their proper places in the Business Ledger, so that the book-keeper, when directed to make out a bill of costs, or business account, hiis merely to iranseribe it from the Ledger, distin- guishing, if desired, in separate columns, the outlay from the business charges. The Cash Ledger should be ruled so as to admit of calculations of interest being extended, either instanter, or at the leisure of the book- keeper. This suggestion may be beneficial to many offices, where there is no stated time for squaring and rendering accounts, and where un- expected settlements are often required. It is well known in many instances, that rather than take the trouble or devote the time to a calculation, professional men have been ready to forego their legitimate claims for interest on advances, even of long standing. The Business Ledger does not differ from General Ledgers in ordinary ■use. BALANCE BOOK. Tliis book has been introduced by the author in very many esta- blishments where he recommended the adoption of monthly balances, from the immense number of cash accounts that appeared in the Led- ger in connection with factories, processes, &c. The result is all that could be desired, and meets with entire approval. It is a book divided into two parts, and ruled with twelve money columns. In the iirst division, are entered the debtor Ledger accounts, in the second, the creditor accounts, all in detail, with folio references. For each calendar month there is a column, and the book-keeper, at time of balancing, lias only to enter the relative amounts duo to or by the several accounts as at the end of the month under revision. Thus the agent at the end of eacli month, instead of having to wade through long accounts in his Ledgers, refers to the balance-book, sees either the increase or reduction of the several accounts since the bal- SOLICITORS BOOKS. 99 ance of the preceding month, and makes such inquiries and investiga- tions as may thereby be suggested. The monthly balancing of the whole set of books is not only done witli facility by this method, but the book-keeper is enabled the more readily to detect any error tliat may have crept into his books. At the very worst, ho has only the work of thirty days to check ; whereas, if the balancing were delayed for twelve or even six months, the proba- bility is, that any discrepancy might never, or at aU events with great difficulty, be detected. The foUoAving style of Books, say of Messrs Home & Cathcart, Solicitors, illustrates the system recommended and described as above. They were framed in 1861, and included in the first edition. Since then, the professional charges have been altered, and in many instances increased, but the author has not made any alteration, as it would have entailed the labour of remodelling the whole set of Books, without any special advantage. Ih r ly ni BOOK-KEEPING. 1 f SOLICITORS' BOOKS. 101 Br. CASH BOOK. FEBRUARY 1874 Cr. 1874 Jan. 31 To TJalaiice at this li'ifp 6 3 Bank Cr. £ s. d. 1874 1 o £ s. (I Bank Dr. 5 25 3 8 Feb. 4 // Brit. Linen Co., Clie({U(% X(j. 14, - 25 Jan. 31 By BaF^ in the Brit. Linen Co. at this date, tt 349 . 10 ff 5 // Do. Do. 15, - 30 tr 30 ft l*'eb. 5 // Charges, - W. Taylor, (JJerks' Sal- i 6 . Melville Tt. - Received from Factor, on acct. of Cand*- Rents, per List, - - _ 648 10 // H * Bo. - - - ary to 1st, Mr Home's Expenses in London, 15 . 30 . ) 1/ 7 * Bortliwick, & J. Cash, 20 tf tt tt Postage acct. P** W. Taylor to acct. - 1 . II m # » Adv. Clerks, G. Young, — Hamilton, // 7 6 6 // Cliarges, - Mr Home's Expenses to 1 ff 8 Watt's Hospit. - Cash, - - - - 14 9 Glasgow, 1 1 It 12 16 * Nat. Bank, // Primrose's Tt. - Hunter, Cheque, No. 35, Ciiahfrom Scott & Smith, 80 tt tt Do. - // City Bank Elgin, for stationery, - Melville, Lodged, 3 277 17 5 6 being price of House II II Brit. Linen Co. - Lodged, - . _ 371 4 371 4! 6 in Canongate, sold on tt 7 Do. - - - Do. - - - - 20 // // 20 . " 2nd inst. - 345 tt II Gordon's Tt. B/a* Fee to G. Young, to 1 » 27 ./ Bringloe's Tt. - Cash from Geo. Munro, In*- on £1000, Bond, to date, - - 12 10 11 II Charges, - prepare Defences in re Hamilton & Clerk, Servants' wages. Office, 3 1 10 2 6 6 1 ti f> « Adv. Clerks, G. Young, — Roy, // 7 6 12 Hunter's Tt. Div. (1st,) @ 10/6 f £, M 2H /' Brit. Linen Co., Cheque, No. 16, - 55 // ff 55 to J. & C. Armitage, 30 9 10 m w ft Balance in Bank carried down. /f n ff 630 6 4 II tt Do. - // Do. - - - * Do. - Do. to Cox & Co. Do. to C. Beyfus, Do. to S. Sorley, 9 20 16 14 18 7 4 1 II 14 16 tt Disbursements, - // Hunter's Tt. Advanced P. House Clk. Div. (1st,) @ 10/6 ^£, 2 tf i[ to H. Tennant, 1 3 11 11 // // Com* Bank, (Primrose), Lodged, 342 3 6 f // // Primrose Tt. Scott & Smith's Acct., 2 16 6 1 II 24 // Charges, - Acct. for Coals, - 1 10 H 27 // City Bank, Bringloe, Lodged, 35 8 9 tt J. M. Roy, B/a., Fee to G. Young, for * II 28 // J. Homo, P/a.t - A. Cathcart, P/a. Opinion in re Miller & Clerk, - Cash, - - . - Do., - - - . 2 5 15 9 6 • II II Charges, - F^' A. Mat^- Writings, 4 9 6 1222 13 5 740 5 4 II Balance of Cash, In hand, 9 7 6 tt // on hiind. am^m m^mm i 6 ■■■H ■ ^ — 122213 5 740 5 4 To Balance of Cash 9 7 (_ 1 By BaP" in the Brit. Linen Co. at this date, II * 630 5 4 !— II 1' 1 • Business Account. f Private Account. 1 li 102 BOOK-KEEl'lXc;. SOLICITORS' BOOKS. 103 I ■ I ■' DAT BOO K -Febraary 1874. Aniouiits at 31st Jan. £ Clurgai. Daily Business. Totals. 15 2 6 107 8 2 107 8 2 FrrR 1 J. M. lioy, - T IV15. X, Meeting ami Attendance, witli you, on I^lr Jones, Agent for J. Millar, as to offer of Composition made by him, and there- after writinj^^ accepting same under conditions. tt w 6 8 Isaac Jauiiesoii, - Attendance with you, as to building marcli dykes at ^ruiryburn, It /I 6 8 Da - Drawing Advertisement to contractors, 1 sheet, and copy, ft n 7 Do. - Agency, inserting same in N. I). Advertiser, n 3 4 1 3 8 9 tf a* (/ainpbell Trust, - (Leases), Writing, J. Monro & Son, Mains Farm, to return us the draft lease, sent them on 2nd ult., tt It 3 4 Do. - (M' i 8 c e 1 3,) Attendance with, Chas. Weir, as to change in rotation of cropping on Bonnyrigs, 6 8 Do. - Do. Writing Factor at Oban on the subject. It 3 4 James CoBway, - Writing Smith & Brown, London, in answer, that the Glen Shootings are let, ... - tt 3 4 16 8 A J) ^. MclYille Trust, - Mr Home's attendance ill London, on Harbour Bill in Committee, 6th ult., to date, 30 dayn at £3, 38., u 94 10 ft Do. - His Expenses, 30 days at £3 *>s _ . - Carry, forward, £ 15 2 63 // 157 10 * 266 18 6 266 18 6 ' DAY BOO K,— February 1 874. o % bO 3 J. M. Eoy, Watt's Hospital, Charges, - - Do. J. M. Roy, Do. Charges, - Do. Melville Trust, Paterson & Co. Brought forward, Feb. 5. £ Do. Bringloe's Trust, Do. Gordon's Trust (Hamilton), Writing you that our INIr H. would be in Glas- gow on Gth, in re Miller as requested, Attending meeting of the Governors as to sale of Feus, &c., 2 hours, Paid Mr W. Taylor's Sa- lary, .... Paid Mr Home his ex- penses to, at, and from London, . - _ » 6. Mr H. going to Glasgow, and after much trouble getting payment of 1st instalment from IMiller, His Expenses, Paid Mr Home's travel- ling expenses, Paid Elgin's stationery account, . _ _ Writing Factor acknow^- ledging remittance of £648, 10s. - Attendance with Burns & Dove, Leitli, receiving bill in your favour for price of wine, Writing you therewith, - „ 7. Attending meeting of Jolm y\jidersou's Cre- ditors, — Olier of J 5/ 6 per £ entertained, AVriting the three Trus- tees thereof, 3/4 and 2/ Agency attending Coun- sel with Fee, Carry forward, - £ Charges. 15 15 30 2 6 Daily Business. 1 17 G 65 266 18 3 1 13 6 6 6 8 4 273 11 Totals. 266 18 6 16 273 17 8 18 11 8 • ( BOOK-KEEPING. DAY BOO K,-Febniary 1 874. -4 O U 9 M J. Jamiesoii, Bo. Do. Hunter's Trust, Charges, - Brought forward, - £ I^ER. 11. Attemlance witli Sharp & Price, huilders, receiv- ing Estimates for build- ing dykes, - Do. with S. M'Konzie do. Making Copy of Esti- mates, — 6 sh. figs. Writing you therewith, - Factor Fee for quarter, due this day, Paid Servant's Waces, oftice, >j 12. Campbell Trust, (Leases), Writing Monro & Son that the trustees cannot agree to any mo- dification, - Primrose Trust, ft Xo.' aiges, - Attendance with Scott & Co., receiving price of Canongate property, „ 24.- Paid J. Fox for Coals, Bringloe's Trust, J. M. li.u}', n 27. Do. Agency, — drawing Int. on Monro's Bund, In consequence of Mil- lar's refusal to imple- ment agreement, — Draw- ing Memorial for opinion of Counsel, 7 sh. - Making 2 co])ies 7 sli. ea. Agency attending Coun- sel with Fee, Carry forward, - £ Charges. 65 1 2 6 10 67 13 Daily Business. 273 11 H U 50 6 6 9 3 8 6 1 8 10 . 14 8 328 Totals. 273 II 9 51 6 8 6 8 328 17 SOLICITORS BOOKS. lUt) DAY BOO K-Febraary 1874. o u Brought forward, Feu. 28. £ Hunter's Trust, | Writing up Sederunt Book, 40 sh. Clerk's checking calculations, &c. - - - - I^ig^jy Jolii^ston,! Writing you in answer, that we will be ready to see you on 5th prox. Paid A. Matthew, Clerk's Writings, - - . Postages tins month, for 2 months, f Charges. 67 13 6 Daily Business. 328 Charges, - Do. Balance of Profit ff // 4 9 . 14 260' 5 333! 3 416 . Totals. t ! 4 2 333 3 6 419! 4 333 3; 6 CROSS-ENTRY BOOK. 1874 Feb. 28.- Thus :- -Sundries, — Per Postage Book, -John Homo, P/a. - - £0 A. Catlicart, do. - - Hunter's Trust, - - Melville's Trust, - - 1 Bringloe's Trust, - - J. Jamieson, - - Digby Johnston, - - J. Conway, - - Campbell Trust, - - Watts' Hospital, - - J. M. Roy, - - Paterson «l 'Ki\ 110 BOOK-KEEPING. CASH LEDGER. BOETIIWICK 4" IMRIE — Cash Account. Date. 1874 tl fin,. Fell. 7 28 o J.alance, I'y Cash, To litilaiice, ..13 V JLJ'iwJhtJll.ivj'L'* Dr. lib tr 1 20 18j 9 m I ft Cr. L. s. , d. II \ II 20i w 118 Balances. L. s. (1. H'- 18 ll 3 C7 118 9 ns.i Dr. Int. L. s. BRINGLOE'S TRUSTEES—Cash Account 1874 iLr Cti- Account. Bate. 1874 Feb. 1 4 6 # * * 28 *■ IT To (Miller) Meeting & Attendance witli you, ,r Do. Writing you that, &c. , Do. Mr H. going to Glasgow, &c. - Do. His expenses there, Do. In consequence, &e. , Do. Mak*-' 2 copies i»f case for opin. Do. Paid Fee to Counsel, &c. . - „ Do. Agency therewith, - - - Do. Postage, - - - " - 8. 6 3 3 1 10 14 9 6 14 BORTHWICK <$■ IMRIE—Bmmess Account. Jan. «j1 To Balance, - 46 8 JAMES CONWAY — Business Account. tJ an. 1 To Balance, - - - - Writing Swift and Brown, &c. Postage this month, - 17 17 BUSINESS LEDGER. ISAAC JAMIESON — Bminess Accoimt. Date. :i874i Jan. 1.31 Feb. 1 II n » H II 11 H /' V 28 To Balance, . . - . // Attendance with you, &c. - // Drawing Advertisement, // Paid for insertion, II Agency inserting do. Attendance with Sharp Sz Price, Do.mth S. Mackenzie, I, Writinjj vou with Estimate.^, Copy Estimates, ,/ Postages this month, 9 ti II II II n II 13 s. 18 6 7 17 3 6 6 3 9 8 6 4 8 8 6 19 GORDON'S TRUST—Budmss Account, 1874 Jan. Feh. 31 To Balance, Fee to G. Young, (fee. 1- igency attending him therewith, 74 3 78 13 10 6 9 6 8 10 WATTS HOSPITAL— -Busums Account. 1874 Jan. I Feb. 31 4 28 To Balance, * Attentling ^Meeting of Governors, &c. Postages, &c., this month, 12 II II 13 10 13 5 4 ■abawMbM^arflMM It 1! i H(M)K-KKKPIXG. BUSINESS LEDGER. PATERSON 4' M'KENZIE, Bmhms Aceount. jLf'dkwd* 1874 Jan. Feb. 31 To Balance, ------ 6 1 „ Attendance witli Burns an,('l Dove, Ire. # Writing you thereafter, 28 /, Porterage of Wine samples. Postages, tfcc. 154 w It 1 156 s. 6 6 3 3 d. 8 8 4 10 BRINliLOE'H TRVSTEES^Bmlnex^ Aecomit Feb. 'i!0 To attending Meeting of Anderson's Cred* ir Writing Trustees thereafter 3/4, d' 2 c. 1/. I, Agency drawing Interest, &r. » Postages, &c. CAMFBELIJS TRUSTEES^Bmlness Account. 18741 Feb. 12 To (Leases) Writing J. ^luiiro & Son, &c. „ (Miseel.) Attendance with V. Weir, ttc. I. Do. Writing Factor at Oban, &c. „ (Leases) Writing J. Munro ell's Trust, N'at. Bank — Hunter, Com. Bank — Primrose, - City Bank — Bringloe, City Bank — Melville, Cash Book, \ Balances Postage Ac'. I of Cash Disbursements, ) ^ ******^* Bortliwick & Imrii-, B;'a. Isaac Jamieson, Ha. Fames Conway, B/a. - I .Gordon's Tnist, B;'a. Watt's Hos]:utal, IJ'a. I '^aterson & M ' iv enzie, 1 1 / a . J. j\l. lioy, B,, a. Bringloe's Trust, 11 a. CanipbeU's Trust, l>,a. D. Jolmston, B/a. - ^W'elville Trust, B/'a. Priuirose Tiiist, IJ/a. S. Meiklejoim, By a. D. Coclirane, li^a. - 15 3 18 195 349 1472 109 743 27 46 9 17 74 12 154 4 4 7 1 14 17 o 6 10 3 9 6 10 3 6 10 8 18!ll 1, i o tf V I 8 18 „ 13 10 6 5 i 4 2 // 8 28th Feb. Slsl March. 195 18 630 1472 s H If 7 ff ■ » 17 19 d. 1 10 II It 6 10 4 6 29 10 8 1086 2 5 62 10 . 5 6 It t 128 2 200 20' 778 1487 16( 10 17 4 9 7j 6 5| 6 2 311 150 407 11 1 18 17 2 2 . 8 2 1319' 3 17' 3 9 78!10 4 kV 5 4 24 .1. 4 w 10 6 9 8 6 n O 6 2 3 n O 1517 30th April 156; 6: 171 3632 II ii II It 1 ^\ 8 II tl I'll 3 11 18:11 2 17 . I 1 15814 i)' 171 6 8 „ 8 2 4 1 5 // 6 15 10 5 111 H » <1 K 4 10 8 10 . 3 9 ■546516 6 31st Maj. BALANCE BOOK, 1 874. [Creditor Accounts. Lr. Fo. 31st Jan. 28tli Feb. 31st 3Iarcli. 30th April. Slat May. £ s. d. £ s. d. £ s. d. -lolin Ilonio, Cap. ac. 500 // If 500 II // 500 II II And. Callicart, Cap. ac. - 500 II II 500 It // 500 It It Do. Priv. ac. 113 9 6 98 5 11 33 9 6 Campbell's Trust, C a. - 1485 II It 1485 ft It 1500 It II Hunter's Trust, C/a. - - 115 II It // II It // tl tl Primrose's Trust, C/'a. 750 II II 1092 3 6 1600 II It Bringloe's Trust, ('a. 50 If If 62 10 ft 150 II II J. Jamieson, C/a. - 25 II It 25 II It It II It Advocates' ( "lerks, - II 7 6 1 m4 6 -7 5 6 Disc^ & Inter^* ) ^^ ,., f Day Book, . | I'rofit. ^ Melville's Trust, C/a. - 1 10 It 1 10 „ 3 10 } .,-1 92 12 8 8 260 277 5 9 5' 6 351 407 4 18 6 8 i 3.) 4 14 () 3632 II If II Bortliwick & Imrie, C a. Sir H. Grant, C, a. - II II If II It 1 18 9 11 17 325 18 tl 9 It • 4305 1 It U 1 II James Piggot, (/a. 1 — ^ It tl It II It ' II 74 9 16 7 (> 5465 1 1 i " ( ADJUSTMENT OF BALANCE, as between Partners at 31st March 1874, The total amount of Debts due to tlie Firm uf Ibuiie and Cathcart, after deducting Ixdant;e of £76, Os. 4d. iluc l)y ^Nlr Home on private account, ---.-. The total amount of Del)t du(} by the Firm to sundry Trusts and Clients included above, --.-__ Balance of available Funds, Whereof Mr Houie's Capital, One half of £354, 14s. 6d. net profit aljove. Less, Balance on private account. 1 5389 16 2 4077 12 6 1312 1 3 8 Mr Cathcart 's Capital, - - £j 500 One lialf of net profit as above, ' 177 Balance on private account, - ; 33 !:i 118 I z Ip o CI o 8 X PH o o o Jz; QQ X CC' PQ CT 01 CO ^ PQ CO 00 BOOK-KEEPlNli. SOLfCITORS HOOKS * ft s t * :; % Ol, oi CI o f>i c r^ o o 1~l 00 »-^ CO IC- CO ■ o o o bo . f-H o '3D D ^ CO c3 ■1 o d • o • O d • o ■+J cs O PQ o p Q fi Q P p ^-< o ^ * « « % % * !l * « f-H a 00 CO Cl f-H f-H t^ 1-^ CO 1-H Cl CO I-H f-H CO " • P • c3 • • ■4-3 o O • > * « o 1—1 ft 1 ,! II CO -* 00 00 ;j 5; * *• ft' ft ft ft I-H I-H FORMS of INTEREST ACCOUNTS. SCOTCH METHOD of cfilcoljiting Txtetikst on the foregoing Acre )TTXT-CUI:U JENT. Dates. 1' - Amounts Days. 9 12 11 45 43 23 12 28 76 45 11 6 13 10 ! 21 Interest @ 6 *> o Or thus In Decimals. ' 187 187 3, Dec. 4, 'I an. tr Feh. Mar. April l^fay June July Sep. Oct. Xov. // Dec. 31 9 21 1 18 30 23 4 2 16 31 11 17 j 30 10 31 To - To - Bv - By - To - By - To - By - To ~ i By - - - To - - - To - By - 1 By - To Interest, £732 85 II £0 1 I 3 1 S 8 1 1 4 // 1 18 6 6 3 14 8 17 3 14 9 2 13 4 10 11 7 8 4 3 2 9 9 ! 51 3 5 3 9' 6588 9804 2387 ' ^640 27133 3013 1 13572 23268 63764 10755 8129 4884 30732 3640 7350 u 817 GOO H II '• It It \ 217 25 It n II n It If It 192 439 ri u • II H H II 631 500 131 1000 1; 1 1/ 1131 300 " 831 8 It It II // II II 1 ll // If \ 839 600 239 500 It II II II 739 75 If It 814 1550 II 1 " II 2364 2000 364 14 II 12 II 9 9 350 30 365 £30 12' 223659 at 5 % £30:12:9 £380 12 solicitors' books. 121 As already remarked, page 98, professional men would sometimes rather lose the advantage of Interest on their Cash advances, than take the trouble supposed to be involved in its calculation. This need not be, as by the insertion of Interest columns in the Cash Ledger, and the adoption of the Scotch or progressive system of calculation, the Book- keeper can daily extend the Interest on the balance of Cash, whether it be at the Debit or Credit of his employer. There are two methods of calculating Interest on an Account-Cur- rent, both have their advantages as well as their drawbacks. By the English Method, the Interest must always be at the same rate per cent., and is calculated on each item of account from its date to that of the closing of the Account- Current. The advantage, here offered, is manifest ; for should it be necessary either to delete or alter any of the entries, the Interest, as already calculateil on the remainder, will not in any way be affected. In the same manner any omissions in the account can be supplied without upsetting the calculation on the other items. By the Scotch Method, on the other hand, where the calculation is upon progressive or periodical balances, no alteration can take place without deranging the calculations on subsequent transactions ; but it has the very great advantage of allowing of any change in the rates of Interest, and also admits of a balance, icith relative Interest, being ascertained at any time during the currency of the account. By the professional Accountant, the latter method will always be preferred ; whereas the commercial man will possibly adhere to the simpler form, which not only meet his requirements, but is always readily understood by his correspondents. -♦-♦-♦- "I III ■ 1,1 i w Q JUDICUL, xVXD OTHER FACTORY ACCOLNTy. li$ III SECTION IJI. JIJBICIAL AXD OTITKE FACTOT^Y ACCOUNTS. A PRTNTEB iiiemorainluiii lias hem isstied for tlic iiistnictioii of parties ap]NTiiite<] Jiulicial Factors or Curators, in the fraiiiing and reiuleriiio- tlieii- Aimiial Aeroniits. This, by the kind permission of tlie Ac- eountant of the Court of Session, lias "been appended to thir, cliapter, and will be fonnd to meet all tlie requirements of a Judicial Audit. But, good as the plan recommended, ■undoubtedly is, it is of great im- |)ortaBce, that fko-^f trho mmj not hare hcfif/ enffaged in comm^tf'al ////>.;///,<, mr hrowjhf up as ftcronnfanfs, shouW he initiated into a simple metliod of keeping their Books, as the primary foundation for framing Accounts of Intromissions required by tlie Court. It need not lie remarked, that there are certain features peculiar to certain Trusts, and a variety of contingencies which can never be met by any prescribed formula ; but where special difficulties are likely to be en- countered in the management, the selection of the factor should be, and it is believed really is, studied by the Court. In ordinary cases, liowe\( I, where no conflicting interests are involved, little difficulty can arise in recording the monetary transactions of a factory ; at the same time, even the simplest affairs may be mismanaged, or the very best manageiiieiit rendered abortive, from incompetency in registering details, or, in otlier words, from an ignorance of Book-keeping. The plan usually adopted by many persons appointed to offices of Trust for behoof of minors or others, and who may be unaccustomed to accounting or to regular systems of Books, is either to hand over this troublesome part of tlieir duties to their agent ab imtw, or to take refuge in a memfmjjub.o/t hi^ok, which book, with all its mystical entries, is forwarded to the said Agent, as the period draws near for rendering the annmd statements. Then commences a tedious process of interrogation and explanation,— a fixing of dates and searching for vouchers, until tlie Balance is struck, and the Factory Ac( (.unts are ready for inspection. All tliis might be avoided, to the great relief of both Factor and Agent, by keeping three books on the simplest system imaginable,— a Cash Book, Bental, and Fedger— the contents of the first beinir actual receipts and paynieiits, tlie second showing the gross charge agauist the Factor, and outstanding arrears, the tlurd and last, em- l)racing the contents of tlio first correctly ledgerised, and from which any one tlie least practised in accounts and figures could with facility make up his Annual State. Accountants and experienced Factors will vei7 naturally adhere to the practice of rendering " Accounts of Charge and Discharge with relative rentals," — the professional and practised eye at once emT)racing all radical points, without being confused or puzzled by details in branching out," but the inexperienced sliould be provided witli a plan of Books, so arranged, that they hare merely to transcribe their Ledrjer upon a sheet ruled in a certain way, and an Account of their Infro- mimions tvill be exhibited, embracing every particular and result re- (luired l>y the Court. Being in a tabular or columnar foi-m, and every sul)jcct or possession taken in detail, showing tlie gross rental, tlie burdens affecting it, and the net revenue, a T>etter insight is obtaineil into the actual working of the factory in its integral i^arts, than b\- foUowing the usual plan of collecting aU the Burdens, Ic'epairs, Feu- duties, &c., under separate lieads or branches in the discharf^e. In all accountings where the Factor in charge of Lands and Ibjuse Property, is liable to be challenged as to his efficiency, and his man- agement tested Ijy certain abstract ideas of economy, the general de- sideratum is to show the burdens, repairs, &c., which actually afiect each subject. Thus a safe check is at once put upon extrava^'ance in repairs or iniprovements, the net proceeds of the farm ov subject a.v- certained, and comparative statements easily extracted l)y parties interested in the estates. To carry out these views, the following system is humbly sub- mitted : — The three books to be kept, are — (1) The Cash Book, (2) The Rental or Income Book, and (3) The Ledger. BOOK-KEEPING. 1. THE CASH BOOK. As the expenditure in most Factories greatly exceeds the receipts in the niimher of entries, there is no necessity for a debtor and creditor page in the Cash Book, — double cash columns being quite sufficient. Unfortunately, the " double column " system prevents, for want of space, the introduction of the Bank Account Counter Check ; so that mn account for the Bank must necessarily be opened in the usual form in the Ledger. It will be observed (see style annexed), that a place for vouchers is affixed to the credit column ; — another essential im- provement on ordinary cash books, — the imvouched entries l>cing con- stantly kept before the eye of the Factor, insuring con-ectuess, and preventing a thoughtless outlay, under the head of " Incidents," for which no vouchttra are in general taken. 2. THE RENTAL OR INCOME BOOK. This should be particularly attended to, as the gross charge against the Factor, for annual revenue is taken from it. A form considered sufficiently comprehensive, is annexed. 3. THE LEDGER. The Iwok here recommended should be ruled with the debtor and creditor columns on the same page, with an additional coliunn for arrears of rents or interests ; — no necessity existing for an extension of periodical balances, the Factor being expected to render a progressive slate of interest on his whole casli intromissions. Accounts should be opened in this book, not with every tenant, but with every subject or security. Tenants of Lands often remove from various causes, — and in the case of House Property, the change of oc- cupancy is of constant occurrence ; hence the necessity of preserving the integrity of each possession. The only other account, besides that of the Bank, is one which the author has always called " Tlie Accumulated Fund Account ; " — being, in fact, the compensating or equalising accoimt of the books — exhibiting the accumulative and divisible, or rather available, fund, of the Trust or Factory. (See Ledger Style annexed.) JUdiciai ., AND OTHER FACTORlT ACCOUNTS. 125 CASH BOOK. u ■|',g 1 Receipts, Expendi- Vra. 1873 ;i4 1 ture. £ s. d. £ s. d. Dec. 31 To Balance per Audited Account, 45 7 6 1874 May 15 II 205 George St, Received from Jno. Rae, 50 II // ff II By Do. - Prison Assesst. repaid, II II 1 3 6 1 ff u Do. - Paving do. do. u II II 4 6 2 II II Do. - Feu-duty paid J. Boyd. H H 6 " 3 H Do. - Repairs per 3 receipts. II ,1 II 4 5 3 4 to 6 n II Nat. Bank, Lodged, - - - i // II II 80 II gf II 1 * To K B. Ey. Stock, Half-year's Dividend, - 27 10 " i II 16 By Nat. Bank, Lodged, " // II 27 10 r» II 17 To 326 Princes St. Received from C. Mason, Half-year's Rent, f 65 H u II II n Do. - Do. Arrear of Mar*' Rent; 1 13 II II ' 1 i ! II By Do. - Repairs repaid ^ 3 rec** 3 5 n 7to 9 II II // Do. - Paving Assest. repaid, 1 II \ II II 11 1 6 ! 10 II // Do. - Feu-duty paid H. Ross, 1 ! u II II 5 // // 11 II n // Nat. Bank, Lodged, 1 H II 70 II // ' II 18 To Caled. Ry. Debs. Half-year's Interest on £2500, - - 50 II II '! 11 # By National Bank, Lodged, - - - tt a 50 tt H 23 To Do. - Cheque No. 43, - 14 II II \ II // By 205 George St. I^ Dodd, Slater, Rep-^ // II II 13 18 6' 12 II 25 To Canongate Rents, Received from Sub-fac- tor. Rents per List, -! 47 18 4 U II By Do. - - Sundry Repairs per 3| ,. Receipts, II t // II 2 15 U to 15 Do. - Police & Paving Assess* 1 II II II 1 10 6 16 & 17 II Do. - -I Exp* enforc« Rents, &c. ( II II 2 8 // t 18 II i // To Bond on M Half-year's Int. from J. Kidd, - 20 II II " // By Nat, Bank, | Lodged, II II II i 60 // // 1 31 Balance of Cash in hand, 1 u II ,/ i 4 1 lOl 332 i^^'i 4 15 1 ! 10 332 15 II ■ 1 t To Balance '^ Acct. rendered, - ' 4 4 1 1 1 I 1 I 12G iJOUlv-KlvEPlNG. RENTAL or STATE of INCOME wrislnrf from ESTATE (jf 0. D,, Judimcd Factory, No. 314, For Half Year, Whitsundoy 1874. Note.— It will be observed that Martinmas 1874 is left blank, that term not being included in the foregoing etyl«8. a 1 m lis: -o* S:, * ft - en ft %. ft 'i*i CO f—^ S|l •a =3| • *«,'*%aiSs5!ft i» ft ft M* _ « * ft, 2 ^ *= * * * '2 ' 00 c*i 00 CI t «C' »C rf IC t^ r- CI W CI CI iO CO CI •r. 5 --■ «ift»%ft;»tS: ft % % ft ■4J d s az 1 %ft!tftft»!*!s * ft; * * — « II II , '/ « II II II II Ii II II 11 II II II ft ft % = 2 « St m Hftft^tftStStft 1—1 — zti O' »c c C; i^ io »c cc 50 C© r— I r— ( 1— ( t- CI CI CI CI 5 "^ a:ft%a;Si*fca ft; * ft; ft 9^ S;ft%ft4%, *k % ft ft; ft a 1 #ei « ^ ft ft * * ft ^ ^ *; ft * fe 1 ^ &:tftft*ftftS s* Si ft: * — (i^ SlftftftcSfti a ft a * » *»»*5:ft6. St % % % St • * ^ -****. * % ft ft; ^1 m . .2 - - - - * ft ft ft C30 c*l ,ic 'CO CI -, '— • ^ i— ' CI f-t — < «: ft % CI ir: i i ■1 1 a m c » -4 J. Rae, C. Mason, S. Wilson, - W. Syme, - B. Murdoch, - J. Jones, T. Weir, P. Miere, J.KiddofM. Int. Dividend, - Interest, - m a > i) V J) s 1.4 • « QQ PS -«; 1. :;5 1 , 1 t 1 • 1 1 5:11 m OB to 1 g'l 1 p Q fi p q g IC C£> 50 CI 00 ^ ^2 ^ 4 Securities : — Bond ^ £1000, Nor. Brit. Rv. Shares, Caledn. Debentures, • * CI eo -,. .lUDTCIAL, AND OTHER FACTORY ACCOUXTB. 127 LEDGER. HOUSE, No. 205 George Street, Edinhurgh. Date. 1873 Dec. 1874 May // * II II II II 31 15 II II II II II 23 31 Arrears |? Rental — J. Rae, Half-year's Rent ^ do. - - - By Cash to Account, To Prison Assessment, - „ Paving do. /, Feu-dutv, ... - II Repairs per Receipts, // Do. to roof, iJiiid Dodd, slater, - II Balance to accumulated Fund Ace* Dr. Cr. Arrears. £ II n 1 n G 4 13 24 50 s. d. // t. II H II It 3 6 4 6 /' // 5 3 18 G 8 3 n H M. H It 50 50 S. (1. t' II II II £ 25 60 85 50 s. // // II It d. II 1' II " 1 II 1 i tl 35 II II HOUSE, No. 320 Princes Street, Edinburgh. 1873 Dec. 1874 May «r n II 11 ft 31 15 17 // n II 31 Arrears f? Rental — C. IMason, Half-year's Rent ^ do. - By Cash from C. Mason, To Repairs allowed, // Paving Assessment, - u Feu-duty paid, // Balance to accumulated Fund Ace* It n II 3 5 69 78 II II u 5 11 n 3 II II II II 6 II 6 II fi 78 78 II II tl It It It II It 13 65 It 11 II II 78 78 It It II If i CANONGATE PROPERTY C. Broiim, Suh-Fador. 1873 Dec. 31 1874 May 15 II H tl U It II II II II 31 Arrears ^ Rental — Sundry Tenants, Half-year's Rent f do. - By Cash from C. Brown per List, - To Repairs allowed, It Assessments do. II Expenses Distraining & Commis. // Balance to accumulated Fund Ace* 2 1 2 41 47 II 15 10 8 4 18 It n 6 10 4 47 47 18 18 14 50 18 64 47 18 18 4 4i 17 // // I? I I i I f \n BOOK-KEEPING. IiEDGER. NOMTH BRITISH MAILWAT STOCK. Bute. 1874 May 15 31 By Half-year's Div. on Shares, - To carried to accumulated Fund Account, - Dr. £! s. ' d. If II 2710 If II II Cr. 10 27 d. CALEDONIAN RAILWAY GO. DEBENTURES. 1874 18 31 By Half-year's Int. on £2500, Doh^ - To carried to accumulated Fund Account, 50 60 I BOND ^ £1000 over ESTATE of M- 1874 May 25 By Half-year's Int. from J. Kidd, due 15tli May, To carried to accumulated Fund Account, - 20 20 JIJDICIAI., AND <»Tfri-:R r.\(T«>RV A( COUXTS. 12! LEDGER. NATIONAL BANK ACCOUNT. Date. 1873 Dec. 1874 May // II II H n 31 15 16 17 18 23 25 31 To Balance, ^^ State, - « Lodged, . - - _ - „ Do. ..... // Do. . . _ - . „ Do. - - - . . liy Cheque Xo. 43, - - - . 'IV) Lodged, _ . - . _ Ity Balance, ""(^ State, - - . . • To Iklance, Dr. Cr. 763 80 27 70 50 60 s. > 4 > „ 10 II // n » H 11 II 9 £ 14 10.36 s. u 14 d. II 9 1 1050 14 1050 14 9 // 1036 14 9 ACCUMULATED FUND ACCOUNT. 1873 Dec. 1874 Miiv u H U 31 31 II II It 11 II By Amount as at this date, # Balance, 205 George Street, - H Do. 326 Princes Street, - // Do. Canongate Property, - H Do. Nor. Brit. Ry. Div. - II Do. Caledn. Deb. Int. II Do. Bond over M — do. - Whereof in Nat. Bank, Cash in hand. Note. — The Judicial Factor's ComiDission, Agents' Charges and Petty Disbursements, as jillowed by Accountant, form a Charge against tliis Account. II II II II II II If 1036 4 1040 II II II II H II n 14 4 18 II II II II II II II 9 1 10 808 24 69 41 27 50 20 1040 12 8 3 4 10 II u 18 3 •J 6 10 H * II 10 I! R ¥ I I' M n 130 BOOK-KEEPIXO. a o* e * o o ^ § 00 • ^^ W^ qQ _- .- - JS*JS5-f?*a 1 s» — C5 o « S 1* S fl S S^ fl w P, n 3 ***• 9 ja «> U a .*« 0) to d So i o "5* n ** a 4} o B fig 3 fl 5lfe--i-9£ s « — ?J3 « V o • "T no .'. § ca O' S bo ■3 9 > o a> o C4 •« o ^|« T3 S •d > 2 as a h"'">^ S S -i °3l i. ^ZmSS Si. 'a S H-o '.*• .2 = * g « fl J" « A.g c _ 2 « O C 0.0) o"S « ° g -£ o fee x- -3 J! «oo»i« PHZI-S8 o /, « « 9 • 5 o ja h •* o • how Si! ,3 »^ a 3 n a u ifil » »> > c — ^Q '- i" Is «' ^ " o «, o.^ "C E * o « < « .5 *> s a »» » «D O 4) * ja •" '3 ^, J3 w .- C C-aS 5 ^ « •c 2 • • --^ « Q * JUDICIAL, AKD OTHER FACTORY ACCOUNTS. 131 Mt CO %i «' oc ec 1 CO 1-H "^ Pass Book. (!J;|J|J) 5^ CO «o ^ CO ^ CO CO .s 8 o 00 i i Is *< O s o o OC ■a . — eo ^ ^ lO 00 lO O X I Oi OS w 1"* ^ cO ''t' CO CO ^ lo G^l f— • CI ®»4 ;l » % « % « :c % » fc 00 rt I- '**! lO « k ft O CI 1—1 -«j» c e • qj O j •43' « a ' « O i ««-♦ © p O iN- ^ £ tc"S :2 fl ft > fm4 ft ft ft e3 ft .ft s O 1— < © 00 00 D O pq < 00 O !-♦ o — •1^ oc ftp* o 3 o i>- o o o 00 (M I- lO CO l« 00 CO ft ft ft ft ft CC 00 I O Oi 1^ ft ft ft % ft ft o o j CO ft ft ft ft ^ ft % • ,^ o Q ^ Hi s © S gP^ CO CI CO CO fl I I I o >— < H CO 9 to © T3 "73 >:r Jr J:^ oj 'U O ^ ft ft r, A-*, .■*^ . lO O t^ 00 CO lO [j, -^ T-H t— ( t-S r— I CI CI H 00 ^ ^ ^ . . ^ o o o CO 00 © as r—t CO •*» O H O © fl O QQ m I © be t3 O © Q o *g {3 O CO CI 00 00 o 00 o o a »— • "^ '«*' I 00 03 © fl 1—5 CO o » OS 7* fl °C) €8 '-< rfl -^ — * «t^ ^ CO 00 t^ f-H •*- 1 00 f— 4 g- o P-) ^H r^ © fiS^ tfm4 fl © tn I— 1 CO A4 © fi eg © ■ QQ r— • CO 05 P a © > O S^ 1*^ r—t -2 E3 ^ fi a fl o • •-4 eS § O 1 fl • •1-1 «4H • 'T3 fl D O O <1 ^ 2^ S OS So 132 IMXlK-KEKinNl,;. JUDICIAL, AND OTHEK FACTORY ACC0UNT8. H ■■■ FORM OF ACCOUNT FOR THE GUIDANCE OF JUDICIAL FACTORS. Under' tka Papirs Protedmn Aa, 12 ami 13 Firt., cap. 51. In onler to afford amistauice to those Factors who have not been used to the i)rei)aration of Ac coMnts of Charge and Diicharge, the following Form has been i>rei>are(l. The example is purposely of th« mott rimple chaimcter, and though the Entries are too briefly expressed, it illustrates the entire prinei]^ on which such an account should be stated. It assumes the pre-existence of a WMTWct Cash Book and Rintal kept by the Factor. The Factor must not mix anp of thetf Hwmdbt, and especially separate and minutely distinguish Revenue from Capital. ' And all ITowdian nuut be lodged at once, and with the Account. Factors should be careful not to re- laill a etna of £90 or upwards in their liands at any time for a period exceeding 10 days, as ilm' render themselves liable in a penalty of 20 per cent. See Act. Sect 5. JSJCA MPJLE. No. 1165.— ACCOUNT of CHARGE and DI8CHAKGE of the INTROMIS- SIONS of * * *, residing at * * *, as Curator Bonis (or, as the case may be) to * * ♦, presently residing at* * *— -From Slst^Iareh 1856 to Slst March 1857. The Cautioner is * • • residing at * * * m >m» m «» jm, V I. EaiaU m taken Credit /or at the dose iifimt Aomint 1. Heritable Bond by " A. B." over lands of * * * 2. Balance iu Koyal Bank, • - ' 3. Household Furniture as appraised, ..... 4 Balance in Fader's handa, • ' . II. .Mmenm.. I. .RUffTS. Sum, 1. Arrears of Bents as taken Credit for at the close of last Account, £15 10 2. Current Bents, as per Kental in Appendix to this Account, - 74 . . . Hots.— A torn of Kental famished to Factors when desired by them. 10 10 6 11. IkJiJEKf 1 0« I. Heritable Bond for £1000 granted by A.B. over Lands of * * * — 1866, May 15, Interest at 5 per cent, for half-year, to this date, „, Nov. 11. Do. do. do. - £25 26 2. Heritable Bond for 800 granted by CD. over Lands „* • « * ■' 1866, Nov. 11 Interest for half-year to this date, • at 4 per cent. ..... 3b Baidz Aceount — 1886, Dec. 31 Interest added by Boyal Bank to Slit December 185«, - lU- AWTOTT. 1856, July 16. Beoeiveil hall-year's Annuity due at this date, - .... 1857, Jan. 16. Da do. do. - £50 10 £8910... 17l 6 £25. .J.. 25...'.. 9417 6 50... Sim, 2iii 7 00 1*^ ■CO . * S a tc o •So eg O 3 p * o •g o to 'S w is * lo 2 *^ 5 ***^ ■hS OS ^ =* c * « ,<« 'PS o s PS o fei "** S o ^ 2 «^ s • P' o o : ^-a o • ^ O • «5 aw ft . 3f «B w >«^ '^^ 2f O S^ o ® s '% ,||||,||M- ,pwa "^ #rf' 5 bo S s So"** oe S * "^ ae , . -*a ae r— * £ ilB M w .fa 5 8 g ■ s n Q OS as , 13 ■as V) 05 9 'w o hi en O 00 K a. D o o C^ -f -f- .c: Cl «M '^ lO CO "3 * « »o iO 00 £3 o CO 3^ O a; &4 e •1-1 B OQ C EP ,<■«• o o X o C3 1:0 • ■— *>■« f^ Sm' r^ -^ »c (O lO CO 1—4 1— » 1-^ * o • o • o 6 • o : '^ ^ ^ Jz; ^ JUDIOIAL, AND OTHER FACTORY ACCOUNTS. 135 NOTES FOR THE GUIDANCE OF JUDICIAL FACTORS, Under the Piipits Protection Act, 12 and 1.3 Vid. cap. 51. I. ACCOUNTS. 1. Body op the Account and its Appendiceb. (1.) Charge Side of ax Account. — The most conclusive form is for the Factor to commence by charging himself witli the Whole Estate; that is — (1.) Whole Funds, Arrears, Balances, and whatever belonged to the Estate according to Inventory, or at the closing date of the precedhir/ Account. By this means no part of the funds can be lost sight of or omitted without aiiecting the Balance. (2.) Revenue will then follow, of what- ever description that has hfcorae payable within the period em- braced by the Account, including the whole rental and an-ear, if any, properly brancheii, and narrating distinctly, in each entnj, the data requisite to check its accuracy ; such as dates, periods, rates of interest, or dividends, stock amounts, kc. The main distinction is between Capital and lievenue. The elements that come under these two must never in any measure be mixed, though each branch may be more or less subdivided. (2.) Discharge Side of an Account, branched as follows :— Public Burdens, Repairs, Interest of Debt, Payments on ac- count of the Ward, Investments made. Debt paid olf. Improve- ments, Expenses of Management, and, lastly. Funds, Mances, and Arrears outstanding, or actual amount and particulars of the Estate, as at the date on whicli the Account closes. 2. Account-Current or Cash Account.— Every Factor of course keeps a Cash Book, and unless there is a Progressive Interest State, a transcript with the dates from his Cash Book is requisite as an Appendix to the Factor's Account of Charge and Discharge. This of course must balance with his AccouiJt of Charge and Discharge. 3. l^EW Claims arising, or Property discovered to belong to the Estate after the Inventory has been lodged, should be specially I'ti I lU BOOK-KEEl'INri. i III m teportecl and explained in the Annual Account next following the discoYery, and taken into the Vidimus of Funds. 4. ¥iDiMUS. — ISach Annual Account of Charge and Discharge must either contain, or be followed (as an Appendix) hy a Vidbii s. In either case, the Aldinats must embrace the entire Estate, that 18, all F CM 1)8 and Ualanceh as subsisting on the exact date of closing the Account, including arrears, if any. When the Aldi- mtis is embraced mthin the Account, the accuracy of the whole is proved by the Balance of the Account. When the Vidimus is ^mprtrafe the Factor must test and prove its accuracy, by recon- ciling it xvith the VidimuB of the year preceding. 5. Dates. — (1.) The Annual closing Date must be rigidly adhered to, unless in the event of the death of the Factor or Waixl, or of a Pupil reaching minority, or other event terminating the Factory, when the Account must be closed and balanced, and the exact amount of the Estate ascertained, as at that date. If the Pupil leaching minority b^ one of several, the Accounts must be also balanced at the subsequent Annual closing Date. (2.) In all Accounts, whenever the nature of Entries admits of it, the Dates must be given. (3.) False Dates, or intromissions of a Date sub- sequent to the closing date of the Accounts, cannot be admitted. f». SiGXATURES. — Accouuts must be signed by tlie Factor, and also the States or Accounts of Sub-factors, also all Separate Expla- nations, though these latter will very rarely he rcfjitimte if Ae- counfs have been aecuratehj lepf (ind properhj dated, 7, Vouchers. — (1.) The A^ouchers must be properly arranged, backed, and mimbefed, and referred to by the number in the Account of Charge and Discharge. (2.) Must refer to the Factorial Estate, M distinct from the Factor's private affaire, and be accompanied by any detailed Accounts of which they fonn the Discharge. (3.) The entry or narrative in the Account must express the trans- action in simple accordance with fact, and with the Vouchers, and fully. (4.) Particular attention is called to the necessity, in Ike payment of board, of stating the name and address of the party with whom tlie Pupil or Lunatic is boarded. (5.) States unsigned, or a Bank Account uncertified, cannot he taken as evi- dence. (6.) No separate Inventory of Vouchers is requisite, (7.) Payments unvouched, or without the proper stamp, 7nusi be dtmUotml (8.) Vouchers are returned after the Audit is com- pleted. JT-|»I(IAI.. AXI) (>T1IEI{ FACToHV AcrorXTs. 187 8. Hackixg Accounts. — The Back of the Account lodged should hear— (1.) The Nome of the Factor and Ward. (2.) The exact pen'od eml)raced by the Account. (3.) At the hottom, the rcft'v- ence number of the Appointment. The Factor or Agent (if the iVccount be attended to by an Agent) is requested, in all cases, to giv<^ his preeim address, in order to secure the safe transmission of documents. 9. Lodging the Account. — The Annual Account, with its Appen- dices, that is, all that has to be retained and presei-ved when lodged at the Accountant's Office, shoidd ho dUclied together as ONE PAPER, and thus be so complete as to be adequate clearly to inform any one having occasion to examine it without the Vouchers, when neitlier the Factor nor the Accountant can be present to explain. 10. Rentals. — A rental should nevefr he omitted from the Appendix to the Account. In ordinary cases, the columns requisite are — (1.) Names of possessions. (2.) Names of Tenants. (3.) Ar- rears taken (without any alteration) from last Eental. (4.) Rents since l>ecome due. (5.) Amounts paid. (6.) Arrears, exact as on the date on which the Account closes. Each subject in the Rental must be accounted for annuaUy. If any subject, therefore, has been unoccupied, or taken possession of by a creditor, the circumstance must be so explained. The amounts of colunnis No. 3 and No. 4 of the Rental are carried to the Factor's Account, Charge Side, Branch 1 and 2 I'espectively. ^Vhere the Rental differs from that of the. preceding year, the liause of difference should be shown. III. AUDIT. 11. Commission. — If none is desired, say so at the end of the Account. If desired, mention the amount deemed due, and luiw arrived at ; but do not include it in the Account, or take Credit for it. The amount fixed bv the Accountant will come into the next Annual Account. 12. Interest. — (1.) Progressive Interest States to be furnished, as an Appendix, when Interest is either charged or allowed on the Ac- count. (2.) Bank Interest will only be allowed a Factor on cash s I3S rioiiK-KEEPiN*":. !': lulvaiiced by liini, if hv liad at his command an availal»le Factorial Fiiml. (3.) The Rite of Interest, and the period to which it applies a lid comes down, inu^^f alwmjs he .^tale'f. (4.) Interest on II I Jaiik or other Aceoiuit-Currpnt is not neces.sarily, and in general Rlionld not l»e, bronf]jlit down to the elosinj^^ date of the Factor's Account. It is enongli to state the date from which it is resting, ttr as yet to be acconnted for. Factors will be charged at the rate of Twenty per Cent., Penal Interest, on the lialanee exceeding X50 remaining in their hands for more than ten days. 13. Investments. — The Accountant is required by the Act to "con- aider the Investments," Besides production of the evidence of an Investment, therefore, Factors should, in the narrative of such an entry, briefly describe the security, its nature, ])osition, and con- ditions, either in the Account or separate Vidimus, and produce the valuations on which the money has been advanced. The Court will not approve of Investments in Shares, Personal Bonds, or Bills, or even of the protracted continuance of such Invest- ments so found by the Factor on his appointment, or of the con- tinuance of the funds in trade or business. The Court has not hitherto approved of Investment on Debenture Bonds. 14. Kepoet. — Wlien lodged, the Account will be audited without (Way, and a Praft Report issued, and tliis the Factor is requested, wiihout delay, to revise and return ; and in any event within twenty days. The Factor should endeavour to clear up all difii- i?iilties IN HIS Annual Account, and to embody there aU that he wislies to record for •his future exoneration at the Accountant's office. Fragmentary and miscellaneous papers lodged — as tliey often are — tit of her xedsoin^, can rarely be of use either at the time, ur at a future date, li is only once c year, in ordinary circum- stances, that the position of each estate can be fully gone into and reported on. 15. XoTBS BY THE AccoUNTAN ('. — When the Accountant issues Notes^ at the Annual Audit, the Factor's additional productions or an- swers or explanations should be signed by him. Such separate papers, or supplementary letters, however, ought not to be re- quisite. They never can rompemate for fhe neffled to lodge at piiiST Accouuts in themselves conclusive. The unnecessary ex- pense, thev or thereaffgr^ so created, will fall upon the Factor, attd not upon tlie Estatt\ .lUDK.IAL, AND OTHKH FACTOKV ACCOUNTS. 139 IV. SPECIAL POWERS. 16. Opinions. — The Accountant cannot take the responsibility of giving opinions for the guidance of Factors, unless in the eourse of his duty, in the Annual Audit of a Factor's Account, or to the Court in applications by Factors for special powers. In the latter case, the Factor proceeds in the form of a Report to the Accountant, he states the circumstances, and his own views, (as in a petition to the Court), and concludes (as in the Prayer of a Petition) by statiug briefly the exact }70wers he wishes the Court to grant to him. The Accountant's opinion will follow thereon. The Factor should then bring his Report, with the Accountant's opinion, by a Xote before the Junior Lord Ordinary. V. MISCELLAlJ^EOUS. 17. The Death (with evidence of it) of a Factor or Ward, or death or insolvency of a Cautioner, to be intimated. 18. Fees of Audit. — When the Draft Report has been returned to the Accountant, and the Audit is completed, the amount due to the Fee Fund wiU immediately l)e intimated to the Factor, and, when paid (unless in special circumstances), the whole Vouchers forthwith returned. Further communications with the iVccount- ;jnt should nut be ordinarily requisite until the occurrence of the Audit of the year following. VI. PETITIONS FOR DISCHARGE. In order to facilitate these applications, uud to prevent unnecessary trouble and expense to Estates, the A( coi ntant uf the Court of Session begs to call the attention oi Agents to the following requisites which have now been sanctioned by the practice of years : — m ■!l! 1. Factors Loco Turoms. — Tutuk.s-at-La\v. — Tuturs-Dative. Where the Factor or Tutor at)plies for discharge at the termination of his office, /. e.j when the youngest Pupil reaches minority, he re- quires to produce — (1.) Evidence of the age of the youngest of the Pupils. (2.) Evidence that the Minors have chosen Curators, /. c, the Extract Decree of Curatory. Bo«)K-KEEr'lN(i. I« N I ►' m I i » \ I I ^ J ' I (3.) A Biscliarge by the Minors, witli consent of tlieir Curators acknowledging tliat the funds and effects under tlie factory have been i»aid over to, or accounted for to tlieiii. The Discharge should refer, in special tenns, to the funds and effects as at the termination of the office, reported on by the Accountant. A convenient form is to append a Statt- of tbrsc funds to the Discharge, referring to it in the latter, and h< 'Iding it as therein repeated. II. Curators Bonis.— Curators-at-Law.— Judicial Factors to Lunatics. I. Where the Wanl diee Te^-iafe, the Curator requires to produce, — (1.) The deceased's Will or Trust-Settlement, or an Extract. (2.) Coniirniation by the Trustees and Executors acting under it. (3.) A Discharge by them to the effect above described. II. Where the Wm-d dies Inteshde. 1. Where the Estate euusisft^ <>/ Uerlttd>le Bovtls, the ( 'iirator re- quires to produce,— (!.) Service expede by tlu' heir-at-law. (!'.) An acknowledgment by him that the Bonds have been made over to him. (■"'.) If the Herital)le Investments have been made bv the Curator out of ^Moveable Estate, tliey will fall under the following head of Executoiy. '1. Where the Estate i-^ Mutmtbte, — (1.) Production of Cuntirmation by the Executiv. -dalivc. (2.) A Discharge by him to the cJfect above described. III. Where the Ward recover-^. The Curator shall present a Petition for liecal, producing therewith Medical Ceiiiticates of the Ward's recovery. After tlie Curatory is recalled, tlic Waixl mu\' execute a \'alid discbarge in the terms before mentioned. 111. Factok.'s Loco Ajjsentis. 1. Evidence of the Ith'Htity of the Ward ; and 2. A Discbarge by him to tlie effect above described. \\, KkCAL and DiSCMAKOE DLlilM- THE SUBSISTENCE oF 1 HE OFFICE, OK ON TiiK Death of Factor. 1. It will T)c seen from llie |>icrediiig Nules tliat the Factor rc([uire> .lUlHClAL. A XI) other FACToHY ACCOCNTS. 141 to divest of the Estate, and transfer the Funds, Documents of Debt, and other Writs, to the party or parties entitled to receive and dis- charge the same, before he can be judicially discharged. 2. It follows, also, that where a sul>8isting factory is sought to bo terminated l)y the Factor desiring to resign the office, on account of leaving the country, or any other proper cause, he cannot be discharged until some one has been appointed in his room, in whose favour lie can divest ; unless consignation is ordered by the Court. 3. Where the Factor dies, a new Factor will be appointed, to whom the llepresentatives of the deceased F^actor will fall to account. L It is competent to embrace the application for Recal and Dis- charge, and for a new Appointment, in one Petition. V. Procedure. In all cases the Accountant will issue a draft of his proposed Report to the Court for revisal. It is extremely desirable, therefore, that the case slioiild be in .dl respects complete befijre the ilmft Report is pi*e- pared. When the Report is signed, intimation will be given to the Agent, who will transmit the process to the office of the Junior Lord Urduiary, and enrol the case. When Judicial Discharge is t)btained, the Agent will procure an extract, and o!i lodging it with the Ac- countant he will obtain delivery of the Bond of Caution. The case Avill tlien be written off the Accountant's Register. SECTION IV. ^1, } NEWSPAPEK AND PEINTIN*; BIT^INESS. tAPs there HIV iKi estaljlishmeiits in the moiiev-makiim world where greater order, regularity, and nietliCMl i)revail than in Newspaper and Printing Offices ; and yet it is a well ascertained fact, that where the two are combined, the system puimied in their monetary arrang(;- ments and IJtiok-keeping, is not hy any means so regular or satisfactory as might he expected. It is true that Books mv always most scrupu- lously kept,-— and the Book-keepers in charge, are invariably men of integrity and probity,— but still there is generally a something wanting. and that thing is seldom sought for or demanded, although of paramount importance in ascertaining the stability of the undertaking and its pro- gress. This great desideratum is simply a ''Balance Sheet of the Books:' Its importance cannot be questioned, where there is more than one partner or proprietor, and even if the two concerns are carried on by one party, it might be supposed, tliat he would very naturally desire to know from whieh sourc he .K-rived the greatest profit and revenue, "1 « "» tlie other hand, to which business he could justly attribute an evident Ljss. The author has had f refluent opportunities of examining the S3 stems adopted both in England and Scotland, and, with a few^ exceptions, the sole object of proprietors appeared fo l>e to pay their current expenses, and hold the balance in the bank at a certain date, as realised iirotit, either subject to division among partner, or retained as an available fund for emergencies. It was a matter of inditi'erence to them, how said balance had accrued — they w^-w to that extent '• above the world," *' the coneerua must be thriving," " all the ex- penses had been paid," '* there ueie book debts besides, due to the business still outstanding," &e. ; but it never seems to have occurred to them, that the " J^ewspaper" would have been more remunerative without the "Printing Business." or vice rtrmi. \n arneliftratioii of thi.s >tale ot things was leiideied still more diffi- NKWSI'APKI! AXO I'itlNTIXO KHTABLISHMKNTS. 143 cult l»y the legislative measures in connection with the press. Weekly papers suddenly (^xpandeook slionld be ruled tlnis : Onto. Description of Work. 1874. . 15' Case Work, ft # a m II ■15,' 1) G ) 1 } *S 6 Charles Brown. // II II — I Totals. 17 *; 1 £ 3 s. 14 d. 1 1 3. THE ADVERTISING DAY BOOK. This book is made u]) from the newspaper Dailtf, and should be " Ml thus :— If advertisements are paid for, when ordered for insertion, the cash received is entered in the Casli Book ; but it will be observed that a column is provideil in the above form for these payments, so that the Book-keeper, in writing up his Day Book from the jmblished news- paper, must take care that tlie casli so received is entered in its proper column, as the advertisments unpaid for should be carried into the credit column, from whern'c they are posted into the Advertisement Ledger, Date. Name of Advertiser. Oaah received. Description of Advertisements. Fo. Adv. Ledger. Credit Accounts. 1874. Jan. 25 Jn. Thomson, 8. d. n House for Sale, Elm £ 8. d. i . 26 A. M'Kenzie, James More, rr fi 1 6 Kow, - - - Sale by Auction, Ship on l>erth for Sydney,- - - i 34 10 2 i 6 6 1 6 ■ H 10 The object of this plan is to have a check upon the credit side of tlie Advertisement Ledger, the summation of which should exactly corre- spond with that of the cash and credit columns above, when added to- gether. The accounts of parties advertising on credit, are posted from this book direct. 4. THE REGISTER OF SUBSCRIBERS AND ADDRESS BOOK. The object of this book is denoted by its title, subscribers being charged at stated periods for the papers, in the Newspaper Ledger, and " Newspaper Account " receiving a relative credit. Cash re- ceived for daily sales, or sales to the trade, passes through the Cash Book, and is also posted to the credit of " Newspaper Account." The form of this book is left entirely to .the fancy of the parties in charge. 5. THE ADVERTISEMENT LEDGER. This Ledger embraces all charges for Advertising, either for Cash or Credit, which are posted into it direct from the Advertising Day Book and Cash Book. Thus : — Sundry advertisers are debited for advertise- ments as per outer column of Day Book, " Advertising account," re- ceiving a credit therefor, and advertisements paid for at the time are carried at once from the Cash Book also to the credit of same account. To check the correctness of this ledger, the suimnation of the credit side of newspaper account, should exactly agree with the debit sides of all. the other accounts, when the amount of the "Cash received" column of the Day Book is added to the latter. 6. NEWSPAPER LEDGER. The Newspaper Ledger, as may be inferred, is solely the recipient on the one hand, of all charges against customers for papers supplied, and on the other, for the credits corresponding thereto ; and is very similar in character to the Advertising Ledger, with this exception, that it is posted from the Register of Subscribers instead of the Day Book. f 146 BOOK-KIEPINO. II.— PRINTING OR JOBBING DEPARTMENT. Tliere are only/otir books actually needed in this department. 1. Cash Book. 2. Wages Book. 3. Day Book. 4. Printing Ledger. 1. THE CASH BOOK, Of whicli a description is unnecessary ; must be kept quite distinct from that used for the newspaper. 2. THE WAGES BOOK, Should be ruled in a similar manner to that in the other depart- ment. It is under the charge of the foreman, and from it he must make up his Day Book. Ill III li ■iJ • ^ i 1^' 3. THE DAY BOOK. This book should be written up from the Wages Book with great care, as it is the register of all the jobbing work done for customers. To the actual wages paid the workmen, are added the trade profit and expense of paper, and the results are posted to the debit of parties in the Ledger, " Printing Account " receiving a corresponding credit. 4. THE PRINTING LEDGER. As before stated, it is posted from the Day and Cash Books, and simply contains the accounts of customers, with a relative compensat- ing account called " Printing Account." Note.— In order to keep the two departments as distinct as possible, it is de- sirable that the two sets of Books, with relative account papers, &c., should be made of different colours,— the difference between the blue and yellow wove papers being ▼•IJ striking, and at once leading the Book-keeper to adhere to the right department in miakisg his entries. For instance, an account rendered for printing work would be made out on yellow wove paper,— when the customer brings it to be discharged, the colour at once directs the Book-keeper to the yellow wove Cash Book, and from thence to the Ledger of the same colour. This suggestion has been acted upon in several cases, and is admitted to have greatly facilitated the work, and at the same time ensured correctness. W i^EWSPAPER AND POINTING ESTABLISHMENTS. 147 III.— TO BALANCE THE TWO SETS OF BOOKS. Having thus given a full description of the books essentially neces- sary for the separate departments, it only remains to describe the connecting link — namely, the Private Ledger — which should be kept by the Principal, or one of the Partners, and contain what may be termed the Radical Accounts, or, in other words, such accounts as form the Capital of the Business, or the charges which affect the Profits. The gross profits appear in the Newspaper, Advertising, and Printing Ledgers, although even there subjected to the offset of work- man's wages, &c. But there are other charges such as Salaries, Eents, Taxes, Interest, &c., which should always be kept private and so de- feat the curiosity of idlers. These accounts should be as follows : — 1. STOCK OR MATERIAL ACCOUNT. Showing the stock, fixtures, and materials belonging to the concern. 2. SALARY AND WAGES ACCOUNT. For such salaries, wages, and allowances to clerks and others as are not exactly applicable to the separate departments. 3. OFFICE EXPENDITURE. For rent, taxes, coals, gas, postages, and incidents. 4. CASH. On hand at time of Balancing. 5. BANK ACCOUNT. The above Accounts should always show Debtor Balances. H 6. CAPITAL ACCOUNT. Being money advanced by Partners. 7. INDIVIDUAL PARTNER'S PRIVATE ACCOUNTS. For their share of Profits at last Balance, affected by theii' subse- i{uent Drawings out of the Business. 148 . f i BOOK-KEEl'JNG. 8. PROFIT AND LOSS. For disposable Balance or Fiiiid for Division. These last three Accounts should always show Creditor Balances, or the following ^':1:T t'^'^r^^* *^« ^^^^^ - -Pended, that 'the Partnerar! ^™g more than their legitimate share ; or, that the Concerns are working at a BALANCE SHEET OP THE BOOKS. Dr. Accounts. Sundries for " News- paper," collected from Newspaper Ledger, £ Do. for " Advertising," collected from Adver- tisement Ledger, Do. "Printing," collect- ed from Printing Led' Stock of Materials, &c., from Private Ledger, Salaries, &c., from do. O ffice Expenses, do. Biiiik Account, do. Casli on hand, per Cash Book, 715 413 321 750 182 1100 14 10 3847 10 6 Or. Accounts. Capital Advanced, per Private Ledger, £ " Newspaper" Account, from Newspaper Led- ger, "Advertising" Acct., from Advertising Ledger, - " Printing Acct.," from Printing Ledger, 2000 831 513 502 2 13 4 9 3847 .|3 The foregoing is supposed to be the Balance Sheet of two sets of Books— but it will be observed that the " Pi-ofit " or " Loss " is not exhibited. To effect this, an account must be opened in the Private Ledger, under the head of Profit and Iioss. AND CHARGED WITH — Salaries, &c., - £ Office Expenses, - Balance of Profit, 350 182 532 1314 1847 10 10 10 BUT CREDITED WITH Newspaper Account, £ Advertising Account, Printing Account, 831 513 502 2 13 4 6 9 1847 The above sum of £1314, 10s. 3d. is thercfuie the free fund for qpm KEWSPAPEll AND I'ltlNTlNG ESTABLISHMENTS. 149 division, or to be held as a sinking Fund to meet future contingencies, and the Balance Sheet of the " Joint Concerns " would be exhibited as follows : — FINAL BALANCE SHEET m Sundries for Newspa- Capital, - - £ 2000 tt n pers, - - £ 715 4 3 Profit for Division, or Do. for Advertising, - 413 10 // to form a Sinking Do. for Printing, 321 9 7 Fund, - 1314 10 3 Stock and Materials, - 750 tt u Bank Accomit, - 1100 u It Cash in hand, - _£ 14 6 5 £ J 3314 10 3 3314 10 The above amounts are merely assumed to show the working of the system, and, of course, provision should be made for bad and doubtful Debts ; but this and any other legitimate charge affecting the Profits, would be carried to the debit of the Profit and Loss Account. From the foregoing system, Proprietors of these joint Establishments can see at a glance how, each department is working, and under which head the greatest profit accrues or loss arises ; and although the Salaries and Office Expenses are charged against the gross profits, it is easy to calculate the proportion applicable to each department, and so ascertain the relative product. It is minecessary to remark, that the above system of Book-keeping is equally well suited to either of the Establishments to which it lias here been conjointly applied. it SECTION V. !!■ r 11 r III I' 11 I II m miYATE B00K-KEEPI:NG for INVESTOES or DEALEES in STOCKS AND SHAEES. A WANT has li.iig been felt by a certain class of Investors— namely, priyate indivitluals possessed of more or less capital, who have suffi- cient shrewdness and foresight to avail themselves of the opportunities presented by the money-market to turn their money to account, but are totally unacquainted with any system of Book-keeping by which they can keep an account of their transactions. To supply this want, the author has particularly directed his attention, but his difficulty has been to recommend such a system as from its simplicity could be ac- quired and understood by any one, however ignorant he maybe of the lecognised methods of Book-keeping— a plan which, without any elaboration of entries, would enable a man to record his transactions with his Broker, and tell at any time how his money was laid out, and the return or income which ho would in all likelihood receive from it. Many men trust implicitly to their Brokers to buy and sell for them according to their judgment, leaving the accomiting which must follow entirely in their hands, and paying or receiving a difference without having any correct idea as to how they stand ; but it is very evident that such a system must at the best be unsatisfactory to them, and a great additional labour and responsibility to the Broker ; whereas, if a aimple system of Book-keeping could be acquired by which the In- vestor could at any time know how he stands without being o])liged to have recourse to others, much care, trouble, and risk would be avoided. The " Speculator for the Account," or " Dabbler in Shares " is not the person here referred to, but the man possessed of money, who seeks the Imt investments, and who, when a fitting opportunity pre- sents itself for turning over his capital, or changing from one security to another, should know the length he ought to go, and the benefit his PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. IM income is likely to derive from the change contemplated. His Ledger should inform him as to this— it should show him what he paid for his Stocks, and at what price he can sell them without sustaining loss — it should also show him the income he enjoys, and whether the pro- posed sale and purchase will increase or lessen it. The method of Book-keeping, which would meet these requirements, is a very simple one. There are only two Books needed — a Cash Book and Ledger. (1.) In the Cash Book, every transaction must be entered of money received and paid away; and as Stock transactions will lie mixed up with private expenditure for housekeeping, &c., due care should be taken that each entry is properly described under its Ledger name or Heading. Thus, if Caledonian Rail- way Stock is sold, commence the entry with " Caledonian Railway ; " if money is expended in housekeeping or wages, with " Private ; " if money is drawn from the Bank, with " Bank ; " if Dividends or Interest are received, commence with " Dividend or Income Account ; " and so on, as all these accounts, thus headed, appear in the Ledger. (2.) The Ledger is devoted to separate Accounts — kept quite dis- tinct — and entries are carried to them from the Cash Book. It wiU show, on the one hand, the Capital of which the party is possessed, and on the other, the Stock, Shares, or Securities in which it is invested. It will also exhibit the " Bank," the " Income," and the " Private Expenditure " Accounts, so that when the Cash Book entries are properly transferred to these several accounts, they will teU their own history. From the annexed form of a CASH BOOK, the following par- ticulars may be gathered : — On the left hand page, is entered the money received — thus, The Balance on hand at Slst December 1872, £87, 7s. 6d., Dividends drawn, Cheques cashed at the Bank, and pro- ceeds of Stocks sold (see Highland Railway Shares and British Linen Co. Stock, on 3rd June and 6th July). On the right hand page is entered the money paid azrwy— thus. For housekeeping, &c., Sums paid into Bank, and Stocks purchased (see Great Xorthem Railway, National Bank, Commercial Bank, &c.). Of course the difference be- tween the sums received and those paid away is the Balance on hand, 152 BOOK-KEEPING. lii and in tMs instance it amounts to XU, Is. lOd., which is carried to the next year's account. From the annexed form of a LEDGER, it will be seen— That various accounts have been opened with distinctive titles or headings^ and the Stocks and Shares, or other securities on hand, at commence- ment, are all entered. The entries in the Cash Book are then carried to these accounts — thus, by entering all tlie sums which appear on the left hand page of the Cash Book, in the right hand columns of the Ledger accounts, and r/ce versa. This being done, the Cash Book is laid aside, and the Ledger is the record of every transaction. No iurther explanation is thought necessary, but reference is made to the annexed Scheme of Books. Let us therefore assume, that a man has come into possession of a fortune. His first desire is to ascertain its amount, and of what it consists ; his next should be, to know how to keep a proper record of it. He proceeds to make out a List or Inventory of Funds belonging to him, and which ho should do as follows : — IlSrVENTORY OF INVESTMENTS, 31«* December 1872. 1 2 3 4 5 6 7 8 9 10 11 Investment. Amount Price. Value. Dividends due. Caledonian Railway, Glasgow & So. West. Ry. Gt. Northern Railway, - Gt. AVestem Railway, Highland Railway, • Consols, 3 per cent. - British Linen Co. Stock, - Commercial Bank Stock, - National Bank Stock, Royal Bank — Deposit, Royal Bank — Account, - Cash in hand, ... £1000 Stock, 1000 Stock, 1500 Stock, 1500 Stock, ( Five shares ) 1 (Nairn) / 20,000 Stock, 1000 Stock, 1000 Stock, 1000 Stock, *•* • ■ ■ '• • • • • ■ £109i 128} 135 126 111 91|i 283 ; 296.4: 307 £1092 1282 2025 1890 555 18,350 2830 I 2965 3070 5000 ' 2940 10 10 "2 2 7 10 6 6 6 A-pril — October. March— Sept. March — Sept. March— Sept. May — Novem. January— July. June — ^Decern. January — July. January— July. December — December — £' 42,000 87 £ 42,087 1 Thus, it will be seen, that he is worth in moveable or personal pro- perty, a sum of £42,087, 10s., valued at the market price of the day which has been assumed as 31st December 1872, u- 1 PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 153 He then takes his Ledger, and from the above Inventory, opens eleven accounts^ and carries the sums there stated into the left hand columns (see Ledger annexed). Then he opens a " Capital Account " in his Ledger, and enters in the right hand column^ £42,087, 10s., as the Capital belonging to him, so that the aggregate amount of the sums entered in the left hand columns, with the Balance of £87, 7s. Od- in his Cash Book, agree in amount with the sum standing in the right hand column of his " Capital Account." The Cash Book is then given effect to, as already minutely described. This is the system which the author would recommend, and a set of Books is now submitted, as explanatory of the method. ♦ ♦ » 1S4 BOOK-KEEPING. PRIVATE BOOK-KEEPING FOB INVESTORS, ETC. 155 'i i 1, CASH BOOK for Tear from 1872, Dec. 1873, Jan. » m Mar. April May JoBe July 31 25 28 5 10 15 15 16 15 15 6 I M » ft .0 Aug. Sep. Oct. Nov.. # JL/Uv. ■24 30 19 1 2 15 11 /c 15 To Balance of . Dividends, > Do. Do. Royal Bank, Dividends, Do. Do. Do. Royal Bank, Do. Dividends, Highland Ry. Dividends, - Do. Do. Brit. Lin. Co. Dividends, Consols, Royal Bank, - Do. Do. Dividends, - Do. JLPO, Do. Do. Royal Bank, - Dividends, - Royal Bank, - Dividends, Da Cash ill hand. Consols - - . Commercial Bank, N'ational Bank, - Cheque, No. 1, - G. & S. W. Railway, - Gt. Northern Railway, - Gt. Western EaUway,' - Caledonian Railway, - Cheque, No. 2, - Cheque, No. 3, - Highland Railway, 3 Shares sold @ £109, less £1, 12s. conunis. British Linen Co. Consols, - - - Commercial Bank, { £500 sold @ £264, less ( £6, 12s. commission, National Bank, - (£10,000 sold 92J less I £12, lOs. comm. Cheque, No. 4, - Do., No. 5, - Do., No. 6, - G. & S. W. Railway, - Gt. Northern Railway, Gt. Western Railway, - Caledonian Railway, Highland Railway, Cheque, No. 7, - Brit. Linen Co. - Cheque, No. 8, - Int. on R. B. Dep. Receipt, Do. on R. B. Acct.-current, ) } Ledg. Fol. 11 11 11 12 11 11 11 11 12 12 11 11 11 11 7 11 6 12 12 12 11 11 11 11 11 12 11 12 11 11 £87 300 70 80 35 30 45 48 26 1924 50 12 325 65 300 70 1313 80 9237 15 8 10 4387 35 4767 30 90 48 25 6 1202 32 890 152 21 8 25,786 10 2 17 15 1 10 9 10 8 6 19 8 3 lit December 1872 to 3 let December 1873. Cr 1873, Jan. Feh. Mar. April * May June July Aug. Sept. ti Oct. Nov. Dec. 1 9 28 10 31 1 16 15 16 3 1 6 24 30 3J 19 2 30 1 11 15 31 By Private, Do. - // Royal Bank, - n Do. - Do. - Private, Gt. North. Ry. Private, // Do. - tt Royal Bank, - Private, * Royal Bank, - Do. National Bk. Royal Bank, - H Commer. Bk. Royal Bank, - Do. . Private, // Do. - * Gt. West. Ry. Caledon. Ry. // Private, Royal Bank, Balance of House in advance. Crown Taxes, Paid in, . - - Do. . . - . Do. - . . . House in advance, (Bought 1500 Stock @) < £127, Comm., Stamps, V ( and Fees, £10, 8s. - j Servants' Wages, - Feu-duty, - - - . Paid in, - -• - House in advance, Paid in, - - - Do. - - - - Bot. 1500 Stock,® £291, ) Comm. £21, 16s. 6d. J Paid in, - - - Bot. 1600 Stock,® £295, ) , 17s. 6d. j { j Comm. £47 Paid in. Do. - . - ■ House in advance. Servants' Wages, (Bought 1000 Stock, @) < £119, Comm., S., and \ \ Fee, £12, Is. 6d. -j ( Bought £500 Stock, @ ) \ £104, Comm., S., and \ ( Fee, £5, 9s. 6d. - j ( Paid Tradesmen for Wine, \ I Coals, Gas, & Sundries > ( to close of the year, - j Paid in (Interest)^ Cash in hand. Ledg. Pol. 14 14 12 12 12 14 14 14 12 14 12 12 9 12 8 12 12 14 14 14 12 £105 50 450 50 80 105 1924 30 15 325 105 1313 9237 4386 450 4767 90 48 105 30 1202 525 355 21 14 // 1/ H H II 8 8 10 16 17 11 n 25,786 II 6 6 8 n 19 4 IC 8 h BOOK-KEEPING. PRIVATE LEDGER. CALEDONIAN RAILWAY. 1872, Dec. 1873, Dec. 31 15 To 1000 Stock, @ X109J - « '500 Do. purchased at £104, iKAn Com. £2, 12, Stamps and Fee, £2, 17s. 6d. £ 1092 525 1617 s. 10 9 19 d. GLASGOW ^ S. WESTERN RAILWAY, 1872, Dec. 31 To 1000 Stock, @ £128i 1282 10 . GREAT NORTHERN RAILWAY. 1872, Dec. 1873, April 31 16 To 1500 Stock, @ £135 # 1500 Do. purchased at £127, ^J^ Com. £9, lOs. 6d. Sts. "*""" and Fee, £9, 17s. 6d. 2025 1924 3949 8 GREAT WESTERN RAILWAY. 1872, Dec. 31 1873, Nov. 11 To 1600 Stock, @ £126, 1000 Do. purchased at £119, 9^7m Com. £519, Stamps & "^"" Fee, £6, 2s. 6d. - 1 1890 1202 3092 (1.) s. d. (2.) (3.) (4.) rtllVATE BOOK-KEEPING FOR INVESTORS, ETC. 157 PRIVATE LEDGER. HIGHLAND RAILWAY. (5.) 1872, Dec. 1873, June « Dec. 31 3 31 To 6 Shares I^airn pref. 5 per cent., @£111,- By 3 Do. sold at £109, com. £1, — 12s. 9d. - 2 By Balance, - 1 £ 555 it s. tt d. H tt H £ 325 229 s, 7 12 0f d. 3 9 555 To 2 Shares brought down, costing 229 12 9 CONSOLS. (6.) 1872, Dec. 1873, July « Dec. 31 24 31 To 20,000 Consols 3 per cent., @ 91| - - - By 10,000 Do. sold at 92^, less , ,.,. romm £12 10s 1 18,350 tt K K 10 tt tt It tt 9237 9112 10 10 10,000 By Balance, - - 18,350 tt n To 10,000 brought down, costing - 9112 BRITISH LINEN CO. BANK STOCK. (7.) 1872, Dec. 1873, July » Dec. 31 6 31 To 1000 Stock, @ £283, By 500 Do. sold at £264, less f,p.r. comm. £6, 12s. ^^^ By Balance, - 1 2830 K tt U tt » tt 1313 1516 8 12 tt tt 2830 tt tt To 500 brought down, costing 1516 12 tt IM BOOK-KEEPING. PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 159 PRIVATE LEDGER. COMMERCIAL BANK STOCK. 1872, Dec. 1873, Aug. 31 To 1000 Stock, @ .£296 J, - 1^1 • 1600 Do., bouglit at £295, Com. 2600 ^'^^' ^^^M S. and F. ^''"" £24, 5s. 6d. - 1 £ 2965 4767 s. d. 17 6 7732 17J 6 NATIONAL BANK STOCK. 1872, Dec. 1873, July 31|To 1000 Stock, @ £307, ^^ ' ^^QQ Do,, bouglit at £291, Com. 2500 £21, 168. 6d.- 3070 4386 7456 16 6 16 6 ROYAL BANK DEPOSIT RECEIPTS. (8.) £ \s.\d. 1872, Dec. li'i 111 31 To Interest Receipt, No. 7220, 5000 (0.) do.) PRIVATE LEDGER. DIVIDEND or INCOME ACCOUNT. (11.) C. B. Fol. 1873 £ S. d £ 8, d. Jan. 6 By ^ Div.- —Consols, _ - - n II II 300 n u # II II Do. Commercial Bank, n u 11 70 H tt jr 25 II Do. National Bank, if II II 80 tt tt Mar. 5 II Do. Glasgow & S. West. Ry. II n tt 30 tt tt II 10 n Do. Great Northern Railway, II II II 45 II H II 15 u Do. Great Western Railway, II II tt 48 15 tt AprD 15 II Do. Caledonian Railway, II II tt 25 H II May 11 II Do. Highland Railway, H II tt 12 10 tt June 15 II Do. British Linen Co. - 1 A II ti » 65 II tt July 6 II Do. Consols. _ - . 1 II II tt 300 tt tt ir // II Do. Commercial Bank, - II II tt 70 tt tt H 24 II Do. National Bank, n II tt 80 II tt Sept. 1 H Do. Glasgow & S. West. Ry. 1 II II tt 30 II tt K 2 H Do. Great Northern Railway, II H H 90 tt tt U 5 II Do. Great Western Railway, - 1 II n tt 48 15 tt Oct. 15 H Do. Caledonian Railway, II u tt 25 tt H Nov. 11 II Do. Highland Railway, X 1 II tt M 5 tt tt Dec. 15 II Do. British Linen Co. - ■* ti u tt 32 10 tt «r 31 n Interest on Royal Bank Deposit Receipt, No. 7220, tt K tt 152 10 tt it u M Do. on Account-current, II tt tt 21 8 4 H II 9 1531 8 4 • 160 BOOK-KEEPINQ. PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 161 ■ft< Im ! PRIVATE LEDGER. ROYAL BANK CURRENT ACCOUNT, (12.) T«7'9 iO'l .a Dec. 1873 Jan. feb. If April May June July 31 Aug. Sept. If .Nov. Dec. II 28 10 28 31 16 15 3 6 24 30 // 31 19 30 11 15 31 To Balance at this date, , Paid in, - - * Uo. By Cheque No. 1, To paid in, - - By Cheque No. 2, . Cheque, No. 3, To paid in, - I, Do. II Do. By Cheque No. 4, Do. No. 5, To paid in, - By Cheque No. 6, To paid in, - * Do. By Cheque No. 7, „ Do. No. 8, To Interest paid in, By Balance in Bank, To Balance in Bank hrought down, Fol. 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2940 450 50 8, 80 326 1313 923^ 450 '90 48 21 15,006 II II II » II 7 8 10 // * H U II 11 8 d. 6 8 8, 35 . 1924 50 4387 35 4767 1202 890 1714 8 6 1714 15,006 17 PRIVATE LEDGER. CAPITAL ACCOUNT. (13J 1872 Dec. 31 By amount of Capital, - - - £ s. II d. II 42,087 s. 10 d) II PRIVATE EXPENDITURE ACCOUNT. ' (14J 1873 Jan. // April May n July Oct. Nov. Dec. 1 9 1 15 16 1 1 11 31 To House Expenditure in advance, * // Taxes, // House Expenditure, II Servants' Wages, // Feu-duty, . . _ _ » House Expenditure, >i Do. - - . // Servants' Wages, // House, Wine, and Tradesmen's Accounts to end of year. 105 50 105 30 15 106 106 30 355 II n H II II II II It II II II II II H » II II \ 1 1 ii 900 M II I ft I II ; X BOOK-KEEPIXG. V ■'f If the reader has thoroughly examined the foregoing set of Books, he will have observed that every transaction of the year has been car- ried either to the debit or to the credit of accounts in the Ledger. The next thing to be done is to see if the Ledger is correct, and this is ascertained by taking down the Balances into what is called a B'A r.AXCE SHEET^tlllls, Dr. BALANCE SHEET. Or • 1 £ s. d. £ s. d. Ciiledonian Railway, 1617 19 6 Capital, 42,087 10 II , G. & S. W. Ry. Co. 1282 10 u Dividends, - 1531 8 4 bt. Northern Ry. - 3949 8 II 1 Gt. Western Ry. - 3092 1 1 Higliland Railway, - 229 12 9 Consols, - - - 9112 10 II Brit. L. Co. Stock, - 1516 12 II Com. Bank Stock, - 7732 17 6 Nat. Bank Stock, - 7456 16 6 Royal Bank — Dep. - 5000 u // i ! Do. — Curt.-acct. 1714 9 Casli in hand, - 14 1 10 Private Expenditure, 900 18 4 18 ^ 43,618 43,618 i The summations are here found to agree, and the correctness of the Books is thus tested ; but the practical effect of the system is— that to the original Capital of £42,087, 10s., a sum of £631, 8s. 4d. has been added during the year — thus, Dividends received, as above, £1531 Deduct Expenditure, do., 900 8 4 £631 8 4 In other words, assuming that the Investments are held as exactly worth what they stand at in the Ledger, the Capital has been increased by the Income not having been exhausted. The more correct plan, however, is to value them at the prices of the day — thus, tt PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 163 -• CO ^ o> ^ CO o> 1 i Apparent Loss on the Y^i r-l 1— 1 I— 1 I— 1 1— 1 i i b- (M !>. ^ CO < Apparent Profit on the Year. ...-....« 1 0) O , ,c.^ ,o , ,co i O G^ (M CO lO CO r-H '«*l 05 CO CO a» 1^ ft&fe%a:*!s&%ft"^^2 fc O 00 IH s U • i < *:^=::.===.O^^^ai.-H rH 0) OOOiOCvliOC^IOSOO"^'^ OS(MO-CC>Oi^ I— It— l"«!jHCO Oil— It-t-iOi— < CO OS C8 o Is <£)©^005CMO«0'^ Or-H'*(MOa»t:^OSO J, ;. 6 ^^r-ir-H,— 1 - ^ O l>- t— Ir-ICOCO C3i— tl>-J>-^r— 1 00 I— 1 1 oooo oooo OOOO qOOOO «+^ «4^ V^ «+^ H 2 ^ Cfl «H 1 i Investments ob Securities. Caledonian Eailway, - - - Glasgow and South- Western Ry. - Great Northern Railway, Great Western Railway, - - Highland Ry. (Nairn pref. 5 ^ c), Consols (3 per cent.), - British Linen Co. Bank Stock, Commercial Bank Stock, National Bank Stock, - - - Royal Bank Deposit Receipt, Do. Current- account. Cash in hand, - - - - •BOllOJ JsSpai 1— iCMCO'*»OCOt>'OOOiO(M r-H i-H ^l il II- l'o4 BOOK-KEEPING. By the i.iCLcdiiig page, the correctness of tlie Books is at once proved — thus, The (Japital at the commencement of the year, was The Dividends and Int., ot Income, re- ceived during the year, amounted to Deduct the Expenditure, Add the estimated Pro- lit on Shai'es, - Less estimated Loss, - £639 396 4 5 1 9 £1531 900 8 631 Add, £42,087 8 243 8 10 Estimated value of Capital at 31st Bee. 1873, as already shown, 874 £42,962 11 It is thus ajjparent that notliing can be more simple than this method of Book-keeping— there is no trouble in balancing. Shotdd it not be thought necessary to value the securities held at the close of the year, but merely to balance the Ledger in order to prove its cor- rectness, the anioimt of Expenditure must be deducted from the Divi- dends or Income, and the difference added to the Capital as an excess on the year ; or, as it might happen, that the Expenditure exceeded the Income, the reverse operation would have to be carried through, and the excess of Expenditure deducted from the Capital as so much loss on the year. In either event the two sides of the Ledger would correspond. Although it has been stated that the forms of accounts, now sub- mitted, are not intended for " Speculators for the Account," they are equally adapted for them as for Investors, the Entries being the same. For example,— we will suppose that a Speculator fot the rise, as it ie called, or in Stock Exchange parlance, " a bull," buys £10,000 Caledonian Stock, at £100, on the first of the month, for settlement on the " Account-day," middle of the month, without having the money to pay for it. Two days before the " Settling-day," or what is called the " making- PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 165 up or carrying-over day," he instructs his Broker to lend — that is continue^ or carry over, the Stock till the end of the month. The Broker does this, by selling the Stock for cash on the Account or Settling-day just approaching, and buys it back for the settlement on the Account-day at the end of the month ; paying, probably, a quarter per cent, more than what the Stock sold for. This is called paying a " Contango," which is, in reahty, interest for getting the payment of his Stock deferred a fortnight. If the Stock, on the carrying-over day, is lower than it was at the date the original purchase was made, the Speculator pays the difference. Suppose the price to be 99 in the case under consideration, the difference would be £100 in addition to the commission of £50 or J per cent. The Debit and Credit entries in the books are here the same as if the Sj)eculator had paid for the Stock. Let us follow the transaction on to the end of the month, — The Stock now stands the Speculator, Also Commission, Do. for carrying over, say, « Contango," £50 12 25 10 n \ n n II At the end of the month, we will suppose that the price has advanced to £103, and that the Broker is instructed to close it — that is, sell it, which he does at 103, producing, - Leaving a profit of £10,000 87 £10,087 10,300 jLi-j L •j 10 10 10 Supposing, on the other hand, the price has fallen to £97, the Stock is either again carried over, and a further difference, or " Con- tango," paid, or it is sold out and out, or closed, leaving a loss of £387, 10s. Sometimes Stocks are very scarce for delivery, and the Buyer, in- stead of having to pay a " Contango " for having his Stock carried over or continued, is allowed a consideration by the Seller for not in- sisting on delivery of the Stock ; such consideration being, what is called in Stock Exchange language, a " Back," or " Backwardation." im BOOK-KEEPING. Let m now reverse the traiisaction, and suppose the Speculator sells X10,000 Stock, instead of bui/i/uj it. Wlien the settling-day comes round, he instructs his Broker to buy or borrow the Stock, and if there is a " Contango " going, he receives it ; or if the Stock be scarce, and a " Backwardation " demanded, he must pay it,\mtil ho closes the Stock. The settHng-days in the Stock Exchange, are at the middle and end of each month ; the carrying-over day, two days ; and the name day (being the day for issuing buyers' names), one day before the settling- day. F ( . pi is With the kind permission of the Edinburgh Stock Exchange, the author now appends the Scale of Commissions usually charged by its members, together with certain regulations on the subject :— " The Eates of Brokerage or Commission payable, in all cases, by both Buyer and SeUer, shaU not be less than the foUowing :~ On Stock and Shares. Under £2 Sd. per £100 Stock or per Share. £2 and under 5 6d. do. 5 do. 10 Is. Od. do. 10 «Jo. 15 ....Is. 6d. do. 15 and upwards, | per cent, on the price. " It being understood that the charge on no transaction, however small, shall he less than Five Shillings to each party. " And farther (1st), When Stocks or Shares, not fuUy paid up, but on which Calls may be prepaid, are purchased with the view of being fully paid up, and the purchasing Broker takes charge of pre-paying the Calls, he shall be entitled to charge Brokerage at the same rate as if the Stock or Shares had been paid in full at time of purchase ; (2nd), Members buying and selling, or selling and buying, the same Stock or Shares, for the same party, during the currency of an Ac- count, may, in their option, charge only one Brokerage for buying and selling, or selling and buying; and when a Constituent sells any Stock or Shares with the view of investing in other Stock or Shares, or vice versa, and the order is given for the transactions of selling and buying, or buying and selling, during the currency of the same Ac- count, Members may, in such cases, if they see proper, charge only one Brokerage ; (3rd), Members carrying over Stock or Shares may PRIVATE BOOK-KEEPING FOR INVESTORS, ETC. 167 charge their Constituents, for each time that the Stock or Shares are carried over, one-half of the fixed rate of Brokerage for buying or selling same ; and these charges for carrying over may cover the re- purchase or re-sale, as the case may be, when done in this market." " In all cases, unless otherwise agreed upon, the expense of Transfer and Recording Fees shall be paid by the buyer, who shall be entitled to fix the consideration money for Transfers at any price quoted, during the Account in which the transactions took place, in the official List of any Stock Exchange in the United Kingdom." " The dealings in Shares shall be ex-dividend from the beginning of the Acpount f(3llowing that in which the dividend may have been declared ; and in Shares bearing interest, such interest falling due in the middle or end of a month shall be deducted in all transactions of the Account immediately following." III ; il » III ! 1 SECTION VI. i m I "III »' CHAEITABLE OR PUBLIC mSTITUTIONS. Thi object in writing this Section, is not so much to suggest to long established Charities or Societies, any change on their systems of Book-keeping, and to which their officials may have become accus- tomed, as to offer to younger Institutions a simple and well-tested method of presenting a state of their financial position or progress to those interested in their welfare. When this can be effected without additional labour, and with an actual saving of time, perhaps it may be worth the whOe of Cashiers and others to consider the subject, and see if the system now suggested could be adopted beneficially in the Institutions they may represent. The scheme of Book-keeping, which is described and recommended in this Section, was expressly filmed by the author for the Eoyal Hospital for Sick Children in Edinburgh, and its satisfactory working is certified by the following letter from Mr John Henry, S.S.C., the highly esteemed and efficient Secretary of that invaluable charity :— " EnmBURGH, 20 St Andrew Square, mh April 1874. «I have great pleasure in stating that the system of monthly balances introduced by you into the Sick Children's Hospital, when you were a director and auditor, has continued in use over since i i.e., for the last ten years, and has been entirely approved of, as it gives a very clear and condensed view of each month's financial transactions. I ought to add that, following the system detailed in your valuable work, my firm have carried out the practice of monthly balances, which is a very great satisfaction. Under your system, it can be very easily accomplished." The advantages of this system are manifest, even on a cursory iu- CHARITABLE OR PUBLIC; INSTITUTIONS. 109 spection— first, in its simplicity ; and, secondly, its completeness ; while the great desideratum which was aimed at has been attaine 10 £761 12 17 10 270 19 19 10 10 1032 12 £774 8 270 1045 53 8 3 12 „ Balance of Cash in Treasurer's hands, - Treasurer. Auditor. £1098 f ^tt ill ! ' Ml l! If m 172 BOOK-KEEPINQ. There are other Institutions, however, which combine an industrial principle with the charitable element — that is, the objects of the Charity are expected to apply themselves to some manual or mechanical employment for which they are paid regular wages, the Institution de- riving the benefit, if any, which may arise from the sale of goods so manufoctured. For instance — the Deaf and Dumb Institution, and the Eoyal Blind Asylum, in Edinburgh. In the former the lads can acquire a knowledge of printing, &c. ; wliilst in the latter, which is professedly an industrial establisliment, the inmates, although blind, arc taught to weave, to make baskets, bedding, brushes, mats and matting, and a variety of other articles. A large number of blind men, women, and boys are constantly employed, and the work turned out is very considerable, as will be seen from the Abstracts of Accounts of which a form is annexed. It can be understood, that there are necessarily many drawbacks, which render it imposaible to support such an Institution as this with- out appealing to the public for support in the shape of subscriptions or donations, hence the necessity of having a particular and thoroughly well organised system of Accounts and IJooks, so as to define and sei»arate the charitable and mercantile elements, showing the proper working of each branch of manufacture, and exhibiting, by analysis, the profit OF loss upon each department. In 80 limited a work as this, it is impossible to give a complete form of the set of books in use, l)ut the system which admits of the following Abstracts, being obtained with facihty, must be considered as nearly perfect as [lossible, and well worthy of imitation and adoption. The Book-keeping, whicli i.s on what is called the " mixed method," altliough heavy from the immense number of small as well as large tmnsactions. Is by uu nieanvs diHicult. Its peculiarity consists in the arrangement of its Ledger. The trade is large and widely spread, and the multiplicity of open accounts, which are unavoidable, rendered it necessary to introduce a "Ledger Balance Book." This Book is invaluable, forming a most perfect clieck upon customer's accounts and outstanding debts. The other books scarcely diiier from those in other large concerns, so that a description of them is unnecessary. There may be said to be three departments under the management of the Directors of the Royal Blind Asylum, Edinburgh — (1), The charitable ; (2), The manufacturing ; and (3), Tlie department np- l>roi>riated to the female blind. These classifications are preserved in CHARITABLE OR PUBLIC INSTITUTIONS. 173 all the financial and other arrangements, and the Annual Accounts are framed on the same principle. To these reference is now made, and the printed statements for the year 1878 are given as specimens of the system which works admirably. No. I. ABSTRACT OF ACCOUNTS connected with the Charity Depart- ment, showing Amount of Subscriptions, Legacies, &c., received, and the General Charges affecting the same. For the Year ending SOth September 1873. I. Rbceipts during the Year. 1. Subscriptions — In Edinburgh and County, In the Provinces, 2. Cash found in the Charity Boxes, - 3. Legacies and Donations — Miss Mair, Miss Wood, Leith, less £200 duty, - Miss Muir, less lis. expenses, Mr J. Court, George Sq., less £10 duty. Miss Hamilton's Estate (residue), Mrs Smith, Coldstream, - Very Rev. Dean Eamsay, less £5, 15s. duty, &c. Janet Eisher, per Mr Thos. Stevenson, Dr. Renton, Dalkeith, less £103, 6s. Id. duty, &c. Mr J. Faichney, Ancrum,less£10, 12s. duty and expenses, IVIiss Bowie, Bathgate, less £2, 10s. - Mr John Croall, Middlefield, - Special Donations towards building of New Asylum for Blind Females — From Trustees of late Mrs Baillie, Lyne- 503 816 1319 4 1323 doch Place (2nd donation), £ From Mrs Finlay, - 500 10 10 Annuity from Mr Finnic of Swanston, Carry over, 1800 19 90 758 5 49 10 896 89 17 100 u 9 19 // 5 // 13 8 10 3861 510 8 n 11 H i tl 11 II II H A 10 5 6 Ill 8 19 8 10 16 10 4380112 8 570412 4 i|*i ^1 •i |lij 174 BOOK-KBEPlNti. Brought over, 4. Interest received — On Deposit Receipts, On X991 Edinburgli City Bonds, On Dr Kenton's Legacy, 29017 Less Charged on Union Bank Account, I 191 15 5. Eents and Feu-duties received and due, - | 391119 Less do. and Taxes paid, - - - 94|16 G. Old Stores sold, Amount ofliecciptSf II. Expenditure affecting the above — 1. New Buildings, .... £ 2. Paid for Clothing, 3. Salaries not chargeable to Trade — Treasurers and Secretaries, - Chaplain and Teacher, Medical Officer, Teacher of Organ and Piano, Teacher of Singing, - Teacher of Instruiu. Music, Leader of Psal*^' for 18 mths. 4. Expenses collecting Subscriptions in Town and Country, Advertising and Printing T). Printing Annual Eeport, 6. Alterations on Property, and Repairs, - 7. Fire Insur, and Miscellaneous payments, 8. Allowances, &c., to Blind Men — Sick Allowances, - £ Gratuities and AlloAvances to augment Wages, Holidays, - Cost of Christmas Festival, Reading to Blind, & Books, Annuity to J. Anderson, - Allowance to T. Mandersou, Amount of Expenditure^ Balance on Chahitv Account, carried to Abstract No. IV. £ 2867 CHARITABLE OR PUBLIC INSTITUTIONS. 175 No. II. ABSTRACT OF ACCOUNTS connected with the Manufacturing Department, For Year ending 30th September 1873. L Sales during the Tear. 1. Cash Sales — At the Asylum, At the Branch Shop, 2. Credit Sales, 5,098 693 Tot(.d Sales, £ 3. Manufactured Goods and Materials on hand at 30th Septt'inher 1873, less (loods not paid for, per Credit Ledger, £3364, 6s. 5d. - - - - II. Payments, &c., during the Year. Wages, £3010, 16s. 5d. ; Messengers, £403, Is. lid. - - - £ Expense of Washing covers, Materials, &c., supplied. Salaries to Manager, Clerks, Shop- keepers, Traveller, &c. - , - Coals, Gas, and Machinery expenses, - Stationery, Printing, and Books, Eents, Taxes, and Insurance, Carriage and Charges on Goods, and Incidents, Advertising Goods, o bo o o 2 CO 00 *fl(K> »"^'# h(M lO »0 Oi CO o> _ GO rH «0 1— 1 CM rH Ol CO CO • o o 00 /n\ t^ ■ ^ '00 « GO O O Ol i-l (M C^ CO »— f »0 O »0 00 t^ 00 rH lO O (M CI CI t "PI Hj o o o o o o o o CI a 1 ••ml o o h; O lT £ H Q. >• fib ti) bo CO O g g3 g ^ O O Cj5 O* o" o" ' o o o o o o «« •> M p— t Cv| I— • o o o o o o o o o o o o o o o o o o o o o o o o o o o CI o o »o M o CI CO o> o o o o o o o ^ O CI O I— I 9 BB E ^ PQ o COpHi-;^0<00'*«OC10 t*O«0O00?-«'<:t«'*ft>.C» -*3 I— j I—* .p^ Co o o o d PQ O »o fc^ to o 0> d xf* I— < to t^ t^ 00 »o O iO CO CX) oa 00 d CO d CO CO CO CO OO 00 GO 00 00 00 00 i I 3 a « ++ 3 ^ 1 o It may be observed that all the Scotch Banks are Joint Stock, and that/^'c of them are called Chartered Banks, having l)een either estab- lished by Act of Parliament or incorporated by Royal Charter; although in what the privileges so conferred consist, is not particularly clear. The Charters of the three oldest, are by some said to have the effect of restricting the liability of the partners to the amount of their shares. The first Scotch bank was the Bank of Scotland, founded by AVilliam Paterson in 1695, as already mentioned, and established by Scottish Act of Parliament. Its subscribed capital was originally £1,200,000 Scots (£100,000 sterling) ; but at its start, not more than £30,000 could be collected from various sources— England and Holland contributing the greater amount. It is a singular fact, that the original foreign shareholders became naturalised Scotsmen under the Act, and the first Board of Directors was composed equally of Englishmen and Scotchmen. Power has l}een taken to increase the Capital to £4,500,000. At present it is £1,000,000 paid up. The Royal Bank, incorporated by lioyal Charter in 1727, originated out of the Equivalent Company, an association which acquired right to the greater part of the compensation of £398,058, 10s., granted by Parhament to Scotland at the Union in 1707. Its original capital of £151,000 has been raised to £2,000,000. This was followed by the British Linen Company in 1746, the object of which originally was to encourage the manufacturers of linen in Scotland, but very soon after its formation, it abandoned its circum- scribed policy, and extended its benefits and accommodation to the public in general, in the legitimate channels of the banking business, whereupon a Charter was obtained. Its paid up capital is £1,000,000. As there are no pecidiarities connected with any of the other banks, it is quite unnecessary to enter into a description of their several establishments. Suffice it to say, tliat the reaction consequent on the cessation of hostilities with America in 1783, led to the formation of several other banks, which were called into operation by the actual re- quirements of the commercial world, as the Restriction Act to which allusion has already been made, limiting the number of partners to six, did not extend to Scotland. Many of the Scotch banks have an extensive proprietary, men pos- sessed of large landed property. The depositor, therefore, need be under no apprehension, where the value of the security can be so easily ascertained, a shareholder being liable to his last farthing for the debts 2b Kr APPENDIX. I ^ i!> I PI! 194 of the Bank, to, of course Tlie btisiness operations of a Scotch Bank may be classed under Jim ON ENGLISH AND SCOTCH BANKING. ll»5 sliarehoHers of the Chartered Banks already referred ed, if any limit to their liability in reality exists). T. Beposit Transactions. Sums are received by banks on deposit, repayable on demand with interest. These accounts are of t^^o classes — Current Accounts and Interest (or Deposit) Eeceipts. 1. Current Accounts. — These are operated on by cheques, which, as well as lodgments, may be of any amount, and no commission is charged upon the operations. Interest is allowed on the accounts, either on the balances remaining at tlieiv credit from day to day, or on the smallest montlily balance which may arise in the course of the ope- rations upon them ; in the latter case a somewhat higher rate is allowed than in the former. Tlie accounts are balanced yearly, and the interest due upon them accumidated. 2. Inti're4 Receipts. — These are issued for lodgments understood to remain for considerable periods, and bear the highest rate of interest allowed from time to time by the Scotch banks. Xo deposits are taken at fixed rates, or for fixed periods. Eeceipts are not operated on hj cheque, but must be produced and endorsed by the depositor on withdrawal whether in full or in part, although, in exceptional cases, payments to account may be made. Interest is not accumulated on this class of deposits ; and when payment or accumulation of interest is wished for, the receipt is ordinarily delivered up as in the case of withdrawal, a new receipt being issued to the depositor. All deposits are payable on demand, but no interest is allowed in the case of deposit receipts unless tlie money has lain for a month. II. Issue of Xotes. Tlie issue of Xotes for sums of £1, £5, £10, £20, and £100, enables Bankers in Scotland to transact business on a footing more advantageous to the pul)lic, than can be afforded under the English system. The large amount of small notes always in circulation, causes an economy in cost of the circulation which admits of other banking operations being done on moderate temis. These notes are convertible into gold on presentation, but there is a most decided preference for the Scotch Fote, gold being seldom asked for, unless for expenditure to the south of Tweed. It has been estimated that the mere cost of production of a Scotch Bank Kote, /.e., paper, printing, &c. (apart from the stamp- duty of 8s. 4d. per cent, per annum on the average circulation) is— for each Twenty Shilling Note, 1 -OTOd. ; and for each large Xote, l-375d. Ajiount of Bank Notes authorised by law to be issued by the several Banks of Issue in Scotland, and the average amount of Bank Notes in circulation, and of Coin held during thirteen periods of four weeks from Dec. 2, 1871, to Nov. 2, 1872, and irom Nov. 30, 1872, to Nov. 1, 1873, as published in the Gazette. Names of Banks. Bank of Scotland, - - - - Royal Bank, British Linen Company, Commercial Bank of Scotland, National Bank of Scotland, - Union Bank of Scotland, Aberdeen Town and County Bank, North of Scotland Banking Co. - Clydesdale Banking Conii)any, City of Glasgow Bank, - Caledonian Banking Company, Total, Authorised Circulation. Avei-age Circulatiou, 1871-72. £343,418 216,451 438,024 374,880 297,024 454,340 70,133 154,319 274,321 72,921 53,434 £2,749,271 £604,198 637,628 504,662 696,883 527,243 722,728 178,416 293,584 475,371 530,929 91,795 Coin 1871-72. £5,263,437 £358,416 534,687 174,773 421,205 345,135 399,673 133,522 166,076 268,254 533,840 55,506 Average Circulation, 1872-73. £3,391,087 £644,187 684,431 539,262 727,994 551,885 761,112 179,299 286,102 516,485 611,445 94,804 £5,597,006 Coin 1872-73. £394,956 .590,606 214,718 466,198 386,131 432,455 137,077 162.668 319,675 617,879 63,669 £3,786,032 III [Taken by permission from Oliver & Boyd's New Edinburgh Almanac, 1874.] III. Discounting. Scotch Banks ncgociate bills throughout the kingdom ; English and Scotch paper, however, are kept quite separate in the bank books, and are classified as— Local,— Provincial,-~London. The rate of discount varies. As the Section that follows is devoted especially to Bills of Exchange, no further comment need be here made, than that more cor- rect information of the means and repute of parties can be obtained l>y bankers in Scotland, through their widely extended branches, than can possibly be procured by their brethren hi the south. IV. Cash Credit Accounts. Ko greater boon has ever been granted to Scotland, than the intro- duction of this system by the Eoyal Bank in 1729. The convenience to the party obtaining the credit, the great advantage derived by Trade from increased circulation of money, and encouragement afforded • 1 H 1.96 Al'TENDIX. ON ENGLISH AND SCOTCH BxVNKlNG. 197 1 iii ? # ,|. "iiii t© men, of all ra.nks ; liistly, the certein profit to the banks themselves, ■me one and all nndeiiiahle.* Tlie banks afford eveiy facility for carry- ing throngli these trausiK'tion.s so remunerative directly and indirectly in themselves., and of such essential benefit to every class of the com- munity. Professor Bell, in his Commenfarm, /., 367, 368, gives the following description of a cash credit : — " A cash credit, is an undertaking on the part of a bank to advance to an individual, or to a partnership, such sums of money as may from time to time he required, not exceeding on the whole a cei-tain definite amount to he repaid ; and a continual circulation kept up by the re- placing in the bank of small profits and mms as they come in. The security upon which tlie advances arc made, is a bond with sureties, genendly two in number, for the repayment, on demand, of the sums actually aih'anced, with interest upon each issue from the day on which it is made; interest at a lower rate being allowed by the bankers for the sums paid into the bank,"— that is, if they l)ring the account to the eredif side. The security, in fact, enables one to transact business witli the baidi, as if the sum for which the cautioners have become responsible were actually de|>osited in the customer's own name. These credits are not entirely limited to persomd security, real property and bank stock, being repeatedly offered, and accepted. The rate of interest charged is generaUy the same as the discount on the longer dated bills — sometimes even higher— l>ut as the banks derive the benefit of an issue of their notes, always, as before observed, a re- munerative feature in Scotch banking, no commission is charged on the cash credit. A writer on this sulyect in the Cyc. of Commerce , briefly explains the ailvantages of cash credits over discounts to those .requiring temporai-y advances. "'The party can repay any part of the sum drawn at pleasure, and interest is charged only for the money actually em|)%ed ; he has also the power of drawing whenever he pleases to the full amount of bis credit, whereas in the case of dis- counting bills, he must make a new application to the bank for each bill. To a bank, the coniparati\'c advantages of a cash credit iu respect to bills, consist chiefly in its connecting tlie party more intimately with the bank ; in the summary mode in which the Ijond may be re- * It would probtMy be foiinci, were bankers' losses analysed, that those from Cfcali Cfedit Accounts {kept within the Imit of the credit), bear an almost infinitesimal proix>i-tion to those arising upon bilk and irregular overdi-awn accounts. In fact if there be less convertibility, there is greater security in this class of advances* any objection to them arising from the want of *' rmlimbilit^," ' covered from the party or his securities ; while to a bank issuing notes, the frequent operations under the credit gives activity to its circulation." V. Exchanges. In the foregoing remarks upon English banking, an account has been given of the system wliich was once adopted by London banks in carry- ing through their exchanges, (See quotation from Babhage's Economy^ in relation to the Clearing-house). The following is a description of the Scotch exchanges : — The system of exchanges among the Scotch banks is one of great simplicity, and has been found to work well in the interests both of the banks themselves and of the public. It was organised for the prompt settlement of all claims by the banks against each other arising in the form of notes or cheques, and is an unfailing safeguard against over issues on the part of the banks. In connection with the system of exchanges, a daily " clearing " or mutual interchange of cheques, drafts, and country bills, or cash orders for collection, takes place between the banks at tlieir offices in Edin- burgh, Glasgow, Dundee, and Leith, and the balances arising are settled by vouchers of acknowledgment carried into the next subse- quent general settlement. The exchanges among the provincial banks (Aberdeen and Inverness local banks), and the country branches, take place weekly at the close of business on Saturday, and the balances arising on them are settled by draft on Edinburgh, payable on demand. In Glasgow, Dundee, Leith, and a few other of the principal business centres, the exchanges are more frequent, and the settlement at these places made to suit the general settlement. This takes place in Edinburgh (where the whole system is concen- trated), thrice a-week, on Monday, Tuesday, and Thursday ; the local interchange of notes in connection with the first of these, is held on Saturday, the settlement being left over until Monday to await the country advices. The balances arising at the general settlements are siiuared oft' by the banks wliich are debtors, by drafts on London at five days' date for the amount of tlieir indebtedness ; interest at 3 percent, being paid by them in cash for the eight days' currency of the bills thus granted to the banks which are creditors. For the sake of convenience, the settlement is carried on through ^! III ,,*; .'t-H if 198 APPENDIX. one bank,— the Bank of Scotland and Royal Bank takint,^ cliamc of tins duty alternately. Under the direction of the settling or presiding bank for the time, the other banks receive or pay the net balances due to or by tlieiu on tlieir respective aggregate exchanges ; and this pro- cess, whicli is somewhat similar to the method adopted in tlie London Clearing House (Page 188), has the advantage of simplicity, whilst it aives trouble and stamp-duty on the drafts granted in settlement. Before concluding this short synopsis of the banking systems, which it is thought may be interesting to such as have not hitherto devoted iBiich attention to the subject, it may be as well to give some idea of the sources from whence BxVNK profits are derived :— Briefly, a Bank's profits may be said to arise from — 1. The difference between the rates at whicli it burrows and lends— in other words, of that between the rates on its deposits and ad- vances or investments. 2. Commissions on drafts issued, on provincial cheques, cash orders, &c., cashed; on acceptances for customers, and foreign credits, and on purchases of Government and other Stocks on account of its customers. S. Profit from the use of money in fransifu, in the form of drafts or letters of credit, and similar lodgments. 4. Its circulation. It may be remarked with regjird to the last, that an excessive value is freciuently set upon it ; in fact, the chief value of a Scotch bank's cifcnlation is to the public, for by means of it the banks arc enabled to give the advantages of a cheap yet readily convertible currency, and afford banking iiicilities in places and to an extent which they could not otherwise do. The withdrawal of the privileges of issue, would inevitably lead to the withdrawal of many country agencies of Scotch banks, and gi-eatly inconvenience the trading community. In point of value this source of profit should rank as No. 3. Bnt, of course, in addition to these, the Banks derive profits from the investment of tlieir Capital and Reserved Fund ; with which, how- ever, belonging as they do to the Shareholders of the banks, the public Mm nothing to do, except in so far as their security as customers is strengthened by the amount and due investment of this portion of a bank's icorldng stock. SECTION 11. ON BILLS OF EXCHANGE. XoTWiTHSTANDiNG the apparent simplicity of a Bill or Note, the rigbts and liabilities of the parties thereto have given rise to innumerable legal questions and decisions, showing how impracticable any attempt must be '* to regulate multiform combinations of circumstances by a few general rules." Still it is thought that such rules and regulations as have been established by usage in the commercial world, may, in an abridged shape, form an appropriate adjunct to a work upon Com- mercial Accounting. There are so many authorities upon bills, of which the best are — Chitty* and Bylest in England, and Thomson;}: in Scotland, for law. yers ; W. Alexander and W. H. Logan, for merchants and Bankers, — that tlie following remarks can have no pretension whatever to novelty, nor, indeed, to convey any information that is not amply given by these writers ; but a book purporting to be a Manual of useful infor- mation for the counting-house, would be defective without a brief analysis of one of the most important features in our commercial system — the law and practice of BiUs of Exchange. The custom of negociating bills, now become so common in home trade, and so universal in all foreign transactions, may be held to have originated in the fourteentli century; although, according to John Mair, " Bills of Exchange are of great antiquity — some are for carrying up their origin to the days of Aristotle, others only to the flourishing times of the Roman Empire." Certain it is, that pecuniary accom- modations through the medium of credits, or the valuing upon second and third parties, were not unknown in the days of Cicero, who, re- siding in Rome, transacted for the payment of his son's education at Athens, without the necessity of having to remit money. (See Epits. * Chitty on Bills, lOtli Edition, 1859. f Byles on Bills, 10th Edition, 1870. t Thomson on Bills, New Edition, 1865. 1 1 200 APPENDIX. ad Att. XII. 24, XV, 25.) Xow altliough this was not an actual bill transaction, but more akin indeed to the letter of credit of our own times, still tbe radiments of a Bill of Exchange were there. Be this 118 it may, and the origin of the practice is very immaterial, no decision relating to Bills of Exchange appear in any law books before the reign of James the sixth of Scotland and first of England. " There can be little doubt," says Byles, " that the Bill of Exchange originally was nothing more than a letter of credit from a merchant in one country, to his debtor, a merchant in another, requesting him to pay the debt to a third person, who carried the letter, and happening to be travelling to the place where the debtor resided. At first, per- haps, the letter contained many other things besides the order to give credit ; but it was found that the original bearer might often with ad- vantage transfer it to another. The letter was then disencumbered of all other matter, it was open and not sealed, and the paper on which it wae written gradually shrunk to the sHp now in use. The assignee was, perhaps, desirous to know before hand whether the party to whom it was addressed would pay it, and sometimes showed it to him for that purpose, \i\9 promise io pay was the origin of acceptances." Scruton, who wrote on practical accounting in 1777, thus quaintly describes a Bill of Exchange : — " It is a piece of paper, commonly long and narrow, on which is wrote a short order, given by a merchant, banker, or trader, for paying to such a person, or by his order, a sum of money equivalent to that received by the banker, merchant, or trader in Ms ofiice or place of residence at the time." There are three kinds of Bills, — 1st, Bills of Exchange, properly so called, or Foreign Bills j 2nd, Inland Bills ; 3rd, Promissory Xotes ; and any of these may be used as Accommodation Bills. Every Bill drawn in and upon any part of the United Kingdom is an Inland Bill, 19 & 20 Viet. c. CO, sec. 12. I-or\T?TPT/?l"Kr UTTTO .--J \JxCi!il.ijrJ>l UlXiJuCf. These are Bills drawn by a party in one country on his correspondent in another, in sets of two and three, at so many days or months after sight (See Acceptance)^ all of same tenor and date, and transmitted by dilferent ships, as a security against accidents or delays ; when one is accepted and paid, the others are as a matter of course, useless. ON BILLS OF EXCHANGE. 201 [Form op a set op Foreign Exchange Bills.] £joo Stg. Glasgmu, ist January 1874, {first 1 second V of Exchange, third y {second and third 1 first and third [• of same tenor and date unpaid, pay to Donald Gray or first and second j order, the sum of Three Hundred Pounds sterling, for value, and charge to account, with or without advice, of To Paton, Clough, &^ Co., "» Jamaica. j GEORGE WINK WORTH. [P. C. & Co., accept here, or across the Bill, with date, and place where payable. ] All bills are drawn in the money of the country in which they are to be paid. Perhaps it may be interesting to the non-commercial reader, to learn the system which has within the last few years been adopted by the Indian Banks for the accommodation of merchants in negotiating Bills draicn on India against Bills of Lading. The Bills of Lading must be drawn in sets of three, blank en- dorsed by shipper, and bearing that goods are deliverable " to order:' The Bills op Exchange also are drawn in sets of three, in Indian currency. Any of the Indian Banks having agencies in this country and who undertake (as most of them do), the negotiating of such bills, will, on the morning of the day on which mails leave for India, fur- nish the rate of exchange for the conversion of Sterling into Indian money, or the equivalent in the latter currency for any amount in the former. The Shipper must grant to the Bank letters of hypothecation in set of three, whicli are equivalent to handing over to the Bank the goods while in course of transit, and until the bills of exchange are honoured by the drawee. The Shipper must also provide the Bank with a stamped policy of insurance over the goods, endorsed blank, and two plain copies. And, further, the Bank require invoices for the goods in tripli- cate. 2 c i I 'i|i i fll li ;|i' 1; S-1 mAjJi APPENDIX. The followiBg is tlie form in which bills require to be drawn :— Edinburgh^ loth August 1874. Sixij i%x ^M sigAf of this first of exchange (second and third of the MMi tmmr and date unpaid )y pay to us or our order the sum of rupees one hundred, amnm.fmr, and pies two, value in goods per " City of London" (Signed) JOHN JONES 6- Co. Messrs Bramn^ MoMnson, &* Co. , Merchants, Old China Bazaar, Calcutta, These Bills require to be endorsed by Drawer, but only the first of exchange requires a stamp, the second and third need only be written on plain paper, [Litter of Hypothecation Form.] Tfm Chartered Mercantile Bank of India, London, and China. Edinbuegh, Idth August 1874. Haying this day negotiated with you on* Bill of Exchange drawn on Measra Bbowh, Robinbon, & Co. of Calcutta, the particulars of which are noted at foot, and having at the same time handed to you as collateral security for the due payment of the said Bills, the Bills of Lading and Shipping documents belonging to me of the several goods also stated at foot ; our agreement is understood to be as foHows:— I hereby authorise the said Chartered Mercantile Bank op India, London, HID China, and the holders of the above Bills for the time being, to take conditional acceptances to all or any of sneh Bills, to the eflfect that on payment thereof at maturity, the above-mentioned Bills of Lading and Shipping documents shall be de- livered to the Drawees or Acceptors thereof ; and such authorisation on my part shall be taken to extend to cases of acceptance for honour. I further authorise the said Bank, or any Manager or Agent thereof, on default being made in acceptance on presentation, or in payment at maturity, of any of the above Bills, or on the Drawees' suspension of payment during the currency of the BiEs, to sell the said Goods, and to apply the net proceeds (after deducting usual commission and charges) in payment of such Bills, with re-exchange and charges ; the balance, if any, to be applied in liquidation of any other debt or liability of mine to the said Bank : any ultimate balance to be at my disposal. And in case the net proceeds of such Goods shall be insufficient to pay the amount of any such dis- honoured Bills, with re-exchange and charges, I authorise the Chartered Mercan- tile Bank op India, London, and China, or the holders thereof for the time being, to draw on me for the deficiency ; and I engage to honour such drafts on present- ment, or to pay the said Bank the amount in London. I further authorise the said Bank, or the holders of the said Bills for the time being,- in case the aforesaid power of sale shall not have arisen,— at any time before their maturity, to accept payment from the Drawees or Acceptors thereof, and on payment to deUver the said Bills of Lading and Shipping documents to such Drawees or Acceptors ; and, in that event, the said Bank, or the holders of the said ON BILLS OP EXCHANGE. 203 Bills, are to allow a discount thereon for the time they may have to run, at the Bank of England minimum rate of the day, if taken up in London ; or, if in India, Ceylon, or China, at the current rate of discount of the day on Government Accept- ances in India, Ceylon, or China, as the case may be, but not to exceed the rate of five per cent, per annum. I also authorise the Chartered Mercantile Bank op India, London, and China, or any Manager or Agent thereof (but not so as to make it imperative) to insure the above Goods from Sea Risk, including loss by capture, and also from loss by fire on shore, and to add the premium and expenses of such insurances to the amount chargeable to me in respect of the said Bills, and to take their recourse against the said Goods or against me for their reimbursement, and also to sell any por- tion of the said Goods which may be necessary for payment of freight ; and the said Bank are to take such measures generally, and to make such charges for commission, and to be accountable in such manner, but not further or otherwise, as in ordinary cases between a merchant and his correspondent, it being hereby declared that the Bank is not to be liable for the default of any broker or auctioneer employed in the sale of the Goods. Lastly, it is mutually agreed that the delivery of said coUateral securities to your Bank shall not prejudice lyour rights on said Bills in case of dishonour, nor shall any recourse taken thereon affect the title of the Bank to said securities to the extent of my liability to your Bank as above. I am, Your obedient Servant, I' ! BILLS AND DOCUMENTS ABOVE REFERRED TO. Particulars of Bills. Particulars of Goods. date. amount. drawee. BILL of lading. NAME op ship. 1874 Aug. 10 B. 100 a. 4 "i Brown, Robinson, & Co., Calcutta. A )4 Two Bales Cotton Goods. " City of London." Bills can in the same manner, and on giving over to the Bank tlie same documents, be negotiated on the Colonies, when drawn in Ster- ling money, the exchange being paid by drawer, or added to amount of bills, according as it may be wished to get the drawee to pay nett amount only of invoice, or both invoice amount and cost of bill. It will at once be seen that by this mode of negotiating bills, firms doing business with India or the Colonies need not He out of their money more than a day or two, instead of the former system of lying out of it for many months. I ll "iiBi 4\ I 204 APPENDIX. It ^also provides a safer method of transacting business, as the Bank's correspondents on the spot require to be satisfied that the Bills wiU be duly honoured before they give up the Bills of Lading. This system of obtaining advances on BiUs of Lading is common in various forms in aU commercial centres at home and abroad. It has its risks when e,g,, the Shipper gets an advance on one of his Bills of Lading, and sells and indorses a duplicate of the same Bill to a Consignee who is not informed of the advance. II.-I N Ii A If D BIIiLS. ^ tlicse are single BiUs drawn and made payable in the same country, either in favour of a third party or of the drawer himself. [Form op an Ordinary Inland Bill.] £79 '^'^^' Edinlmrgh, isi January 1S74. ^«"' ^ioni/is a/tur date, pay to me or my order, at the National BmkofScotlames Office here, the sum of Seventy -mne Pounds sterling, for value m^ ., ,,, ,, ^ , , ^ - GEORGE MORE. To Mr Walter Copeland, \ Merchant, \ w. C accepts here, or across Aberdeen. J t^^ ^^^ .V.iJ.-This admits of various alterations, according to circumstances :-Instead of " four monllis after date," it may be two, or three, or at sight, or at such time after sight, or at such a specified time, or "on demand."-and the instruction to pay may be "to X Y Z or order." » > > «» in.-PBOMISSOEY NOTES. This note is as often caUed in England a note of hand, and is a pro- mise to pay a specified sum at a time therein stated, or on demand, or at sight, to a person therein named, or to his order, or to the bearer. It is precisely on the same footing as Bills. [Form of a Promissory Notb.] •^•^^ "%■• ^0* f Consiitutimt Street, Leitk, 1st January 1874. Two months after date, I promise to pay to James Campbell or In kis order, ai «j emniing^house here, the sum of Fifty Founds sterling for value received. ALEXANDER GREEN The variations noticed under Mant^ Bills are all appHcable to the above, so far as are consistent with the nature of the document. ON BILLS OF EXCHANGE. 205 ACCOMMODATIOJCT BILLS. Ordinary Bills follow upon and represent a real mercantile trans- action, in which the Acceptor has become the Drawer's debtor. The peculiarity of an Accommodation Bill, consists in its being made a medium of credit without value having been given to the acceptor, as in the case of ordinary bills, but it is granted solely for the drawer's use — in fact, that he alone may discount or otherwise derive benefit. In this transaction, should the drawer fail to retire the bill, the ac- ceptor, of course, becomes liable on presentation ; but has his remedy against the drawer, if he can establish his true position by the drawer's writ or oath, for the sum in the bill, and the costs of action. The party accommodating, may stand in any position on the face or back of the bill ; he may be drawer, acceptor sole or joint, or indorser ; and he has often the greatest difficulty in establishing his right against the person for whose accommodation he has signed, to re-payment or immunity contrary to the legal position which he has assumed on the bill. The safe and simple precaution for any person who puts his name to a bill solely to accommodate another, is to take from that other a letter, expressing his true character, and promising relief. It i.i astonishing how much distressing litigation arises from the neglect of this simple precaution. This bill is sometimes called a " Kite " or " wind bill." The system originated in the natural desire of a merchant to assist his friend under some unexpected emergency, such as a sudden fall in the markets, when a sale of goods would have amounted to sacrifice, and on the ex- press understanding that the acceptance was to be retired by the drawer before or at its maturity. The accommodation so obtained is self-evident ; but, like every other system, having a fictitious basis, it has resulted in the ruin of thousands. Eelief, in the first instance, was so manifest, the plan so simple, the risk to the acceptor so remote, that recourse to this expedient was not only likely but natural. Then came reciprocal drawings, or mutual accommodations, insensibly lead- ing men of broken credit to the verge of bankruptcy, where they tottered for a brief interval and fell at length, dragging with them, as is too often the case, their trusting, or, perhaps, too credulous friends to destruction. So closely allied is this ruinous system with insol- vency, that during several years experience in English bankruptcies, and Scotch sequestrations, the author has seldom seen a case of failure in III II' 206 APPIMDIZ. v.. wMch the cause of embarrassment could not be traced to the facilities of mcommodaiion^ or in which these mischievous arrangements did not figure in some shape. In one word, the Accommodation Bill system iftduces men to trade upon an hnagimrtj Capital; but when the day of reckoning arrives, wh&re are ilie assets f Mr J. W. Gilbart, in his " Principles and Practice of Banking," when dealing with discounts, thus alludes to Accommodation Bills : — " Kites or Accommodation Bills should almost always be rejected by the banker. To an experienced banker, who knows the parties, * the discovery of Accommodation Bills is by no means difficult. They are usually drawn for even amounts, for the largest sum that the stamp will bear, and for the longest term that the bank will discount, and aue presented for discount soon after they are drawn. The parties are often relatives, Mends, or parties, who, from their avocations, can have no dealings with each other." Sometimes Acceptances are exchanged, and these are known as " JSkeletmi BUU^ — a most dangerous practice. A man who signs a blank hill stamp is liable to third parties for the highest sum which the stamp will carry ; but to the original grantee only for the sum agreed upon. Having thus defined the general character of Bills and Notes, we will proceed to the essential points of drawing, accepting, negotiating, and recovering under dislwnour. BBAWINO OF BlliliS. The maker of a Bill is called the drawer, and he on whom it is drawn, or to whom it is addressed, the drawee; by accepting the obligation or engaging to pay the Bill, the drawee becomes the acceptor. The buyer or remitter, the seller or negotiator, and the 'Mder ot possessor are sufficiently indicated by the terms. If the Bill is made payable to the payee or bearer, the payee may transfer the Bill by simple delivery; but if it be payable to the payee or order, or if neither bearer nor order be mentioned, then transference must be effected by indorsation — that is, by the payee's giving over his right in the Bill to another party named or nor named above the payee's signature on the back of the Bill. — (see Indorsatimi). By this process the payee merges into the indorser, and he to whom it is transferred becomes the indorsee. The party signing a Promissory Not§ is called the maker or payer. ON BILLS OP EXCHANGE. 207 and as in the case of Bills, the person to whom it is payable is the payee. So that the former stands in the place of the acceptor, and the latter, after indorsement by him, in the place of the drawer of a bill to the subsequent indorsers. No particular form of words is essential ; but there must be an absolute and distinct undertaking or promise to pay a precise sum of money, not commodities, by a fixed time ; and such payment must be certain, not conditional. The sum must be expressed in words in the body of the bill, and the bill may be drawn to bear interest from its date. In drawing, therefore, attention should be paid to these particulars, — ^the date, — the engagement to pay, — the term of payment, — the place where it is to be presented for payment,— the sum, — the name of the payee — the name and address of the drawer, — and the stamp. Any person may draw, accept, or indorse bills for another, per p^'o- curation, but he must have that other person's authority, so to bind him, given by express mandate or clearly implied by a course of deal- ing. As to the requisites in drawing above referred to — 1. The (ia^e.— Bills are dated in figures at the top, and such date has been held to be prima facie evidence of the time of draw- ing; but a date is not essential to the validity of a Bill or Note, and a Bill or Note may be post dated. The date of a bill issued without a date may be proved, but the bill will not warrant summary diligence. 2. Engagement to pay in Promissory Notes. So that an actual " pro- mise to pay " is made, no precise words of contract are neces- sary ; but if there be no words amounting to a promise, the instrument is merely evidence of a debt. An I. 0. XJ., pro- perly dated and addressed, merely acknowledging a debt, and with no promise or obligation to pay, is perfectly valid to establish the debt for forty years from its date. 3. Term pf payment. The Bill generally commences with the time of payment ; where none is expressed, the bill is payable " on demand." Where " after sight " is used, it has a different sig- nification in a Bill and a Note. In the former, it means after acceptance, or protest for non-acceptance, for the sight must be legally established ; but in the latter it simply means, " that payment is not to be demanded till it has been again exhibited to the maker, a Note being incapable of acceptance." — [Holmes V. Kerrison, 2 Taunt. 323.) Bills or Notes may be made pay- cll 111 '* < 1' ! t I y I I f Mil rf « ijiiiii' •fl *II5 APPENDIX. able by instalments, and tlio condition may be added that, if any of the instalments is not paid when due, the whole sum shall be exigible at once, 4. Place of payment It is not absolutely necessary to specify the place of payment ; but it is more regular to do so. Wlien such direction is given, the holder is bound to present, and the acceptor to pay, the bill at the place named. 5. The sum. The amount for which the Bill is drawn must be written in the body of the bill in words, and in figures at the top. Where any difference occurs between these, the sum written in words is held to be that for which the instrument is granted. 6. HiepmjBe's name. Particular care should be taken in the desig- nation of the payee, so that he cannot be confounded with another of the same name. No Bill or Note is complete un- less the payee is pointed out either by name or description. 7. The drawees name. It is almost needless to observe, that eveiy Bill or Note must bear the drawer's signature, otherwise it will not warrant summary diligence, nor be a good document of debt. The drawer may sign at any time after the acceptor has signed and handed him the bill ; but regularly, the drawees signature should be first. Bills accepted by initials or a mark before witnesses, cannot authorise summary diligence, yet upon proof that this was the usual manner of the party's subscribing an ordinary action for payment can be raised. 8. The stamp, A Bill or Note must be written on the stamp re- quired by law ; if not written upon a stamp, or on too low a stamp, the instniment will not be available to any effect what- ever. The error, at least in regard to Inland Bills, cannot be afterwards rectified. Being written on a stamp of a higher value than necessary (if not appropriated to any other instru- meiit), does not vitiate the Bill. The foHowing ar*? the stamp duties exigible under Acts 33 re- senting for acceptance has l)een held to mean, the day after the day on whii'li the bill is received, and this is the safe rule for agents to follow. A draft may l)e left with the drawee lor twenty-four hours, and if lie then refuses to accept, the agent should immediately protest for non- acceptance, to preser\'e his constituent's remedy. It is needless to re- mark that this applies only to tliird parties on bills. Drawers will be guided by circumstances in presenting for acceptance. PRESEHTMEHT for PAYMENT. In presenting for payment, the holder of a Bill or l^ote will of course be governed entirely by its currency. As for instance, bills payable at so many divs or months after date, are allowed a further ON BILLS OF EXCHANGE. 211 limit of three days— h^iiiii known as " days of grace,"— formerly granted as a favour, now assumed as a riglit. ° Bills payable " on demand," have no days of grace ; but those pay- able '' at sight," most probably, are entitled to the gmce.—(ByIes, p 207; Thomson, p. 248). Days of gr^ice in foreign countries vary considerably-from four days as at Frankfort, to thirty days as at Genoa ; whilst at Leghorn and other places in Italy, there are none.— (See List, Thomson, p. 650). By presenting for payment before the expiry of the days of grace, the holder cannot charge the antecedent ^ariieB.-{Wlffen v. Roberts, 1 Esp. 261). AVhen the last day of grace falls on a Sunday or authorised holiday, presentation and payment must be made on "the day preceding.— (TAom^o/i, p. 247). Possession of the Bill is in general sufficient evidence of authority to demand payment ; but where a party presents as an agent, the ac- ceptor may insist on seeing his credentials. A Bill made payable at a particular place, must be presented at that place ; but if no place is specified, it should be presented to the acceptor at his place of business, or at hil private dweUing-house at a seasonable hour. In cases of absence or death, the holder should make every inquiry for the ac- ceptor or his representatives, and be able to prove presentation at the last known place of residence or business, or to the representatives. Baidcruptcy has no ellect in dispensing with due negotiation and presentment to the bankrupt. ACCEPTING and PAYING -SUPRA PROTEST:^ This is an acceptance by a party who prefesses to be under no obli- c^ation to accept, but merely that he may preserve the honour of the drawer or indorser of a biU. He first allows the bill to be pretested against the drawee for non-acceptance, and inmiediately thereafter accepts it, expressing in his acceptance that it is siqjra protest, and mentioning the person or persons for whose honour it is given. By this means, the credit of the two first, or as the case may be, is main- tained ; and the safety of the last or acceptor is preserved by his securing the right of recourse against the parties for whose honour he has accepted. The holder of a BiU may refuse to take such an accept- ance, and at once preceed against the drawer and indorsers. When he does take such an acceptance, he must present to the original drawee and protest for non-payment before he can exact payment from the acceptor supra protest. Ill ill 212 AFFENBIX. IHBOBSATIOir. By indorsation, is meant the transference of one's right in a BiU or Note by a writing on the back of it, and which is either hhn,l' or sp.nnl Bdls with blank indorsements-that is, where the name of the drawer or mdorser is only signed, and that of the indorsee left blank are transferable by delivery, and are the same as if made payable to bJarer. Special mdorsements convey an instruction or direction in addition to the drawer or indorser's name-thus, " Pay to Robert Smith," and it may be as weU here to mention, that the words " or order " in an in- dorsation are superfluous, as Robert Smith is not debarred from re- indorsing, unless the restrictive condition be expressed of "for i.y we. Each indorsation renders the indoi^er liable to all subsequent indo«ees,bnt he may prevent this by indorsing " without recoise." Special mdorsements are always to be preferred, for should the Bill faU into improper hands, negotiation can only be effected by forgery In England, bills cannot be negotiated or validly indorsed, without contaming the words " or order," or « bearer ; " but bills without these worda are good as between the original parties to them, and if indoi^od by the payee, the indorsee has an action against him, though none against the drawer and acceptor. In Scotland these words are not essential to render a biU negotiable.— (%/ar, p. ii9, . Thomson p 53) An indorsation of paH of a Bill cannot be made, but an' unpaid balance may be indorsed away. The claims of an indorsee depend so much upon the circumstances of Jiis holding, and the pecuHarities of the document to which he is a party, that our space wiU not admit of a minute and lengthened treat ment of the subject ; the principal points, however, are m foUows :— (1.) As ay.nud the Acceptor. An indorsee is not bound by the rules of negotiation or notice, and can enforce payment of principal and in terest at any time within the six year's prescription. (2.) As agaimt Brtmee or Payee. Upon protest for non-acceptance or non-payment and due notice, these parties arc liable to indorsee for principal' interest, and expenses. (3.) As w, Geo. IV., cap. 14, sec. 3, « no memorandum of part payment by the party receiving payment is sufficient to take a BUI out of the rule " In 1855, summary execution on BUls was introduced into EiLdand limited to six months as in ScotlaniL ^^ ' PAYMENT. In making payment of a Bill, the party so doing shuiiLl be careful to get possession of the document, and to ascertain that the holder has ON BILLS OF EXCHANGE. 215 i>ji t duly preserved his recourse by negotiation, or he may be unable to sue the previous parties liable to him. The holder may take a partial payment from the acceptor, but must protest for the balance with relative intimation. He may also take a composition from any of the parties to the instrument, but must reserve his claim on the back of the Bill against the other parties to it. PRBSCBIPTIOlSr. In Scotland, as before stated under Protest and DUigence, pre- scription can be averted ; but if dUigence is neither raised nor exe- cuted, nor an action commenced within six ijmrs from the date when Bills or Notes become exigible (i.e.y from the last day of grace on or- dinary bUls or notes, from the date of the biU if it be payable on demand, and from the date of presentment, or last day of grace, if it be payable at sight), the Bill prescribes, and is of no further use as a document of debt. After the six years have run, the debt can only be proved by writ or oath of the debtor (12 Geo. Ill, cap. 72). Fail- ing an action or diligence, within the six years, upon the BUI, the only safe way to avoid the prescription, is to take a new BUI, or an acknow- ledgment of the debt from the debtor. BANK CHEQUES. Drafts or Cheques by a person directing his banker to pay to the bearer or the payee's order on demand, follow the i-ules applicable to BiUs of Exchange ; but yet they are not to be regarded in aU respects as BiUs. Though resembling in form a BiU payable on demand, they never bear any acceptance by the banker, and the drawer may validly stop their payment. They may be indorsed, and in the event of non- payment by the banker, the indorsee or payee may have recourse on the drawer ; but there is no such presumption of value as exists in favour of the holder of a BiU. The holder, even for value, wUl not be entitled to recourse, if he has delayed beyond a reasonable time to present for payment and the banker has failed in the meantime. The banker is bound to honour his customers cheques if he has funds at his credit, and the banker will be liable in damage if he refuses or unduly delays payment. By the Act 19 and 20 Vict., cap 23, Crossed Cheques i.e.y cheques bearing across the face the words "and company," can only be paid to a banker. By 16 and 17 Vict., cap. 59, sec. 19, bankers paying cheques on forged indorsations are freed from liabUity to the riditful holder. SECTION III. OUTLINES OF BOOK-KEEPING FOE STUDENTS OR BEGINNERS. Book-keeping is a Science which teaches how to record mercantile or monetary transactions in an intelligible, regular, and systematic manner. There are three recognised systems of Book-keeping — namely, Double Entry, Single Entry, and by a Mixed Method. I.-DOUBLE ENTRY. Tlie name almost explains the system. It requires that every trans- action in business should be charged against one account, and credited to another in the Ledgers,— so that, the Debit and Credit Accounts must agree in amount, (see page 6). There are four principal books necessary for this system— Cash Book, Day or Waste Book, Journal, and Ledger. 1. In the Cash Book all cash transactions are recorded — that isi every sum received, and also paid away, must be entered daily, the difference thereon, if any, being the balance in cashier's hands. There are many forms of Cash Book, some made to suit the peculiarities of a particidar business, but the principle is identical in all ; the Cash re- ceived, being entered on the left, or debit side or column, and the Payments on the right, or credit side or column. These being added up, the credit summation (or that of the payments), is deducted from the debit summation (or tliat of the receipts), and the balance, if any, must be the cash in hand, as it is iuipossible to expend more than has be(m received. Ey the strict rules of Double Entry, the entries in this book should be classified and particularly detailed in the Journal, but as this entails considerable labour, it is customary, now, to post direct from the Cash Book to the Ledger accounts, and merely bring the gross amounts of "cash received," and " cash paid," into the outlines of book-keeping. 217 Journal, at the end of the month, to carry out the principle and admit of tlie usual checking, should the books fail to balance. — (See pages 18, 56, 84, 101, 125, and 154). A Scroll Cash Book is sometimes kept, where the cash transactions are dependent to a great extent upon out-door collectors, adjustment of settlements, or other indefinite matters, which are subject to alteration and cannot be entered to the proper Ledger accounts at the time ; but this book frequently leads to irregularities, and is not recommended by the author ; indeed, it is simply referred to here to satisfy inquiry. 2. The Day or Waste Book. — In this book a daily register is kept of the trader's business transactions of every kind, with a full descrip- tion thereof, avoiding superfluity, but leaving nothing ambiguous ; as it should always be borne in mind by the trader, that he should keep his accounts not only for his own satisfaction, but in such a manner that they may be understood by those whom they may concern, and who might succeed him, when he and his book-keepers have retired from business. The entries in this book are also classified and entered in the Journal for distribution in the Ledger. — (Seepages 14,85, and 102). 3. The Journal. — This is the most important book of the series, and the one best calculated to teach a merchant how to conduct his business. In it are classified and arranged all the transactions con- tained in the " Cash " and " Day Books," unless those of the former are posted direct to the Ledger, as noticed in the description of that book. These entries are subsequently carried or ^^ posted" to the Ledgers. The Journal, in ordinary use, contains two contiguous columns ; in the left hand column are entered all the debits or re- ceipts, and in the right, aU the credits or payments. When these columns are added up, they should agree in amount — ^for example, Cash — For sums received this month. Dr. To Bank acct. — cheque 33, - - Or. u Jones & Smith — Cash to acct. - Or. M Brown and Robertson — do. - Or, Wheat account, — (purchase,) - Dr. To Robinow & Co. — per invoice, - Or. £470 II M II II 11 H II II II II H £300 96 74 It II II It # H U £470 132 II K II H II II II £470 132 It It £602 It II £602 w H Thus, when posted, " Cash Account " becomes Debtor for what has 2e i Illi .1 ! "■ 218 APPENDIX. i been received. The " Bank," « Jones & Smith," and " Brown & Eobertson," are CrecUtors," for the sums they have severally paid. In like manner " Wheat Account " is charged with the grain purchased, and " Eohinow & Co." are credited as having sold the same. As a matter of course, when these items are " posted " to the dif- ferent sides of the Ledger, the simimations of the Ledger must agree ; and the balances, if any, must also correspond in amount. This book should be very carefully kept, as the whole set depends upon it. As a book of reference every entry should be explicit, es- pecially in crom or domig entries, where so much is involved at time of balancing. An expert book-keeper can always be discovered by the manner in which he writes up this most important book— in other words, by his JovRi^AUsmQ.— {See pages 20, and 58). 4. The Ledger.— As may have been noticed already, this book becomes the final depository of every entry in the trader's books. After the scattered items, articles or transactions, for cash or credit, have been classified in the Journal, they are carried or posted either to the debit or credit of accounts opened in this book, and when every thing is exhausted, the Ledger is said to be " posted up.'' ^Seepages 24, 87, 106, 112, 127, and 156). Debtor and Creditor.— The expressions debit and credit, have already been frequently used in these definitions, and an explanation may be of use. There are three kinds of Debits and Credits— 1, Personal ; 2, Keal ] and 3, Fictitious. By personal, is understood, where a person's name is used— as « Charles W. Thomson," " Charles Pearson," " Adam Wardlaw." By real, is where a timgk referred to— as " Wheat," " Wine," " Timber," •* SUk," and " Cotton." By fictitious, a character of account is in- ferred, which is neither personal nor real — such as "Interest," « Charges," " Suspense," " Profit and Loss "—in other words, they do mt represent cmvertihle value, nor are they personal There is sometimes a difficulty to the novice in discriminating be- tween Debit and Credit postings, but this should disappear when the following rules are mastered :— 1. A thing received, is Debtor to the thing given for it— as " Sugar " is Dr. to " Cash." 2. A thing received upon trust or Credit, is Debtor to the party supplying it— as " Timber Ace* " Dr. to ''"C. Park ;" " Cotton Ice* " Dr. to "J. Rolfe ;" " Cash," Dr. to " National Bank." OUTLINES OF BOOK-KEEPING. 219 3. The party to whom a thing is sold or delivered, is DeUor to the thing delivered— as "D. K Christie," Dr. to " " Coal Ace*- ; " " Wm. Bell," Dr. to " Sherry Ace* ;" " Wm. Hardie," Dr. to " Indigo Ace*- " Posting, is the carrying classified entries from the Journal (or Cash) into separate and distinct accounts opened in the Ledger. Postings are divided into two classes :-l, Simple ; 2, Compound. A Simple Posting has but one Debtor and one Creditor— as " John Smith," Dr. to " Sugar." A Compound Posting is that which has one Debtor and two or more Creditors, or vice «;ers«— thus, "Wheat Account," Dr. to " Cash," to " Charges," and to « Insurance ; " or "James Arnot." "Thomas Bruce," and "WiUiam Scott," Drs. to " Profit and Loss," for their shares in the profits of a business for the year. Balancing the Ledger.— Before coming to a final balance of the books, it is customary, m large concerns, to make what is called a Trial Balance, and this is sometimes done during the year, at stated periods, to prove the correctness of the books. There are two kinds of trial balances. In one, both sides of the Ledger are added, (excluding any balances,) and the summations brought down on a sheet— the debit summations on the left hand, the credits on the right. If these agree in amount, the Ledger has been correctly posted, if not, every entry must be compared at once until the error is detected. Another plan is to strike the balance on each Ledger account and bring down the differences— which, of course, should correspond in amount— if not, the same process of comparison must be gone through. The trial balance sheets having been found correct, the next step, and a most important 0716, is to make the Cross or Closing Entries, so that the final balance sheet may exhibit the actual state of the traders' affairs. To effect this, without difficulty, the book-keeper has only to ascertain as foUows : 1st. " What represents on the debit or left side of the trial balance sheet, the Actual Assets representing value or that which may be converted into cash ; and 2ndly, on the credit or right side of the sheet, the Actual Liabilities which must be paid out of the assets of the firm or company." Such accounts as do not come under these descriptions must be icritten off by a cross entry, that is, carried to the debit or credit, as the case may be, of Profit ■HHHb'' H'i ! Ui I S20 APPENDIX. md Lobs Account. The closing entries principally affect the following accounts: "Stock" or "Goods" accounts, on which profit or loss itfifie, the goods on hand being valued and brought down as a balance ©f iiaaets, the difference, or what remains, is writte7i o/-— that is, if there is a profit, the balance is carried to the credit or right hand aid© of Profit and Loss ; if there is a loss, it is carried of course to the other side of that account. Then the following accounts are always closed bj carrying the balances thereon to the debit or credit of Pbofit and Loss, viz. : « Charges," " Salaries," " Interest," " Dis- count," "Commission," "Wages," " Eent and Taxes," "Bad and Doubtful Debts,"— if there is not an account kept open for the last item. All this having been done, nothing should remain in the trial balance sheet but actual Assets on the one side, and positive LiABiMTiM on the other. These are thereafter brought down into the « Balance Sheet " proper, and if the assets exceed the liabilities, or m'cs verm, it must be to the extent of the balance appearing on " Profit and Loss Account," which is entered on the lesser side.— {Smpagm 36, 48, 60, 63, 89, 116, 148, 149, 162, 170, inland 177.) II.— SmOLE ENTRY. This method is also appropriately termed, seeing that the traders* transactions are entered but once in the Ledger, and not twice, as per Double Entry, (Seepage 81.) There are only two books required, viz. : a Day Book and Ledger. NoTK.-^ Cash Book tkouM aim be kept in order to check cash transacliom, and exhibit the balance in hand at awj time, but it U not absolutetif re- quired under the gpitem, (See page 84.) 1. The Dai Book.— In this book all purchases and sales for cash or credit must be entered daily • also all sums received from pur- chasers (not cash sales,) and payments made to parties supplying goods (not cash purchases,) and aU these Day Book entries must be iwreafter posted to the Ledger, (Seepage 85.) 2. The Ledger.— Personal accounts only are entered in this book that is, accounts with customers for goods sold to them and cash re- ceived in payment^ and accounts with parties furnishing croods (See page 87.) ^ ' BiLAKciNG.— In framing a Balance Sheet, the sums or balances due hy customers are brought down to the left hand' side of the sheet, as also the stock, when valued, and the cash in hand ; the sums' or OUTLINES OF BOOK-KEEPING. 221 balances due to others are brought down to the right hand side, to which is added the capital, if any, put into the business. The dif- ference between the two sides is either profit or loss, (See page 89.) III.— THE MIXED METHOD. As may be inferred from the title, this system partakes of the characteristics of the other two, or rather may be said to combine their respective features. There are no arbitrary rules, except that every transaction must be recorded somewhere, and posted either to the Ledger or some other book. The directions for balancing are the same as in the other systems, (See pages 91 and 92 for a full des- cription of the system.) Bills of Exchange — Inland and Foreign. — These are of three kinds — 1, Bills Receivable ; 2, Bills Payable ; and 3, Accommodation BiUs, (See Appendix^ Section No. II. ^ Page 199.) 1. Bills Receivable, are bills taken or received for goods sold or money advanced. In journalizing, " BUls Receivable Account " is debtor for all bills received, and the same account is creditor when any of these are paid, discounted, or otherwise disposed of. The following rides for journalizing " Bills Receivable " will apply to every case that can occur in business : — Remitting Bills. The " person " for or to whom remitted, debtor to " Bills Receivable." Indorsing Bills. The " person " to whom indorsed, debtor to " Bills Receivable." Renewing Bills, (1) If the bill is in your own hands, make " A. B." the acceptor, debtor to " BiUs Receivable " for it, and "Bills Receivable" debtor to "A. B." for the new biU ^ (2) If the bill has been discounted, credit " cash " by " A. B." for the sum you pay for him in retiring the bill, and make " Bills Receivable " debtor to "A. B." for the new bill. Protesting ^\Ws. (1) If the bill is in your own hands, make " A. B." the acceptor or indorser to you, debtor to " Sundries," viz. : to " Bills Receivable " for the amount of the bill, and to " Charges " for expense of noting and protest. (2) If the bill has been disposed of, credit " cash" by "A. B." on whose account you pay. 2. Bills Payable, are bills granted or payable by you for goods purchased, or money borrowed or advanced to you, In journalizing, " Bills Payable Account " is creditor for aU bills accepted, and the same account is debited by " cash " when any of them are paid. mA^ APPENDIX. 3. Accommodation Bills. These are bills granted for the accom- modation or convenience of the drawer, and where the acceptor is said to receive no value or consideration for the bill he grants. The drawer discounts on the credit or strength of the acceptor's name, undertaking to retire the bill at maturity, that is, when it falls due ; and should he fail to do so, the acceptor, being the primary obligant, or the party who granted this aceommodatiorif has to retire it, but has recourse against the drawer. It is unnecessary to remark that this style of business is most dangerous and objectionable, and too often leads to discredit and commercial ruin. SECTION lY. EXPLANATION OF COMMEECIAL AND OTHER TERMS USED IN BOOK-KEEPING and ACCOUNTING, Note.— For the information of learners, the following explanations of terms have been sketched by the author, with as much brevity as circumstances will admit, and to insure correctness in his definitions, he has availed himself of many valuable authorities to whom more particular reference is made in the following Section- No. V. He would strongly recommend the study of these authors by young Ac- countants and Commercial men, as the manner in which many of them treat their subjects, is calculated to enlarge the mind on matters of very great importance. The Encyclopjedias may be referred to passim. Abandonment.— In commerce and navigation is used to express the surrendering of a ship, or goods insured, to the insurer.— See M'CuUoch's Die. Comm., Marshall on Insurance, Arnould on Marine Insurance, Park on Laws of Insurance, and Emerigon's Traite des Assurances et des Contrats, Account-Current.— This is an account rendered by one party to another with whom he has done business, narrating, in the order of their dates, the transactions which have passed between them. The debit and credit entries are on opposite pages, and the balance, if any, is brought down on that side on which the summation is gce&i^st—M'CulJoch's Comm. Die. Account of Sales or Account -Sales,-- A document giving a detailed account of the sale of goods, and which should ex- hibit the quantities and values of the goods sold, the attendant charges, and nett proceeds. — M'Culloch. Adventure and Joint -Adventure,— Terms used to express a shipment by a merchant on his own account, or when the shipment is made by two or more parties on joint account.— M'Culloch. ti.ii V J' 824 APPENDIX. Agio.— A term applied, in some parts of the Continent, to the pre- mium or percentage allowed on a better sort of money, when it is given in exchange for that of an inferior kind (see Cyc. of Com- merce.) At Amsterdam, for instance, no money defective in weight is received into the Bank, and therefore the Bank treasure is accounted of superior value to the current value. This differ- ence was called Agio, and varied from two to five per cent. {Hamilton). It was generally regulated by the market price of gold, and subject to considerable fluctuations.— (?276ar^'» Prin- ciples and Practice of Banking. Arbitratioil.~An arrangement by which parties, disputing, enter into a contract submitting the adjustment of the question to a third, or neutral party, called an SLThitGT.— -Caldwell on Arbitra- ttorij Parker on Arh/'tration. A¥erage.— A contribution made by underwriters for losses sus- tained at sea. Particular Average, is when the loss occurs from common accidents. General Average, when it is necessary for the safety of the ship to cut a cable, throw goods overboard, and the like. This comes under the law of Insurance.— i?. Steven's Essay, Abbott on the Law of Shipping, Marshall, Park, Arnould, Benecke on Principles of Indemnity, Smith's Mercantile Law, Martin on the Fradiee of Stating Averages, MVulloch, Articles by J. Warrark of Leith, in Mmiyclopcedia Brit, and Pritchard's Admiralty Digest Balance of Trade. — The difference between the Exports and Imports of one country with respect to another.— ^c/am Smith's Wealth of Nations, and other Works on Political Economy; also M^Culloch, Sairalry.— A fraud committed by the master or crew of a ship, such as sinking, deserting, or running away with it, or embezzling the c&Tgo.~Hamiltm and Morrison's Book-keeping, M'Culloch Marshall, and Park. Barter.— This system is now of rare occurrence ; but it means the exchange of one species of merchandise for another. COMMERCIAL AND OTHER TERMS. 225 Bill of Entry. — A memorandum of the particulars of goods entered at the Custom House. — Holt on the Laic of Shipping, Bills of Exchange. — See special section, No. II. Appendix, devoted to the subject. Bill of Lading. — An acknowledgment signed by the master of a ship for goods received on board. It is a negotiable instru- ment ; three copies are made out, one for the use of the master, the others for the shipper, who, by means of them, can give a title to the consignee or other person, for whom the goods are destmQd.—M'CuUoch, Holt on the Law of Shipping, Morton on Vendors and Purchasers, Smith's Mer. Law, BelVs Com., and Chambers's Inform., vol. i., p. 678. Bill of Parcels. — A note of goods sold, delivered by the seller to the buyer. — Morrison, Scruton, and Hamilton. Bottomry and Respondentia.— An act, so called, from money being lent upon the ship's bottom. The lender advances money to the owner of the ship, who pledges it in security, and engages to repay the same, with interest, generally charged at a very high rate, when the ship returns. Should the ship be lost, neither loan nor interest are paid, hence the high rate expected for the hXiQi:.— Smith's Mer. Law, Marshall^ Abbott, Parke, M^Culloch, and Benecke. Brokers or Factors.- Parties employed to carry on or nego- tiate business between different merchants on commission.— M'Culloch and Montefiore's Comm. Die, Bullion.— Uncoined gold and silver, but now used to denote the precious metals in general.— (^^7&ar^, Macleod, Adam Smith, Ricardo, and R. H. Patterson's Economy of Capital Cash Credit.— See Appendix, Section No. I, on Banking in Scotland ; also Burton's Manual of the Law of Scotland, and BelVs Commentaries. Charter-Party.— A sealed contract between the freighter and H ^i 2M APPENDIX. COMMERCIAL AND OTHER TERMS. I. 227 II owner of a ship, containing the terms on which the ship is freighted. — M'CuUoch, Holt, Maude and Pollock, Laio of Ship- ping, Abbott, and Chitiy's Commercial Laio. Circulatioil. — ^When used in reference to a Bank, means the amount of its paper issue. — Qilhart, Macleod, and R. H, Pat- terson, Clrculatiiig^ Medium. — Cash, or paper money payable on de- mand. — Gilhart, Macleod, and R, H, Patterson, Clearing a Vessel. — Entering all particulars relating to her at the Custom House. — Holt, and Smith's Mer. Law. Commerce. — "The exchange of commodities for commodities," M^CullocNs Com, Die. See authorities recomm^ended, ^Qciion V. CoflUBission Brokerage or Factorage. — ^An allowance to a factor, agent, or broker, for transacting the business of others. When the agent guarantees his dealings, he gets paid at a higher percentage, and this is called del credere commission. — M'Culloch. Conitgimient. — The consignation of goods by one trader to another at some other place. The party transmitting goods is the consigner, the one receiving them, the consignee. ' Crossed Cheques. — Cheques on which either a banker's name is written across, or with the words "and Company" be- tween two transverse lines : so that a banker's name may be in- serted so as to make it payable to the banker only, whose name is written across it. By this means, the cheque is only payable to some banker. — Macleod on Banking. Days of Grace. — Certain days granted to the acceptor of a bill after the term of a bill is expired. They run on bills payable upon a day fixed, or after sight ; but not on bills on demand. — ThoTmon, Bayley, Chitty, Byles, Glen, and Wm. Alexander. See Appendix, Section II. m^ Demurrage.— Is a term; used to designate the money payable to the owner for the time during which a vessel is detained, beyond that originaUy stipulated, in loading or unloading. It is also now applied to the detention of railway trucks and waggons when unnecessarily detained. — M'CuUoch. Drawback.— An allowance for the exportation of manufactures or upon certain goods that have paid duty on importation.— M'CuUoch. Embargo.— An arrest of ships by order of the Government of any comitTj.— Chitty on the Law of Nations. Export.— Commodities taken abroad in trafic.—iJf* CwZZoc/l See Import. Flotsam, Jetsam, and Ligan or Lagan.— These are held as descriptive of wrecked goods which have.not been cast ashore. Flotsam, is used when the goods are floating ; Jetsam, when they sink under the water ; and Ligan or Lagan, when, though sunk, they are tied to a buoy, in order that they may be found again. All these are escheat to the crown, if not claimed by their owner within a year of the time when taken possession of by the parties finding them. — M'CuUoch. Funds.— Government obligations of the United Kingdom.— Gi7- hart, M'Leod, Patterson, M'Culloch, Encych. Brit., vol. x., p. 253. Import.— Commodities brought into this country from abroad.— M^Culloch. Invoice.— A particular account of goods shipped or otherwise sent away by the trader or manufacturer.— C/iaw5ers's Inform., vol. i., p. 677. I.lquidation.-The winding-up of a trader's business by receiv- ing debts, and paying liabiHties therewith in fuU, or so far as they wiU go. ■i m 22B AFPINDIX. Moyilt (London).— "A coffee-house kept by one Lloyd iii Ab- churcli Lane in 1710. It was afterwards removed; finally to the Eoyal Exchange in 1774, and remained there till the fire in 1838." (It is now at the South Sea House). "Here resort eminent merchants, underwriters, insurance brokers, etc; and here are effected insurances for all the world on ships and mer- chandise. It is supported by subscribers, who pay annually £4, 4s. The books kept here contain an account of the arrival and sailing of vessels, and are remarkable for their early inteUi- gence of maritime afidiis."— Haydn's Dictionary and Chambers's Li form., vol. i., p. 678. ManifSeSt. — A document giving the particulars of cargo and voyage of a ship, under the master's signature.— if'Cw/ZocA. Xfirket Price. — The current selling price of any article. NaYigatlon Laws.—/. M. M'Oulhchh Art. in Edin. Review, Art, xi., May 1823 ; Adam Smith, and MVulloch's Die. Com. Nett Proceeds. — The proceeds of the sale of goods, after all deductions have been made. Political Economy.— " The science which teaches the manner in which nations and in- dividuals acquire weailih"— Chambers's Inform., vol. i , p. 705. " Is a systematic aiTangement of the laws by which, under our present constitution, the relations of man, whether individual or aocial, to the objects of his desire are granted."— /> Wayland's Elements of Polit. Econ. " The science which treats of the laws which govern the re- lations of exchangeable quantities." — if. Dunning MacleocCs TJieory and Practice of Bankifig. " The object of pohtical economy is to point out the means by which the necessaries, comforts, and enjoyments that constitute wealth, may be most easily and cheaply produced ; to ascertain the laws which regulate their distribution among the different classes of the community, and the mode in which they may be most advantageously consumed."— ^c/awi Smith's Wealth of MatioM. COMMEBCIAL AND OTHER TERMS. 229 " Political economy is now most commonly defined, the science of the laws which regulate the production, distribution, and con- sumption of those articles or products that have exchangeable value, and are, at the same time, necessary, useful, or agreeable to man."— Notes by J. R. M'CuUoch on Smith's Wealth of Nations, 1838, p. 187. « The science which has for its object the improvement of the condition of mankind, and the promotion of civiUsation, wealth, and haip^^mesB." —Haydn's Dictionary. " The produce of the earth— all that is derived from its surface by the united application of labour, machinery, and capital, is 'divided among three classes of the commimity— namely, the pro- prietor of the land, the owner of the stock or capital necessary for its cultivation, and the labourers by whose industry it its cul- tivated. But in different stages of society, the proportions of the whole produce of the earth which will be allotted to each of these classes under the names of rent, profit, and wages, wiU be essen- tially different ; depending mainly on the actual fertility of the soil, on the accumulation of capital and population, and on the skill, ingenuity, and instilments employed in agriculture. To determine the laws >vhich regulate this distribution, is the prin- cipal problem in political economy."—/). Ricardo on the Pnn- ciples of Political Economy and Taxation. Salvage. — An allowance to parties assisting in saving goods from a wreck or otherwise. — Abbott, Maude and Pollock, and M^Culloch. Ship's Husband*— The agent or commissioner for the owners in charge of the vessel. Specie.— Coin, as distinguished from paper money. Staple.— Originally a city or town in which there was a public market for sale of goods. Staple Goods.— Such as are sold at a staple, and are not perisli- able— as wool, leather, lead, &c. Now the term is applied to the chief productions of a country. 230 APPENDIX. I UUage.— The quantity of liquor necessary to make up for leakage of casks or bottles, or that part of a cask which is not filled with liquor. — See Fetirif/ Cychpmdia. Underwriter-— A person who takes upon himself a risk or an insurance ; and so called, from writing his name under the con- ditions. — M'CuUoch, See Insurance^ and other authorities on Average, :Note.— For explanations of Bills of Exchange, see Appendix, Section II. • ;■■>—<■ SECTION V. AUTHORITIES AND WRITERS UPON COMMERCIAL AXD OTHER SUBJECTS RECOMMENDED TO STUDENTS. In the foregoing article on " Commercial and other Terms " (Section No. IV.), reference has been made to writers on the various matters of which brief definitions are given ; but it has been suggested to the author, to prepare a list of the best authorities on professional subjects or those analogous thereto, for the particular use of Students and Accountants' Apprentices, as well as for those entering upon com- mercial pursuits ; or again, for such as may have a taste for that class of literature, which springs from, or is rather based upon, the science of Political Economy, and the Theory of Life Assurance. He has, therefore, gone over a wide field of reading and inquiry to enable him to comply with this request ; and the list which is now submitted, not only contains the names of those whose writings have a world-wide reputation, but of others, who, although perhaps not so universally known, are deserving of earnest consideration and careful study. The cultivation of literary tastes :depends almost entirely on the judicious course of study prescribed, and to the mastery, if possible, of those theoretical as well as practical views, which from time to time have been propounded by philosophers and sound thinkers. It is scarcely possible to estimate the immense advantage of mental culture to those who determine on following professions where mathe- matical and logical, or reasoning arguments are essential. Much valuable time may be frittered away and lost by an ill-regulated course of study, and a misdirected system of inquiry ; hence the necessity of ascertaining the most direct paths to follow, and of becoming ac- quainted with the land-marks which prevent tlie wayfarer from going astray. Of the very many who have started theories upon the subject now under review, and have written legal and other works of immense im- portance, a selection has now been made of such works only as are 232 APPENDIX, known to Lave met with acceptance by practical men and sound lawyer,. It will be observed that the majority are acknowledged authorities upon the subjects on which they especially treat, and, although the others may occasionally differ in theory, and not perhaps be accepted with the same fevour, they are, nevertheless, entitled to particular at- tention, and the study of one and all must necessarily develope the reasoning powers of the Student, and induce that train of thought which is calculated to enlarge the mind and mature the judgment. Of Mathematical studies, with special reference to their application to the doctrine of Life Annuities and Assurances, it is necessary that the student have a sound knowledge of " Pure " Mathematics before proceeding to study its applications to this or any other branch of science. The books on Arithmetic, Algebra, and Geometry, are so numerous, that it is somewhat difficult making a selection. After careful inquiry and study of the subject, the author would venture to suggest the fol- lowing as Text Books. With reference to this syllabus of subjects, some may think that it is unpractical— that, for example, all that is necessary in acquiring a knowledge of the science of Life Contingencies, is simply Arithmetic and Algebra, and that a knowledge of the other subjects he suggests are superfluous. The author would, however, point out that the refined processes now adopted in certain actuarial investigations, render an elementary knowledge of the Differential and Integral Calculus almost indispensable, and that to enable one to ac- quire such a knowledge of this branch of Mathematics, the preliminary study of the subjects he mentions will be foimd necessary. I.-PUKE MATHEMATICS. 1 . Arithmetic Sang's Elementary and Higher Arithmetic. ( Euler's Algebra. \ Todhunter's Algebra. Euclid. Sir John Leslie's Geometry and Geometrical Analysis, and Geometry of Curve Lines. - Professor Duncan's SoHd Geometry. Whewell's Conic Sections. Todhunter's Trigonometry and Analytical Geo- nietrv. 2, Algebra ( Geometry ATTTHORITIES RECOMMENDED. 233 ■I Differential and Integral Calculus. The Elementary chapters of De Morgan's Differential and Integral Calculus. The Principles of the Differential and In- tegral Calculus, by Thomas Tait. Pulv lished by Longmans, London. Theory f GaUoway. of < De Morgan. Probabilities. ( Quetelet. 6. Button's Course of Mathematics, as a sort of rSsumS of the fore- going subjects, would be found useful. II.-LIPB CONTINGBNCIBS. &c. [The following selected Authors are recommended to the Student.] Francis Baily Life Annuities and Assurances, &c. Joshua Mihie On the Valuation of Annuities and Assumnces, and on the Construction of Mortality Tables, &c. David Jones Value of Annuities and Keversionary Payments. A. H. TurnbuU On Compound Interest and Annuities Certain. Edward Sang Valuation of Life Contingencies. David Chisholm Introduction to his " Commutation Tables." Will. Thos. Thomson... Actuarial Tables. James Meikle Rationale of Life Assurance Premiums. „ Analysis of Life Assurance Profits. Policy Life Lines. Dr WilHam Farr Introductionto his " English Life Table, No. III." C. J. Bunyon Law of Life Assurance. j^lis On Fire and Life Assurance. Mortality Exiperience of Life Assurance Companies, collected by Institute of Actuaries in 1863. The Journal of the Institute of Actuaries. IIL-COMMEBCIAIi SUBJECTS. M'Culloch's " Dictionary of Commerce." Macpherson's " History of Commerce." Anderson's " History of Commerce." Montefiore's " Commercial Dictionary." Oddy on " European Commerce." Sergeant Marshall on " Insurance." Amould on " Marine Insurance." 2© 234 APPENDIX. AUTHORITIES RECOMMENDED. 235 Parke on tlie " Law of Insurance." Em^rigon's " Traite des Assurances et des Contrats." Caldwell on " Arbitration." Parker on " Arbitration." Abbot on " The Law of Shipping." Benecke on " The Principles of Indemnity." Smith's " Mercantile Law." Martin on " The Practice of Stating Averages." Holt on " The Law of Shipping." Morton on " Vendors and Purchasers." Bell's Commentaries. Maude and Pollock, "Law of Merchant Shipping." Chitty's " Commercial Law." Burton's " Manual of the Law of Scotland." Chitty on " The Law of Nations." Babbage's " Economy of Machinery^ and Manufactures." J. E. M'CuUoch's article in "Edinburgh Mevieic, Art. xi. May 1823, on " The Navigation Laws." Smith's " Wealth of Nations,"— on same subject. J. Warrack, Leith, on ''AYemge" in Ency. Brit, 1856, vol. xii, p. 419. rV.-BANKING. J. W. Gilbart's " Principles and Practice of Banking." H. Dunning Macleod'a " Theory and Practice of Banking." Taylor's " Statesman." J. E. M'Culloch, Article in Edinburgh Meview, on " Prolongation of the Bank Charter." — Art. v., January 1833, • " On " Joint Stock Banks and Companies.— Art. vi., July 1836. • * On " State of the Currency, the Bank of England, and Country Banks."— Art. iii, April 1837. Thornton on " Paper Credit." Evidence of Lord Overstone (Samuel Jones Lloyd) before Committee on Bank Charter in 1840. Eeport (1832) on " Eenewal of the Bank Charter." Postlethwaite's " History of the Eevenue." Glyn's Evidence, 1832. G. W. Norman's Evidence. 1840. Tooke's Evidence, 1840. „ Hamilton on the " National Debt." — Second Edition. Letter by the late Eobert Bell, Western Bank, Edinburgh, to J. W. Gilbart, London and Westminster Bank, on " The j Relative Merits of the English and Scotch Banking Systems." — Bell & Bradfute, 1838. Letter by E. Bell to J. W. Gilbart, on " The Eegulation of the Cur- rency by the Foreign Exchanges, and the Appointment of the Bank of England to be the sole Bank of Issue throughout Great Britain." — Hatchard & Son, London, 1840. E. H. Patterson's "Economy of Capital," 1865. » » *' Science of Finance." — Blackwood, 1868. Henry English's " Complete View of Joint Stock Companies formed in 1824-25." G. M. Bell's "Philosophy of Joint Stock Banking." — Longman, 1855. V.-POLITICAIi ECONOMY. Adam Smith—" Wealth of Nations." D. Eicardo — " Principles of Political Economy and Taxation." J. E. M*Culloch — Article in Edinburgh Review on "Eicardo's Prin- ciples of Political Economy." — Art. ii., June 1818. „ * On Chalmers' Political Economy. — Edln. RevieWj Art. iii., Oct. 1832. T. E. Thorold Eogers, M.A. — Manual for Use of Schools. — Macmillan, London. Say's " Political Economy " — Prinsep's Translation. — Longman, 1821. H. Dunning Macleod's " Principles of Political Economy." — Long- man, 1872. Cairne's "Essay on Political Economy." — Macmillan & Co., 1873. Dr Francis Wayland — "Elements of Political Economy." — Brown, Aberdeen, 1866. J. Stuart Mill's " Principles of Political Economy." J. G. Courcelli, — Seneuil, — " Traite d'Economie Politique." Tooke's " History of Prices." Cordillac's Treatise — "Le Commerce et le Gouvernement," 1776. VL -BILLS OP EXCHANGE. English Authorities — Byles and Chitty. Scotch Authorities— Thomson, Bayley, and Glen. 236 APPENDIX. TH.-BOOK-KBEPINO. J. W. Gilbart — Bank Book-keeping, in " Principles and Practice of Banking." M'Cullocli's " Commercial Dictionary " — " System by an Official Assignee." Jones — ^Double Entry, 1796. Hamilton, 1820. C. Morrison, Glasgow, 1823. W. & R. Chambers — by Inglis, Edinburgh. Hamilton & Bell's Book-keeping. — Oxford, 1869. Kain's EngHsh Solicitor's Book-keeping.— Waterlow & Sons, London. C. Hight's System for Gas Companies. — Nissen, Parker, & Arnould, London. j^OTE. — The author has not referred to the various Encyclopiedias in the matters treated upon in this Section ; but they may be con- sulted with advantage, pamm. > » » » < II SECTION VL A FEW WORDS OF ADVICE TO YOUNG BOOK-KEEPERS AND JUNIOR CLERKS. L Always be at your work rather before than after the time for attendance in the morning; and never leave before the hour fixed for closing. 2. Always complete the work in which you are engaged — such as "Balancing Cash," "Posting the Journal," or "Comparing Post- ingSj " — before leaving ; and never be induced to drop the pen while engaged in making an entry ; there is nothing more likely to occasion errors in books than interruption of any kind. 3. Always balance your cash daily ; and never leave your desk until the difference, if any, is ascertained. If you cannot discover it on the day it occurs, it is less likely to be found out at a later or deferred period. 4. Always lock away, or otherwise secure the cash, or cash securities or documents in your possession ; and never put temptation in the way of any one, as your carelessness may perhaps lead to another's dishonesty, 5. Always report, without a moment's delay, the loss of money which you may have dropt, or which may have been abstracted from your repositories. Your employers not only should be informed at once, but may be better able to make inquiries and take measures for its recovery ; and never omit the precaution of stop- ping payment of cheques and notes, if you should be in pos- session of the particulars. 238 AE'PSNOIX. ADVICE TO YOUNG BOOK-KEEPERS, ETC. 239 6. Always connt money wlieu you receive it, no matter from wJiom ; an/never let any .««, to whom you pay it, depart without doing so. 7. Always have your books weU posted or " brought up," daily, if possible ; and never allow a week .to elapse without comparing the Bank pass-books with the respective Ledger accounts. Where more than one Bank account is kept, there may be a com- plication and false posting — which vnU. thus be easily rectified. 8. Always check most carefully the invoices, bills of parcels, ac- counts of sales, and receipts that come into your hands ; and never assume that these, or any of them, must be coiTect be- cause they come from careful houses and are well urrltten. This 18 a very common and, perhaps, natural error into which young book-keepers are apt to faU — remember, that every one is liable to make mistakes, 9. Always satisfy yourself that letters are properly addressed and sufficiently stamped; it is a good plan to re-examine the ad- dresses when in the act of posting, for it is extraordinary the number of letters received at the Post-office without having any address whatever; and never conceal from your employers the mislaying or loss of a letter, or your forgetting to post it at the proper time. Very great troubles and losses have arisen from such carelessness, and even greater from its con- cealment. Eemember, that that which is only a mistake when first ascertained or discovered, becomes a serious error when it is concealed. 10. Always see that statements, or accounts, sent out of your office, are compared and made to agi^ee with the Ledger accounts, from which they should be made out or transcribed ; and never close these Ledger accounts, on such occasions, without the proper Journal entries. It sometimes happens that accounts-current are hurriedly made out for rendering without referring to the Ledgers — this shows extreme carelessness, is wrong in principle, and frequently attended with the most serious consequences. Close your Ledger accounts, when statements are rendered, by bringing down the balances then duo ; if the account has been rendered more than once, insert the dates of such rendering, in red ink, on the Ledger account — ^this saves the trouble of reference, and also gives a sort of history of the account. 11. Always Journalise cross-entries, even although they may be re- quired to correct false postings or entries in wrong accounts ; and never erase a figure if it can possibly be avoided. Eemember, that books in which erasures appear, are generally regarded with suspicion. 12. Always be obedient to your seniors in the office, doiug your best to carry out their instructions ; and never, on the completion of any work that they may have given you to do, lay it aside, but re- turn it, or report it, to the party instructing you, as having been done — this is very necessary in offices where a large business is carried on. 13. Always be ready to attend to the wishes of your employers, show- ing alacrity in carrying out their instructions ; and never take offence at or resent a rebuke or sharp word received at any time from them. Remember, that principals, taking an active part in the management of large concerns, may have many cares, anxieties,and responsibilities of which you have no conception ; and if occasionally short tempered with their employees, are generally sorrj^ for it when the cloud has passed away. " A soft anstcer turneth away icratJi." 14. Always preserve your temper, and never show irritation should trouble or difficulties present themselves in your professional avocations. Remember, especially, that Book-keeping is a pre- cise science, requiring great care and patience, and it is often only by the most laborious and persevering efforts that diffi- culties can be overcome. In balancing a complicated set of books for instance, the balance might not perhaps " come out " at the first trial ; do not, however, despond or become irritable, as is too often the case, but persevere until it does. 15. Always be ready to confess your ignorance ; and never say or imply that you comprehend instructions if you really do not. This proceeds, too often, either from false modesty, or from too 240 APPENDIX. great vanity. Ask again and again until you cmnprehend the matter^ it will save time, trouble, and vexation to you; and, very probably, money to your employers. 16. Always be courteous and polite to every one with whom you do business — it may smooth the way to your own success in after life ; and never assume that any business, no matter what it may be, is unimportant, merely because it appears to be trifling to you ; it may be of the most vital consequence to others. LASTLY. 1 7. Always bear in mind that your employers' secrets are not yours, but must be held sacred ; and never divulge, directly, or by in- ference, anything of which you are cognisant by virtue of the position you hold. Remember, that a thoughtless sHp of the tongue, may seriously affect commercial and other interests and relations. Reticence is one of the most valuable gifts of a Book-keeper ; for however excellent his other qualifications may be, let him but indulge in chattering propensities, and ho is worse than useless. THE END. MOULD AND TOD, PRINTBRS, ST. JAMBS' SQUARE, EDINBURGH. bate Due 9 I i ( I barter Pr aotioal book-keepnng APR 2 7 1938 ^^/<***^ OVl\o^ NEH 3GP0619M Ai|). it-^ JtTK'jJr OF TIT I