diff --git "a/Accounting/business_accounting_vol_2_1920.md" "b/Accounting/business_accounting_vol_2_1920.md" new file mode 100644--- /dev/null +++ "b/Accounting/business_accounting_vol_2_1920.md" @@ -0,0 +1,22368 @@ +A black and white textured page. + +A seal with three columns of text, "THE UNIVERSITY OF CALIFORNIA LOS ANGELES" at the top. +THE LIBRARY +OF +THE UNIVERSITY +OF CALIFORNIA +LOS ANGELES + +A black and white image with a torn section at the top. +University of California Berkeley 2013 + +University of California Berkeley +Los Angeles CA, California + +Digitized by the Internet Archive +in 2007 with funding from +Microsoft Corporation + +http://www.archive.org/details/businessaccounti02greeiala + +SOUTHERN BRANCH, +UNIVERSITY OF CALIFORNIA, +LOS ANGELES, CALIF. + +[API_EMPTY_RESPONSE] + +A blank white page. + +je + +A blank page with a faint vertical line on the left side. + +BUSINESS ACCOUNTING +HAROLD DUDLEY GREELEY, C.P.A., Editor + +Volume I—Theory of Accounts +By Harold Dudley Greeley + +II—Constructive Accounting +By George E. Bennett + +III—Cost Accounting +By DeWitt Cant Eggleston + +IV—Advanced and Analytical Accounting +By Henry C. Coz + +V—Illustrative Accounting Problems +By William H. Rittenhouse and Harold Dudley Greeley + +Business Accounting + +VOLUME II + +CONSTRUCTIVE ACCOUNTING +A Manual of System Building + +By +GEORGE E. BENNETT, A.B., LL.M. +Certified Public Accountant; Professor and Director of +the Department of Accounting, Syracuse University + +CP + +Second Printing + +NEW YORK +THE RONALD PRESS COMPANY +1921 +40067 + +Copyright, 1920, by +THE RONALD PRESS COMPANY + +All Rights Reserved + +Bus. Admin. +Library + +HF +5621 +G81b +v. 2 + +EDITORIAL PREFACE + +Ten years ago almost any contribution to the literature of accounting would have been welcomed. Today, however, with the increasing number of excellent publications, it is incumbent upon one who puts forth a new accounting work to justify his action. Much more is it necessary to explain the publication of a set of accounting books. Hence it is desirable to state at the outset the purpose of "Business Accounting" and to outline its scope and general methods of presentation. + +While many books have been published on accounting topics, in almost every case they are unrelated volumes. In some few instances, a volume on accounting has logically followed another by the same author, but with these few exceptions every one published has been written without connection with, or adjustment to, any of those already existing. Under these conditions, the student of accounting, to get any connected and logical knowledge of his subject, must find one of his books here, another there, a third somewhere else, and bridge over the gaps between them as best he may. The process is difficult, and the accounting knowledge he obtains is not always well co-ordinated and logically developed. + +The volumes of "Business Accounting" are intended to meet this situation. They cannot, it is true, provide a course of study in the sense that prescribed readings are recommended, written answers to questions required, and personal instruction given. Neither do they con- +iii + +iv EDITORIAL PREFACE + +stitute an encyclopaedia of unconnected and isolated articles. Rather are they an attempt to present in simple, non-technical language the basic principles of account-keeping and their application to various lines of business, together with general directions for preparing, analyzing, and interpreting accounting statements. + +One who starts at the beginning of Volume I and works faithfully through to the end of Volume IV, and then solves the problems and examines the solutions of Volume V, should acquire some real understanding of the theory and practice of accounts—a knowledge that, supplemented by experience, should enable him successfully to stand the test of practical work in any ordinary business office and furnish a foundation for going as much further into the study of accountancy as he may desire. + +It may be noted in passing that the volumes of "Business Accounting" have been indexed in such a way as to provide many of the features of an encyclopaedia, so that the person desiring the practice on a particular point or accounting ideas of suggestive value in particular lines of industry will be able to use the set to advantage. + +Taking up the volumes of the set in order—Volume I presents the fundamental principles of account-keeping and statement preparation. Upon these basic principles all systems of account are built. Volume II explains the principles governing the development of the simple accounting procedures described in Volume I to meet the needs of more complicated and more extensive systems of financial accounting. Volume III explains in much the same way how the basic principles + +EDITORIAL PREFACE + +have been applied to factory or cost accounting. Hav- +ing thus traced the fundamental principles into more +elaborate financial and cost accounting procedures, Vol- +ume IV treats accounting principles and practices +which are more advanced than the basic ones described +in Volume I. These advanced principles are in most +cases subject to differences of opinion, owing to their nature +or application among persons qualified to deal with them, +and it is for this reason that their discussion is +confined to Volume IV. Supplementing the illustra- +tions of accounting principles and statement prepara- +tion there follows in Volume IV a practical discussion +of the methods of verifying accounts and statements and +of their interpretation and analysis. + +The set closes with Volume V, which gives a num- +ber of problems of a practical nature, together with +their solutions. The working of these problems will +not only clarify the reader's ideas but in many cases +will provide models upon which he can base accounting +procedures and build statements to meet concrete situa- +tions arising in his own work. + +The readers to whom this set will appeal most +strongly may be divided roughly into two classes. There +will be, on the one hand, business and professional men, +bankers, office managers, and other executives who feel +the need of understanding in a general way the methods +of modern account-keeping and statement preparation. +There can hardly be excuse nowadays for them to con- +sider bookkeeping methods and accounting statements +as too complicated to understand or of such slight im- +portance as to merit no attention. They need a grasp +of the subject so that they may judge for themselves + +ii +EDITORIAL PREFACE + +whether bookkeepers and other persons who keep accounts for them and render statements to them are giving information which is accurate, adequate, and presented in the most intelligible form. The entire tendency of modern business and civic life is toward more exact accounting, of which the accounting requirements of the present income tax legislation are but one indication. Any person having substantial interests at stake should be able to appraise intelligently the stewardship of those to whom his interests are entrusted and the volumes of "Business Accounting" will give him the technical information this demands. + +The other class of persons to whom "Business Accounting" will appeal is composed of those whose duty it is to keep accounts and to prepare statements. They should find in this set an inspiration and an aid to more intensive study, which in turn will result in improved accounting ability and an enhanced wage. The careful and intelligent use of these books will lead beyond question to increased power of service to employer and community. + +HAROLD DUDLEY GREELEY, +Editor, Business Accounting Set. +New York City, +April 1, 1920 + +PREFACE + +Within the past few years, many books have been written on the principles of accounting. But, so far as the author is aware, "Constructive Accounting" is the first attempt to present the principles of accounting construction as distinct from those of purely business operation. The work is intended to assist in the designing of appropriate business records and statements for a new enterprise, or for one already in operation that requires certain features of its accounting system to be replaced, modified, or improved. + +The really qualified bookkeeper or accountant should be capable not only of performing the routine tasks of bookkeeping, but also of undertaking work of higher grade, requiring initiative and exact professional skill. He should know what defects, if any, are to be found in the system under his control and be able to correct these so as to secure for the enterprise a complete, understandable, and readily available record of its transactions with others, the cost of securing and handling the commodities in which it deals, its loss or gain in past periods, and its present trend. He should be able to build up a system that will, at a minimum of effort, do all this and at the same time secure a maximum of protection against error, omission, or fraud. It is in preparing the practitioner for such work that the author trusts the present volume will find a definite place. + +In all accounting systems the underlying principles are, of course, the same, their application or combina- +vii + +viii +PREFACE + +tion varying with the requirements of the particular business. Recognizing this fact, the method of the present volume is to analyze the records and practices of ordinary bookkeeping and accounting and show how these may be combined and utilized to form a system adapted to meet special requirements. In doing this, the various forms of ordinary accounting records are examined and their special functions discussed so that systems built up from them will meet such requirements. + +It has not been attempted to present in this book systems complete in detail. These must vary according to the circumstances of each business. But the outlines presented should give a basis for development. The points of difficulty most frequently met with in trading operations and the general conduct of modern business are the points of discussion in the systems considered. In passing from one to another of these, the aim has been to work from simpler systems to those of more complexity. + +Accountants will naturally differ as to particular methods to be employed in each case. The author feels, however, that the plans and methods here presented—the result of experience, investigation, and consultation with professional associates—will, taken as a whole, be found helpful, practical, and in accord with best modern practice. + +Criticisms, comments, and suggestions from those who use the volume will be most welcome. + +GEORGE E. BENNETT + +New York City, +April 1, 1920 + +CONTENTS + +**CHAPTER** + +**I** INTRODUCTORY + +1. Accounting Theory and Practice +2. Place of Accounting in Organisation +3. Necessity for Proper Accounting System +4. Internal Control +5. Operative and Inspective Accounting +6. Function of Constructive Accounting + +**II** THE WORKING ORGANIZATION + +1. Scope of Working Organization +2. Functions of the Working Business Operation +3. Subsidiary Departments +4. Types of Internal Control +5. Partnership Organisation +6. Partnership Accounting +7. Corporate Accounting +8. Corporation Accounting +9. Governmental Accounting +10. The Organisation Chart + +**III** DEVELOPMENT OF RECORDS + +1. Accounting Records +2. The Simple Trial of Accounts +3. The Development of Books of Original Record +4. Development of Ledger Records +5. Arrangement of Entries + +**IV** THE SURVEY + +1. Preliminary Considerations +2. Objectives of Survey +3. Character of the Business +4. Trading and Manufacturing Records Compared +5. Books in Use +6. Accounts in Use +7. General Rules for Dealing with Specific Cases +8. Working Papers + +**V** PLANNING AN ACCOUNTING SYSTEM + +1. Outlining a Plan +2. Organisation Plan + +**CHAPTER** + +**PART I—PRINCIPLES AND PRACTICE** + + + + + + + + + + + + + + + + + + + + + + + + + + +
CHAPTERPAGE
I3
II9
III25
IV32
V42
+ +14 + +X CONTENTS + +CHAPTER PAGE +3. Co-operation of Officials and Employees 50 +4. Chart of Accounts 51 +5. Loose-Leaf System 52 +6. The Records of Original Entry 53 +7. Subsidiary and Auxiliary Forms 54 +8. Forms for Installation 55 +9. Rules 56 +10. Supervision 57 + +VI FORMS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 +1. Forms a Matter of Convenience 52 +2. The Relation of Records to System 53 +3. Completeness of Routine 54 +4. Uniformity of Form 54 +5. The Amount of Detail on a Form 54 +6. Questions to be Answered when Ruling a Form 54 +7. Use of the Index Card 54 + +VII LOOSE-LEAF AND BOUND RECORDS . . . . . . . . . . . . . . . . . . . 60 +1. Increase in Use of Loose-Leaf Records 60 +2. Advantages of Bound Records 61 +3. Disadvantages of Bound Records 61 +4. Advantages of Loose-Leaf Records 62 +5. Disadvantages of Loose-Leaf Records 62 +6. Provisions in Installing Loose-Leaf Records 63 +7. Cards 63 + +VIII PURCHASE DEPARTMENT ORGANIZATION . . . . . . . . . . . . . . 69 +1. Importance of Subject 69 +2. Purchasing and Cost of Goods Sold 70 +3. Results of Unscientific Purchasing 70 +4. Social Activities of the Purchase Department 71 + +IX PURCHASE DEPARTMENT ROUTINE . . . . . . . . . . . . . . . . 76 +1. Preparation for Purchasing 76 +2. Purchase System Requirements 77 +3. Description of the Purchase Order 78 +4. Purchase Specifications 78 +5. Time Required for Order 79 +6. Accuracy of Content of Requisition and Order 80 +7. Frequency and Number of Copies of Purchase Requisition Required 80 +8. Placing the Order 81 +9. Issuing the Order 82 +10. Purchase Order Register 83 +11. Order Follow-Up 84 +12. Shipments on Order + +CONTENTS + +CHAPTER X +PURCHASE DEPARTMENT ROUTINE (Continued) . 96 + +XI PURCHASE RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 + +XII PURCHASE RECORDS (Continued) . . . . . . . . . . . . . . . . 128 + +XIII STORES SYSTEMS . . . . . . . . . . . . . . . . . . . 130 + + + + + + + + + + + + + + + + + + + + + + +
CHAPTERPAGE
X96
XI104
XII128
XIII130
+ + + + + + + + + + + + + + + + + + + + + + +
1.Necessity for Accurate Work
2. + Invoice Register
3. + Cash Receipts Book
4. + Invoice Checking and Approval
5. + Procedure for Recording Invoices
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
1.Recording Purchases
2. + The Three-Column Journal
3. + The Cash Book
4. + Purchase Book Posting
5. + The Purchase Book
6. + Columnar Purchase and Expense Journal Entry
7. + When Columnar Purchase and Expense Journal Entry Is Not Used
8. + Purchase Journal vs. Voucher Register
9. + The Voucher Register
10. + Statement Vouchers
11. + Handled Suppliers Without a Record of Creditors
12. + Cash Purchases
+ + + + +
MONTHLY SUMMARY OF PURCHASESSUMMARY OF PURCHASES + (Continued)
+ + + + + + + + + + +
+ + + + + + + + + +
+ + + + + +
+ + +
+ + +xii +CONTENTS + +CHAP T ER +XIV SALES DEPARTMENT ORGANIZATION . . . . . . . . 146 + +1. Profitable Selling +2. Functions of the Sales Department +3. Sales Department Organization +4. The Sales Office +5. The Small Retail Store +6. The Mail-Order Business +7. The Mail-Order Business +8. The Combination of the Retail and the Jobbing +9. The Advertising Department + +XV SALES ORDER ROUTINE . . . . . . . . . . 156 + +1. Importance of Correct Handling +2. Recording the Sales Order on Uniform Blank +3. The Cash Register +4. The Credit Department +5. Grouping of Invoices +6. Duplicate Copies of Order +7. Accounting Department Routine + +XVI SALES RECORDS . . . . . . . . . . . 162 + +1. Recording Sales +2. Necessity for Sales Records +3. Invoice Book and Credit Journal +4. The Three-Column Journal +5. The Cash Register +6. The Impression Book +7. Bound Book of Invitations +8. Duplicate Copies of Invoices +9. The Billing Machine +10. The Billing Machine in a Department Store +11. Sales Returns of a Wholesale Concern +12. Alternate Sales System for a Small Concern +13. Sales Recapitulation +14. A Combined Sales System +15. Returned Sales +16. Deposit Receipts for Cash Sales +17. The Cash Register +18. Sales Book for Consignee +19. Sales Book for Consignee +20. Sales on Approval +21. Journals and Registers +22. Containers +23. Installment Sales +24. Coupon Books + +CONTENTS + +xiii + +CHAPTER XVII +GENERAL CASH RECORDS +189 + +1. The Separate Cash Record +2. Reason for Distinct Records +3. Description of General Cash Records +4. The Essentials of a Cash System +5. The Cash Book +6. The Cash Book Not a Ledger Account +7. Cash Book Entries +8. Cash Book Columnarization +9. Recording Cash Discount +10. Classification of Accounts Debtors and Creditors + +XVIII GENERAL CASH RECORDS (Continued) +201 + +1. General Cash Book for a Mercantile Concern +2. Cash Sales +3. Charitable Institution Cash Book +4. The Petty Cash System +5. The Check Register +6. Cash Receipts and Payment Record +7. The Voucher Check +8. Gypsum Checks +9. The Mechanical Cash Register + +XIX PETTY CASH RECORDS +217 + +1. The Imprest System +2. The Fixed Fund and Account for Petty Cash +3. The Petty Cash as a Portion Medium +4. Petty Cash Vouchers +5. Handling Many Items of a Similar Kind + +XX MISCELLANEOUS CASH RECORDS +222 + +1. The Cash Journal +2. Cash Returns for Cash Returned +3. Cashier's Cash Distribution +4. Daily Cash Report +5. The Circular Cash Book + +XXI THE JOURNAL + +1. Books of Original Entry +2. Entries in the General Journal +3. Opening and Closing Entries +4. Journal Entries +5. The Two-Column Journal +6. Three-Column Journal +7. Four-Column Journal +8. Slip-Card Journal +9. "Left and Right" Journal +10. Cut Sheet Journal + +xir +CONTENTS + +CHAPTER XXII THE LEDGER PAGE 247 + +1. General Use +2. Source of Original Entry +3. Records of Summarization +4. Summary of Accounting +5. Development of Ledger Ruling +6. Ledger Form with Debts and Credits in Center +7. The Standard Ledger Form +8. Tabular Ledgers +9. Bankers' Ledger +10. Club Members Ledger +11. Joint Stock Company Ledger +12. Ledger Account with Wide Explanation Column +13. Ledger Form with Balance Columns in Center +14. Standard Ledger Form with Balance Column at Right +15. Standard of Sales Ledger +16. Standard Ledger Form with Double Columns +17. The Private Ledger +18. The Private Ledger +19. Corporation Stock Ledger +20. Inventory Ledger +21. Ledger Control + +XXIII CLASSIFICATION OF ACCOUNTS 264 + +1. The Two-Group Classification of Accounts +2. Scope of Functions of an Account +3. Classifications by Nature of Business +4. Variations In Size of Classification Groups +5. Major Classes of Accounts by Classification +6. Ledger Arrangement of Accounts +7. Numbering of Accounts +8. Classification of Accounts for a Manu- +facturing or a Trading Company +9. Description and Use of Accounts +10. Account Grouping to Facilitate Statement Prep- +aration + +XXIV STATEMENTS 287 + +1. Constructive Importance +2. Liability Statements, and Statements +3. Basic Statements +4. Account Form vs. Running Form of State- +ment. +5. Periods of Time Covered by Statements +6. Use of Percentage in Statements +7. The Units Used in Statements +8. Comparison of Statistics +9. Compilation of Statistics--Graphs + +CONTENTS + +CHAPTER XXV +EXPENSES + +
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
1. Classes of Expense297
2. Permissible Department Expense
3. Administrative Expense
4. Selling Expense
5. Inventory Selling Expense to Sales
6. Ratio of Selling Expense to the Cost of Pro- duction
7. Selling Expense as a Rate per Pound or per Ton of Product Shipped
8. Disposition of Selling Expense
+ +XXVI LABOR AND SALARIES + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
1. Importance of Labor Records308
2. The Rate Card
3. Pay Periods
4. Methods of Payment
5. The Original Record
6. The Payroll System
7. The Job Card
8. Frequency of Wages
9. Fudging the Pay-Roll
10. Construction Work
11. Salaries
+ +XXVII THE BUDGET + + + 482 + +1. The American Plan +2. The European Plan +3. The Table d'Hôte Dining Room +4. The American Dining Room +5. Prevention of Fraud +6. The American Plan +7. Records Required +8. Guest Register +9. Boarding Passes +10. Guest Ledger +11. Charge Ticket +12. Charge Journal +13. Accessory Envelopes +14. Cash Receipts Registers +15. Expenditures +16. Wages +17. Dish Breakage +18. Seasonal Period +19. Departure Record +20. Monthly Earnings +21. Two Forma Statement of Profit and Loss + +XXXVII CLUBS + +1. Clubs +2. Classification of Accounts +3. Records Required +4. Membership Fees +5. Life Memberships +6. Unpaid Accounts Payable +7. House Accounts +8. Membership Register +9. Bye-Laws and Regulations +10. Closing the Books + +XXXVIII BUILDING CONTRACTORS + +1. The Building Contractor +2. Records Required +3. Names of Contractors +4. The Contract and Sub-Contract Register +5. Cost of Work Short +6. Voucher Register +7. Materials +8. Labor +9. Subcontract Payments +10. Periodical Charges to Owners +11. Profit and Loss + +453 + +CONTENTS +six + +CHAPTER XXXIX Cost Accounts of a Manufacturing Enterprise +PAGE 461 + +1. Double-Entry Method and Cost Records +2. The Problem +3. Materials +4. Labor +5. Overhead +6. The Records + +XL Cost Accounts of a Trading Enterprise 466 + +1. Costs Ascertained by Departments +2. Direct Charges +3. General Principles of Expense Distribution +4. Specific Problem Considered +5. Schedule 1—Sales Revenue +6. Schedule 2—Rental Expense +7. Schedule 3—Electricity and Power +8. Schedule 4—Fixed Charges on Furniture and Fixtures +9. Schedule 5—Pay-Roll for Office and Sales Force +10. Schedule 6—Purchases +11. Schedule 7—Net Sales (Net) +12. Schedule 8—Sales (Net) +13. Analysis of Profit on Sales + +FORMS + +ORGANIZATION CHARTS + +
1. Definition of Budget
2. Segregated and Lump Sum Budgets
3. General Importance
4. Importance of Budget to the Executive
5. Importance to Other Organization Officials
6. Budget Preparation
7. Material Considered
8. Estimate of Revenue
9. Estimation of Disbursements
10. Budget Approval
11. Study of Nature of Business as a Whole
12. Plan for a Budget
13. Illustrative Budgets
XXVIII SPECIAL RECORDS USEFUL RECORDS
1. Miscellaneous Useful Records
2. Notes Receivable and Notes Payable Regis- ters
3. Capital Stock Transfer Record
4. Allowance Journal
5. Drivers' Sales
6. Salesmen's Commissions
334
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
FORMPAGE
1. General Organization Chart11
2. Partnership Control Chart—I14
3. Partnership Control Chart—II15
4. Partnership Control Chart—III16
5. Corporate Control Chart19
6. Organization Chart22
+ +PURCHASE RECORDS + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +







































































































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A small image of a book or ledger page.
PURCHASE RECORDSPAGE
7. Purchase Requisition84
8. Purchase Order89
9. Invoice Journal, with Purchases Column106
(4) Purchase Order Journal—Manufacturing107
(5) Purchase Order Journal—Approved Form108
10. Columnar Purchase and Expense Journal—General-Merchandise111
11. Columnar Purchase and Expense Journal—Manufacturing113
12. Purchase and Expense Journal—Merchandise115
13. Purchase and Expense Journal—Manufacturing117
14. Voucher Register.
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +```html +
STORES RECORDS
SALES RECORDS
Sales Requisition Report - by Shipments
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
SALES RECAPITULATION SHEET BY DEPARTMENTS AND TERRITORIES (continued)
+ + +                                                            + 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
& +& +& +
Sales Requisition Report - by Shipments:Sales Order Blank:Sales Recapitulation Sheet-by Departments:Sales Recapitulation Sheet-by Departments and Territories:Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitulation Sheet-by Departments and Territories (continued):& +Sales Recapitation +``` + +FORMS + +xxi + +FORM +Page + +34. Returned Goods Memorandum +176 +35. Consignment and General Sales Book +176 +36. Cash Book with Controlling Account and Discount Columns +182 +37. C. O. D. Route Ledger +182 +38. Sales Book, with Containers Column +184 +39. Sales Book, with Containers Column +184 +40. Record of Instalment Sales +185 + +CASH RECORDS + +41. Simple Cash Book +193 +42. Cash Book with Controlling Account and Discount Columns +199 +43. General Cash Book +202 +44. Charitable Institution Cash Book +205 +45. Petty Cash Register +208 +46. Check Register +208 +47. Petty Cash Record +213 +48. Petty Cash Memorandum +214 +49. Petty Cash Book +219 +50. Petty Cash Voucher +220 +51. Petty Cash Payment Order +221 +52. Cash Refund Ticket +226 +53. Petty Cash Receipt Order +227 +54. Daily Cash Report +228 +56. Private Cash Book +229 + +JOURNAL FORMS + +57. Chart of Books of Original Entry +331 +58. Journal Voucher +335 +59. Two-Column Journal +337 +60. Three-Column Journal +338 +61. Four-Column Journal +340 +62. Five-Column Journal +341 +63. "Left and Right" Journal +344 +64. Cut Sheet Journal +344 + +Ledger RULINGS + +65. Standard Ledger Form 249 +Ledger with Money Columns in Center for Balancing Purposes 249 +66. Journal-Isolated Ledger 251 +67. Merchants Ledger 252 +68. Rent Register 254 +69. Ledger with Balance Column in Center 255 +70. Ledger with Balance Column on Right 255 +71. Special Sales Ledger 255 +72. Special Sales Ledger Double Columns 256 +73. Corporation Stock Ledger 258 + +THE BUDGET + +75. Budget Schedule 324 + +xxii FORMS + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
FORMSPECIAL RECORDSPAGE
76. Notes Receivable Register335
77. Notes Payable Register335
78. Cost of Goods Sold Book337
79. Allowance Journal337
80. Dividends Journal337
81. Customer's Weekly Bill339
82. Order Register, showing Sales and Agents' Commissions339
83. Freight Receipts Register341
84. Diamond Registers343
85. Insurance Journal345
86. Securities Register for Income Tax Purposes346
87. Income Revenues Register346
88. Allowable Deductions Record for Income Tax Purposes347
+ + + +
AGENCY AND BRANCH RECORDSPagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePagePage7 + +by means of the regular office machinery is much more desirable than that secured by positive individual exertion; the latter tends to break down under the pressure of business. + +6. Function of Constructive Accounting + +Constructive accounting, the subject of this particular volume, concerns the devising and development of such instrumentalities—books, records, etc.—as a particular business requires in order to put into operation an effectual accounting system. It also involves the use of statements. + +Constructive accounting may be concerned with an organization which is entirely new, or it may be concerned with an older one which needs its account-keeping reorganized. + +As applied to any specific organization under consideration it is concerned with: + +1. Determining the account classifications, by means of which the accounts that are to be used are stated and explained. +2. Designing the account books so as to secure the best possible method of account-keeping for recording financial transactions; this con- templates: + (a) Books of original entry, in which the debits and credits of each transaction are displayed first in their relation to the account classifications as agreed upon. + (b) Books of subsequent entry (Jedgers), in which the debits and credits of each + +8 +PRINCIPLES AND PRACTICE + +transaction are collected together under account headings, as decided upon in the classification of accounts, and by means of which business information is made available for statement purposes. + +3. Preparing the periodical statements necessary to show interested persons: + (a) The financial position of the concern at the close of the accounting period. + (b) The reasons for changes in this financial position from the beginning of the accounting period. + +REVIEW QUESTIONS + +1. Distinguish between the theory and the practice of accounting. +2. Why is an effective system of accounting essential to the success of a modern enterprise? +3. Describe the function of modern accounting. +4. As applied to a specific organization, what is the function of constructive accounting? +5. What natural ability and specific training must a person have to be able to install a proper accounting system in a given business? + +CHAPTER II + +THE WORKING ORGANIZATION + +1. Scope of Working Organization + +The working organization of a business enterprise is responsible for the actual conduct of its business activities. It is formed by the grouping of duties involved in the operation of the concern, and the assignment to individuals of the respective responsibilities connected with these duties. In a well-organized and well-conducted business, the various offices of all grades should be filled by those individuals according to ability; proper training in the various operative duties should be provided so that the internal machinery of the organization may run smoothly; proper steps should be taken so that all responsible officials shall have understudies and the vacancies as they occur may be filled by promotions of qualified subordinates; and the lines of authority should be laid out so they do not overlap. + +It is the ideal that every person—officer or employee—shall be placed in his or her proper niche. In short, everything is to be planned so as to produce the most effective operation throughout the organization. The object to be kept in mind at all times is to secure the largest results in return for the expenditure of effort and capital. + +It is the purpose of this chapter to consider some of the principles connected with this matter of internal organization. + +9 + +10 PRINCIPLES AND PRACTICE + +**2. Fundamental Divisions of Business Operation** + +The two fundamental operations of business are: +(1) producing and (2) selling. Any group of persons engaged in producing or selling, or both, is a business organization. + +1. The producing division or department secures the raw material and manufactures the commodity that is to be sold, if the organization be a manufacturing one. Those who control the manufacturing must produce at the lowest possible cost, in the shortest period of time, and in the most salable form. In the case of a trading concern, the production department is that part of the organization which finds and buys the goods that are to be sold again. In every line of business, as a matter of fact, there is something which corresponds to the production division of a manufacturing concern, although in some cases the distinction may not be at first apparent. + +2. The sales division takes charge when the manufactured or purchased article is ready for sale. Its function is the marketing of the commodities made or bought by the production division. It must find the customers, and by advertising, salesmen, and correspondence must sell the goods. The advertising function is an important, sometimes the most important, activity of the sales division. + +**3. Subsidiary Departments** + +To the two fundamental divisions of business operation mentioned above may be added the subordinate departments of financing, accounting, and office administration, existing separately or combined. + +THE WORKING ORGANIZATION + + +A marketing department +A finance department +A production department +An office department +Business control +Sales, purchasing, shipping +Accounting department +Finance department +Personnel fund +Product development +Raw materials +Work-in-progress +Finished goods +Manufacturing equipment +Marketing equipment +Office furniture +Administrative furniture + + +Form 1. General Organization Chart + +11 + +12 + +**PRINCIPLES AND PRACTICE** + +The financial department of a concern provides the funds, arranges for credits, and negotiates such loans as may be necessary to carry on business operations. In Form 6 (page 32) the financial department is not shown as a separate department, as in the diagrams preceding, but has been merged into the activities of the board of directors. + +The accounting department records all the company's financial transactions. Periodically it tabulates and presents in an intelligible form the results of these transactions. These tabulated results form the basis for determining future activity and outlining prospective business policies. + +The office administration of a concern must take care of all clerical detail throughout the whole of the organization. It may be a separate department of activity controlled by an office manager, or its functions may be scattered among the various departments, each conducting its own clerical activity independently. + +The preceding chart (Form 1) presents in graphic form the usual division of the operating functions of a business. + +**4. Types of Business Control** + +In every organization the element of first importance is that of ownership. This ownership, which may be vested in a single individual or in one or more individuals united in the form of a partnership or corporation, constitutes the primary source of authority and control. All departments of the business are subject to the control and supervision of the proprietor, even though each department may be in immediate charge + +THE WORKING ORGANIZATION 15 + +of a manager. The owner may be in direct contact with his managers at all times, or he may have them as a group between himself and the organization, allowing this group to exercise general authority in all organization matters. In such event, the owner is relieved of personal supervision. + +The chief types of business control are these: + +1. Individual proprietorship +2. Partnership +3. Corporation + +Individual proprietorship requires no special discussion here, as it is the simplest and oldest form of business control. The peculiarities of partnership and corporate businesses will be briefly outlined here. + +5. Partnership Organization + +In the partnership form of organization the individuals who are bound by the partnership agreement are the controlling factors. Their method of managing the concern is usually specified and possibly limited in the partnership articles themselves. + +These articles (1) may provide for a division of duties and authority among the various partners; (2) may delegate the entire management to one partner, the others being inactive in management; or (3) may provide for a committee of partners, under whose control and authority the managers of each of the divisions of the concern carry out their duties. + +The following three diagrams (Forms 2-4) illustrate partnership control as related to the working organization: + + + + + + + + + + + + +
Diagram 1Diagram 2Diagram 3
Description 1Description 2Description 3
+ +14 +PRINCIPLES AND PRACTICE + +A flowchart diagram showing organizational structure. + +E. ENNERS +D.DALY +C CRANE +B BROWN +A ALTON + +BUSINESS CONTROL +ACCOUNTING DIV. +FINANCIAL DIV. +PRODUCTION DIV. + +SELLING DIV. +D.DALY-MOR- +C.CRANE-MOR- +E.ENNERS-MOR- + +OFFICE DIV. +E.ENNERS-MOR. + +Form 2. Partnership Control Chart-1 + +THE WORKING ORGANIZATION 15 + + +A flowchart diagram titled "BUSINESS CONTROL" shows a hierarchical structure with various departments and roles. + +- **E. ENDERTS** + - SELLING DIV. + - ACCOUNTING DIV. + - OFFICE DIV. + +- **D DALY** + - GENERAL MANAGER + - C.CRANE + +- **C.C.RANE** + - FINANCIAL DIV. + - PRODUCING DIV. + +- **B.BROWN** + - PRESIDENT, OPERATIONS + - ABC Company + +- **A.ALTON** + +**Events 3. Partnership Control Chart-II** + + +16 +PRINCIPLES AND PRACTICE + +A flowchart diagram showing organizational structure. +Form 4. Partnership Control Chart - III + +E. Ender
+D. Daly
+C. Crane
+B. Brown
+A. Alton + +BUSINESS CONTROL +EXECUTIVE COMMITTEE +ACCOUNTING DIV. +FINANCING DIV. +PRODUCING DIV. + +SELLING DIV. +OFFICE DIV. +P.M.R. + +FINANCING DIV. +PRODUCING DIV. + +FORM 4. PARTNERSHIP CONTROL CHART - III + +THE WORKING ORGANIZATION 17 + +All partnerships should be based upon a written agreement setting out clearly the rights and duties of each partner. Such an instrument intelligently prepared will avoid most of the misunderstandings that arise between the members of a copartnership. + +The accountant is not supposed to draw up partnership agreements—that is properly the work of a lawyer—but he should know what essential features should be provided for in such an agreement. These features may be summarized as follows: + +1. Names of parties to the agreement +2. Name of partnership +3. Nature of partnership business +4. Location of partnership business +5. Date of commencement +6. Duration +7. Partners' investments +8. Partners' rights and duties +9. Sharing of profits and losses +10. Salaries +11. Interest on investments +12. Drawings +13. Account books and records +14. Auditing of books and records +15. Dissolution + +**6. Partnership Accounting*** + +The books of a partnership vary but slightly from those of an individual engaged in the same line of business. The records and routine entries are identical + +*For a discussion of partnership accounting see Volume I of "Business Accounting." + +18 +PRINCIPLES AND PRACTICE + +—for purchases, sales, cash, etc. The distinguishing features of partnership accounting as compared with single proprietorship accounting concern the following: + +1. Partners’ capital and personal accounts +2. Opening entries +3. Closing entries +4. Dissolution entries +5. Retiring partner entries +6. Admission of new partner entries + +7. Corporate Control + +In the corporate form of organization the stockholders are the ultimate source of control. They are bound by the terms of the articles of incorporation, their by-laws, and the statutes of the state. The board of directors is elected by them annually. The board of directors, after appointment, chooses the officers of the company. It may, as a body, concern itself with the many details of the organization, but the chances are that it will leave these mostly to the president or general manager, to whom much of its authority will be transferred. The president, or a director, or some outside person, may be made general manager of the corporation. The general manager will be given full authority for the usual conduct of the corporate business subject to supervision by the board. + +An executive committee may be formed of members of the board of directors, to whom the authority of the board of directors will be given when the board is not in session. In addition to the executive committee, a financial committee may be formed, composed usually of the department executives and at times someone from + +THE WORKING ORGANIZATION 19 + +the outside who is connected with a bank or other financial institution with which the company does business. These two are known as standing committees. Definite rules must be formulated to prevent any of these bodies from opposing the general policy of the company. + +The powers and duties of the executive officers—the president, treasurer, and secretary—are prescribed in the by-laws and in some cases are very extensive. + +The following diagram (Form 5) illustrates corporate control as related to the working organization: + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
STOCKHOLDERS
LAWS OF INCORPORATION
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
PRESIDENT:
GENERAL MANAGER:
PRODUCING DIV.
FINANCING DIV.
ACCOUNTING DIV.
SELLING DIV.
OFFICE DIV.
+ +Form 5. Corporate Control Chart + +20 +PRINCIPLES AND PRACTICE + +8. Corporation Accounting* + +All corporations are formed in accordance with statutory law. In New York any body of men who comply with the provisions of a general statute, known as the Business Corporations Law, may form a corporation. This statute and similar enactments in other states standardize corporation procedure. + +Many of the books kept by a corporation are similar to those kept by sole proprietorships or partnerships engaged in that particular line of business. But in addition, corporations also employ various auxiliary books and records which the others do not. These books and records are: + +1. Subscription book +2. Stock book +3. Minute book +4. Stock certificate book +5. Stock ledger +6. Transfer books +7. Dividend books + +No accounts with individual stockholders are kept in the regular books of account. Such a record is kept in the separate book known as a stock ledger. It is in this particular that the account-keeping of a corporation differs greatly from that of a sole proprietorship or a partnership. + +9. General Lines of Organization + +Whether the form of ownership be that of the sole proprietor, the partnership, or the corporation, there is + +* For discussion of corporation accounting see Volumes I and IV of this series. + +THE WORKING ORGANIZATION 21 + +a marked sameness in the general lines of organization of every business. Every organization of whatever complexity will be found to come under some one of the forms presented above. The nature of the business will determine how it will be organized. Sometimes, to be sure, it is difficult to separate clearly the work of each department, as one person may be connected with two or more divisions of work in one way or another. + +The general subdivision and co-ordination of the usual departments, showing how the business functions in general are related to one another, are indicated in the following diagram of a concern operating under the corporate form of ownership. Although certain shifts may be made under certain conditions, the general form will be as here given. As has been said, the financial department may be merged into the activities of the board of directors, of which the treasurer is usually a member. + +10. The Organization Chart + +When a business is started, care must be taken to work out its organization as fully as possible. All the individuals must be united in such a way as to form one working body for carrying through the object of the enterprise. A carefully made organization chart will serve as a useful working plan from which to build the administration and devise the accounting required. In constructing such a plan, the basic consideration is to follow the movement of the product through the organization, from the moment the need for its production or purchase is reduced to a written order to the time it leaves the place under sale to a customer. + +22 +PRINCIPLES AND PRACTICE + +Form 6. Organisation Chart + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
STOCKHOLDERS
DIRECTORS
ELECTIVE COMMITTEE
PRESIDENT
GENERAL MANAGERS
ACCOUNTING
SECURITY
SUB-DEPARTMENTFUNCTIONSRESPONSIBLE FORREPORTS TOREPORTED BYREVENUE FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMEXPENSE TOINCOME FROMSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENTSUB-DEPARTMENT.
+ +A diagram showing an organisation chart with various departments and their functions. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Form 6. Organisation Chart (Diagram)
+ +Invoice Date ____________ Checked with Invoice ____________ +Received via ____________ Entered in Stores Record ____________ +Received by ____________ Value $ ____________ + +Form 25. Materials Received Report—by Shipments + +One or two more points should be noticed before passing on. Sometimes goods must be sent direct to the departments concerned as soon as received instead of being passed through the stores department first. In this event, the goods may be sent to their destination accompanied by the stores-keeper's copy of the materials received report. This is signed at the desti- + +STORES SYSTEMS 137 + +nation point and sent immediately to the stores-keeper, +who then passes it through his records as if the material +had gone through the stores department before being +issued. In other words, the stores-keeper enters the +goods as a receipt and then immediately enters them as +a delivery. + +Goods returned from customers must be carefully +taken care of by the receiving department. These will +be considered from the accounting point of view when +the subject of sales is taken up. + +8. Stores Accountability + +It was said above that there should be as much care +exercised over the goods and materials kept in stores as +over the cash drawer. The stores-keeper assumes re- +sponsibility for what he receives and this responsibility +remains fixed upon him until these articles have been +issued upon proper authority. Therefore, stores ac- +countability from the standpoint of the stores-keeper +begins with the making of a proper record of every- +thing which he actually receives. + +The goods, as soon as they are received, should be +placed in proper receptacles either in a central loca- +tion, or in a number of locations near departments in +which the material will be used. The latter method may +require duplicate locations for similar stores, but time +is saved in trips to and from the stores-room. Material +in stores should not be accessible to any person not +definitely authorized to handle it, except in the case +of heavy pieces which, though carried on the records, +may be left outside the stores-room or even out in +the open. + +138 +PRINCIPLES AND PRACTICE + +It must be kept in mind that the least possible number of stock accounts should be used, consistent with the needs of the business and the available time of the person responsible for making the proper records in the books of account. Each different kind of stores usually requires a separate accounting for receipts and issues. + +The system of stores records should be elastic in that it should be possible to increase or decrease the number of accounts used whenever it is deemed advisable. If, for example, it is desired that the "Ribbon" account be subdivided, that should be done readily by subdividing the current accounts as kept. Care must be observed in the case of any such subdivision that the departmental distribution of sales be changed likewise so as to meet the changed condition of the stores ledger. + +Since there must be a separate accounting for receipts and issues of each kind of stores, a card form for each kind may be used for this purpose. + +The loose-leaf form is by all means the proper one for the stores ledger. In that form each sheet may be kept in order, a leaf for each account, and each group of accounts in alphabetical order. + +The card form of the loose-leaf scheme is better than the ledger sheet form. The cards may be kept in a loose-leaf file or box for ready reference and use. Any group of cards may be removed from the file quickly when work is to be done on them, and the file capacity is limitless. The cards should be at least 7 x 9 inches in size and should be arranged so that record can be kept of the stock by quantity only, or by quantity and price. (See Form 26.) + +A page from a book or manual, numbered 138. + +STORES SYSTEMS 139 + +The three parts of the stock card represent the main stages of the stores procedure—receiving material, issuing it, and determining the balance which is on hand at any time. + +**9. "Purchased" Division of Stores Ledger** + +The first entry upon a stores ledger card will be recording the receipt of the item with which it is concerned. This may be by quantities only, no attention being paid to prices, or it may be by quantities and prices. The stores card (Form 26) is ruled for the latter purpose. In some cases even the cost of freight is included. + +If it were desired to install such a ledger, what would be the course of procedure? It would be necessary first to secure an inventory of all stores on hand. This inventory then would have to be cut up into accounts, that is, analyzed. The first entry on the stores ledger would be the stock inventory at cost on a certain date, the date of opening the books. This entry would be made direct from the analysis of the inventory sheets, prepared for this purpose, to the purchased division of the form. After the inventory and analysis sheets had served their purpose, they would be fastened together, and the whole filed away with a journal voucher—placed in the envelope voucher, if that style of voucher were used. If the papers are too numerous, the analysis sheets only may be placed in the envelopes or attached to the voucher. + +The voucher is properly filled out, and, assuming the general accounting books contain thus far no entries concerned with stock, the results are recorded + +140 +PRINCIPLES AND PRACTICE + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
COMPANYKindDescriptionSizeSTORESALLOWS:
NumberCard No.MaterialBalance
InventoryInsertStock (or Number)Balance (Un.)
Form 26 Stores Ledger CardDateOrder Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value / Date / Order Quanity / Price Code / Cost Code / Date / Value
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
+ + +
YEARNET PURCHASESNET SALESREVENUE COSTSRENTAL COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTSBALANCE COSTS
1919 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 Inventory Jan-1 inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventory jan inventi +```html + + +
FORM 26 STORES LEDGER CARD
From: Stores Ledger with Fast-Up


+``` + +STORES SYSTEMS 141 + +properly in the general journal. The journal entry as made is then posted to the general ledger as: + +Purchase Stores Accounts Department........ 8......... +To Capital........ 8......... + +**10. "Sold" Division of Stores Ledger** + +The entries here are made from the recapitulations of sales (see Chapter XVI, § 13) in the case of a mercantile concern, or from the record of the different quantities of material issued to the shop, in the case of a manufacturing concern. + +The division of stores is a matter of importance. Only authorized persons should be allowed to sign requisitions for withdrawing material and supplies from stores. In a manufacturing establishment the foreman who needs materials for his men may be one of these authorized persons. The requisition in that case should be at least in duplicate, numbered, and each copy of a different color, so that a duplicate will never pass through as an original. The original copy signed by the person desiring the material would be sent to the stores-room and the duplicate held back until the material called for by the original had been delivered. The stores ledger entries are then made from the original, which is finally sent to the accounting department. The duplicate is also sent to the accounting department as soon as the material for which it calls has been received. + +When excess material has been drawn, or when for some other reason material is to be returned to stores, a credit requisition is made out by the person who has material to return. This requisition is in duplicate, + +142 +PRINCIPLES AND PRACTICE + +both copies being sent the stores-keeper with the re- +turned goods. These copies the stores-keeper signs, +returning the duplicate to its source, from which it +goes to the accounting department; the original he uses +as the basis for his stores ledger, and afterwards sends +it to the accounting department. + +The same idea underlies accountability in a mercan- +tile establishment. Here, however, care must be taken +to secure proper accountability for goods issued, so to +speak, to the shelves and counters. Stock is found in +these places as well as in the bales, boxes, and bins in +the warehouse. + +11. "Balance" Division of Stores Ledger + +At the close of each day, week, or month, or when- +ever desired, a balance should be found for each ledger +card. When this balance is found the quantity should +be checked against the actual quantity of that item on +hand. A few cards may be checked over in this man- +ner every day, so that as a whole the stores ledger will +give a true continuous inventory at all times. + +Footings and balances should be in red ink. On the +form presented the quantity column will contain the +difference between the total quantity purchased and the +total quantity sold. The unit cost column will contain +the average cost per unit, which will be the total cost +column in the purchased division, divided by the total +of the quantity column in the purchased division. This +unit cost multiplied by the quantity on hand will be +carried to the value column. In some cases keeping the +"average cost" is not advisable. Then the actual cost is +carried out in the manner indicated. + +**STORES SYSTEMS** 148 + +All adjustments because of allowances, returns, debit and credit errors, will come through from forms previously described: the allowance memorandum sheet, the debit memorandum sheet, and the credit memorandum slip. + +The total balance of all the accounts on the stock ledger theoretically should agree at all times with the balance of the totals of the Purchases (Stores) accounts —perhaps departmentalized. If freight has been added to the purchase price of goods and has been carried into the stores ledger, this item as found on the general ledger must be taken into consideration also. Practically, however, this agreement between the stores ledger and the general ledger is something rarely found. Experience has shown that usually a discrepancy will exist in spite of the efforts of the organization officials. But a carefully laid out stores system should and will keep the amount of this difference at a low figure. If prices are carried on the stores ledger, and not quantities only, this reconciliation will be materially assisted. + +The general ledger account with Stores, or Purchases, is the controlling account for the stores ledger. If departmental accounts are carried, each one is a control over a certain section of the stores ledger. + +**12. Abstract of Stores Ledger** + +The stores ledger, as a means of securing proper accountability for stores, has now been described. The facts recorded therein should be examined from time to time to prove their correctness and to secure from them certain valuable information as a check against the + +144 +PRINCIPLES AND PRACTICE + +entries on the general books of account. The next two sections consider this matter more fully. + +It is assumed that the form of stores ledger which has been shown is being used. Issues are against sales. When all the entries, including the balances at a given date, have been made in the stores ledger, an abstract should be prepared for each group of articles (or each article, according to the stock classification in use) showing: + +1. Total received to date (total cost column of purchased division). +2. Total sold to date (value column of sold division). +3. Stock on hand (value column of balance division). + +This work can be done easily on an adding machine. The abstract should be proved against the general financial books. If the stores ledger entries and the abstract have been made correctly, the total received to date will agree with the purchases, as shown by the purchases accounts in the ledger, and the total sold to date will agree with the sales as shown on the ledger. + +13. Gross Profit and Cost of Sales + +The gross profit for each period can be obtained from the abstract by adding the stock on hand to the total sales to date, and deducting the total receipts to date. + +The cost of sales for each period can be obtained by deducting the gross profit from the amount of sales to date. + +STORES SYSTEMS 145 + +**14. Inventory at Both Cost and Selling Prices** + +For certain dealers listing stock at cost price only is not satisfactory. The fullest value of an inventory to them will not be realized unless both cost and selling price are listed. If only the cost value is used, the mark-up on the entire stock will not be known. If this mark-up is not watched, there may be a large discrepancy between the profit expected and the profit realized. After a year of heavy business, the actual resulting profit may be low; for this there may be two causes: + +1. Low-profit goods may have been sold without enough turnovers, and high-profit goods remained in stock to tie up capital and profit. +2. Operation expenses may have been out of proportion to the volume of business done and the net profit. + +Form 27 (page 140) gives a simple illustration of a stores ledger which provides for a record of mark-up. Its principle may be utilized with any form of stores ledger. + +--- + +**REVIEW QUESTIONS** + +1. You are engaged to devise and install a system of accounts for a concern producing electrical machinery but which purchases all its castings. Outline briefly a stores system for the concern. +2. Explain the exact relation between a stores ledger and a general ledger. +3. Outline the steps in stores control concerned with the receipt of goods. What forms may be used in connection therewith? +4. Rule a form for a stock ledger suitable for a department store. + +CHAPTER XIV + +SALES DEPARTMENT ORGANIZATION + +**1. Profitable Selling** + +Commodities are produced to satisfy human wants, either for home consumption or for sale to other persons. A hundred years ago most production was for home consumption. Today, the factory system, the division of labor, and the great economy of machine production has changed our whole economic life and people depend on others for goods to satisfy their daily needs. In other words, nearly all goods in these days are produced for sale. + +People engage in business or manufacturing for profit. Profits depend upon three principles: + +1. Careful buying +2. Low production cost +3. Good selling + +Bad judgment or carelessness in any one of these particulars may be sufficient to eliminate all profits and if continued may lead to insolvency. The subject of buying has been discussed under purchases; that of production cost will be considered at length in Volume III of this set. + +Upon the profitable disposal of the product purchased, in its original or altered form, depends the existence of every enterprise. In other words, selling is a most important factor in every business, for upon it + +146 + +SALES DEPARTMENT ORGANIZATION 147 + +depends frequently not only the success but the survival of the undertaking. + +Since selling is such an essential part of business—opening the necessary markets for the trader's merchandise and the manufacturer's product—a proper record of the transactions making up this selling (marketing) function is needed for intelligent management. Management is intelligent and efficient only when it: + +1. Controls the values involved in the selling transactions. +2. Directs sales effort by the use of statistical information. + +**2. Functions of the Sales Department** + +The functions of the sales department are many, and not all of them need be considered in this volume. They may be enumerated roughly as follows: + +1. Making the contract of sale with the purchaser, taking into consideration the elements of price, quantity, quality, credit, warranties, and time of delivery. +2. Handling the many documents involved in the control of sales. +3. Making sure that the goods to be sold are attractive and adapted to the markets accessible. +4. Supervision of salesmen, branches, agencies, and retail stores. +5. Supervision of advertising in its various forms, including dealer education. +6. Determining when goods may be returned and orders canceled. + +148 +PRINCIPLES AND PRACTICE + +3. Sales Department Organization + +The organization of the sales department is determined primarily by the selling methods used. Before satisfactory selling methods can be devised, however, the class of customers it is desired to reach must be known. The same methods are not equally effective in reaching the jobber, the retailer, and the consumer. In fact, the methods used to sell to the three kinds of trade should ordinarily be quite different. Different methods are not required in all cases, but the various methods must all be borne in mind in order to make use of the one best adapted to the particular business. + +4. The Retail Organization + +There are three methods of selling to the retail trade: + +1. Through the retail store +2. By mail +3. By salesmen calling upon consumers + +The accounting system must take due cognizance of each of these methods. If the store is of considerable size and highly developed, no individual serves in more than one capacity. The owner or general manager, who as head of the business has supervision over the entire organization, usually delegates the immediate direction of the strictly selling activities of the business to other officials. The first of these is the merchandise manager, the real store manager, who is responsible not only for buying the stock but also for its profitable sale. Since the merchandise manager, however, cannot give his personal attention to the purchase and sale of the + +SALES DEPARTMENT ORGANIZATION 149 + +entire stock, it is customary for him to divide the store into departments, basing the division upon the various kinds of goods carried, and to place each department in charge of a buyer directly responsible to the merchandise manager. This department head is the sales manager as well as the buyer for his department. + +If the business is of sufficient size, the departments will themselves be subdivided into sections, each section in charge of an assistant buyer, whose duties are in general similar to those of the buyer. As the organization grows more complex, department heads will confine their work more to supervision and to determination of policies, leaving the actual buying and selling detail to the assistant buyers. The assistant buyers are directly in control of the salespeople through whom the consumer is reached. There may be, of course, a separate department, called, for example, a maintenance department, the head of which is responsible for the employment and the disciplining of salespeople. Yet as concerns the actual disposition of stock, salesmen are usually responsible for results directly to the buyers or assistant buyers. + +In a business of sufficient size, a separate department would handle mail orders, the manager being directly responsible to the owner or general manager. Sometimes this department is placed under the supervision of the merchandise manager, although it is not customary, since the merchandise manager as a rule is not trained in mail-order methods. + +Finally, the advertising department, which has the function of getting customers into the store, must cooperate with the merchandise manager and the buyers. + +150 +PRINCIPLES AND PRACTICE + +**5. The Small Retail Store** + +What has been said of the division of labor in the large store will not apply to a small store. In the small store one person may perform all the duties which in a large store are done by many. This one person may be his own merchandise manager, buyer, and salesman; his own mail-order manager and advertising manager. Whether one person performs all these duties or whether the organization is complex, the differentiation of activities is always the same, and it is always possible with the growth of business to develop the organization by specialization along the lines of these activities. + +**6. The Jobbing Organization** + +The wholesale trade tends to develop its sales organization along lines similar in general to those of a retail organization. In a jobbing house, as in a retail store, it is possible for one individual to combine the functions of buying and selling. Later, as business develops, the work may be divided, one person buying and another person selling. Gradually the development reaches a point where it becomes necessary to divide the business into departments and to appoint department managers, a general sales manager, sometimes called the manager of departments, and a purchasing agent. In the jobbing business, departments are concerned with parts of the line of stock carried and not so much with accounting, shipping, etc. + +The manager of departments will have several department managers under him, each in charge of one or more lines of goods carried. Each department manager buys the stock for his department, fixes prices, and + +SALES DEPARTMENT ORGANIZATION 151 + +supervises the salesmen to the extent at least of seeing that each salesman gives his line proper consideration. Specialty salesmen may be employed to handle the line of one department exclusively. Usually, though, the entire line is sold only by general salesmen, and even if specialty salesmen are used their lines are handled by the general salesmen as well. Floor salesmen are sometimes used to assist retailers who prefer to select their stock personally. + +On account of the special organization of a typical jobbing house, the general salesman is placed in a peculiar position. He is responsible directly and indirectly to the manager of departments, and to some extent to each department head. The manager should provide means so that these various departments do not conflict. Department managers ought to refer matters to the manager of departments before the salesmen are called in and instructed; in this way the manager of departments will be in a position to direct and control departmental competition and keep up the interest of the salesmen in all the lines. + +7. The Mail-Order Business + +A large mail-order business may require a mail-order manager, who is responsible directly to the manager of departments. In a mail-order business it is usually unwise to allow each department to attend to its own orders, because an order coming in almost always calls for more than one class of articles, and unless some one person is responsible for seeing the order filled completely and promptly, error and delay may result. + +152 +PRINCIPLES AND PRACTICE + +8. The Combination of the Retail and the Jobbing Organization + +Sometimes a business is both wholesale and retail. In this case the sales organization is a combination of what is required separately for both a retail and a wholesale enterprise. If the retail feature of the combination is large enough, the two organizations can be entirely separated one from the other, each complete in itself. Two officials, the wholesaler manager and the retail manager, may be in full charge of the organization of their respective departments, the owner or general manager being their superior. Although this complete demarcation is seldom seen, an organization doing both a wholesale and retail business must be completely organized for both of these activities. This is possible even though the same employees may perform duties in two departments. + +The manufacturer has such a variety of selling methods at his option, that it is difficult to present a typical scheme. One point to be noted, however, is that in the manufacturing concern the selling organization is entirely separate from the purchasing department, whereas in the retail or wholesale firm this may not be true. The buying in a manufacturing concern is usually done under the supervision of the factory manager. + +For example, consider an organization which makes use of all possible selling methods, one that is selling its product directly to anyone who desires to buy—jobber, retailer, or consumer. + +The sales department is wholly responsible for the sales. The sales manager, who is the head of the selling department, receives his authority from the owner + +SALES DEPARTMENT ORGANIZATION 153 + +or general manager. He, in turn, delegates his author- +ity to five others: + +1. The manager of the salesman +2. The manager of the mail-order department +3. The manager of the retail stores +4. The manager of the branch houses +5. The manager of the agencies + +By means of the organization of which these five per- +sons are the heads, the manufactured product can be +distributed in every way in which it is possible to have +products marketed. + +The salesmen are supervised by the manager of the +salesmen. If the manufacturing concern is not using +all methods of distribution, all salesmen may be under +the direct control of the sales manager. + +The mail-order department is supervised by the +mail-order manager in the same way. In connection +with mail orders, the same precaution should be exer- +cised here as in the jobbing organization, i.e., one de- +partment must be responsible for seeing that the mail- +orders are filled completely and promptly so that errors +and delays will not result. + +The manager of retail stores is responsible for the +proper organization of each retail store conducted by +the concern. Each of these stores is organized prac- +tically as an independent retail business would be (see +§ 4), except that the store manager does not go into +the market to purchase his stock; he requisitions it from +the factory as his needs require. + +Each branch house may be organized in separate +detail; it may have salesmen who are working under + +154 +PRINCIPLES AND PRACTICE + +the manager of the branch; it may itself supervise agencies and other branch houses; it may sell to agents; it may sell to retail stores; it may have a mail-order business. Usually, however, the relation of a branch to agencies, retail stores, and mail-order business is not of much importance; as a general thing these three activities are handled and supervised directly by the main office. + +The trade with the agencies is under the supervision of the manager of agencies. The agent, however, is an independent dealer, and when he purchases an article from the house it is finally disposed of, much as if it had been sold to a stranger. His selling methods, therefore, are usually of no interest to the manufacturer. + +9. The Advertising Department + +In a manufacturing business the advertising department is closely connected with the selling division of the enterprise, yet not subordinate to it; the same may be said of the traffic department. The managers of these two departments usually are responsible only to the owner or general manager. In some organizations it is customary to make the sales manager the superior of the advertising and traffic managers, but this arrangement is not always advisable. The advertising department is responsible for an important part of the sales campaign, namely, arousing attention, and thus the advertising manager may well be considered as subordi-nate to the sales manager. Yet the advertising depart-ment is not concerned with clinching orders, nor is it part of the system of distribution, as are salesmen, the branch houses, etc. The traffic department cannot in + +A page from a book titled "PRINCIPLES AND PRACTICE" on principles and practices. + +SALES DEPARTMENT ORGANIZATION 155 + +any way be considered as subordinate to the sales division; its duties begin after the sale has been secured, after the purpose of the sales division—clinching orders —has been fulfilled. + +REVIEW QUESTIONS + +1. What are the functions of a sales department? +2. How many methods are there of selling to the retail trade? Describe the working organization made necessary by each method. + +CHAPTER XV + +SALES ORDER ROUTINE + +**1. Importance of Careful Handling** + +No part of the work of the organization is more important, for economical operation, than the handling of the sales order after it is received. Sales orders may be grouped according to origin in three classes: + +1. Those sent in by the salesman. +2. Those sent in by customers. +3. Those brought in by customers. + +The routine connected with all three groups, however, is very nearly identical. + +The handling of a sales order begins with its receipt, or, we may assume, with the opening of the mail. + +**2. Recording the Sales Order on Uniform Blank** + +Regardless of source, the first thing to be done with a sales order is to have it recorded by the salesman upon a uniform blank, identical for all three classes mentioned above. The number of copies required, however, varies according to the class. If the order is sent by a salesman on the road, three copies should be made; he sends in the original to the office, gives the customer the duplicate, and keeps the triplicate himself as a matter of protection in case the original is lost in transit. For orders coming from the other two sources only two copies are needed. + +156 + +SALES ORDER ROUTINE 157 + +3. Sales Register + +As the sales orders are received in the office they should be entered upon a loose sheet record called a sales register. This record has only one purpose in the system - to keep track of all orders coming in so that an order may not be easily mislaid and forgotten. For its purpose, this register needs to be ruled to carry only a small amount of information: + +Date order received +Name of customer +Amount + +Each line of the register is numbered, and one line is used for each order. The number on the line is marked on the order to connect the register entry with the order itself. + +4. The Credit Department + +After an order has been entered in the sales register, it may next be passed along to secure the approval of the credit department. (If cash accompanies the order, this step is, of course, unnecessary.) The credit department examines the orders passing through and notes on each the decision given. This decision is based upon an up-to-the-minute knowledge of the condition of the various customers' accounts. In some cases an order is approved without qualification; in others the credit asked for is reduced; in others prompt payment is requested; in still other cases, perhaps, a C. O. D. mark is placed on the order. When this requirement has been carried out, the order passes from the credit department. + +158 +PRINCIPLES AND PRACTICE + +**5. Order Interpretation** + +At this point it may be assumed that the order has passed from the credit department and has been sent to what may be called the order department. In this latter place, each order must be interpreted so that it will be unnecessary to refer fully to its contents in filling it. This interpretation is indicated on the order by certain markings, so that when the entry clerks receive it their duties will involve nothing but a mechanical operation. + +**6. Duplicate Copies of Order** + +After an order has been interpreted it may be handed to a billing machine clerk who makes out the requisite number of duplicate copies preliminary to its actual filling. The number of copies needed must of necessity vary with the character and organization of the business. In one instance two copies may be sufficient; in other and rarer cases, the number required may be nearer a dozen. Each set of copies is made by such a careful arrangement of the carbon paper between the sheets, that only the information necessary for each particular copy appears on it. The important point here is that all the copies required should be made at one writing, because by doing this: + +1. Time and expense are saved: the total number of copies required is made in approximately the same time it takes to make out one, and orders are passed through the establishment rapidly. +2. Accuracy is secured: there is no chance of difference between copies. + +SALES ORDER ROUTINE 159 + +If, for example, ten copies of the sales order were made out, they would be used as follows: + +1. Invoice. This is mailed to the customer, with the transportation company's receipt. +2. Acknowledgment of order. This is sent to the customer as a check on the accuracy of the interpretation of the order and to permit correction if necessary. +3. Posting ticket. This is passed to the accounting department and postings are made to the customers ledger and the sales summary from this copy. +4. Order department copy. This is kept in the office as a permanent record. +5. Stock requisition. This is sent to the stockroom, warehouse, or factory as an order to get the shipment ready. If the material is located in a number of departments, special subrequisitions may be made out for each one. The entire material is reassembled in the shipping department by reference to the complete copy on file there. +6, 7, 8. Package labels and receipts. Three of these are sent to the shipping clerk. The first copy is to be pasted on the package. The other two are to be signed by transportation companies as receipts; one of these is sent with the invoice to the customer; the other is kept until the shipment has reached its destination. +9, 10. Shipping tickets. Two copies of a complete list of goods to be shipped are sent to the shipping clerk as a guide in making up the shipment. This list controls the stock requisition mentioned above. One of the tickets, signed by the shipping clerk, is enclosed with the shipment; the other is returned to the office. + +160 + +**PRINCIPLES AND PRACTICE** + +When these copies have been made out, they are first checked against the original order to be sure that all items are correct, and the copies are then distributed. It is unnecessary to indicate the routine connected with this distribution. The goods are gathered, checked against the stock order, and sent to the shipping department. There the goods coming from the warehouse are checked against the shipping ticket, packed, and made ready for shipment. A double check may be required in the shipping department—one against the shipping ticket as the goods come in—the other against the same ticket or the other copy before the goods are packed after they have all been assembled. One copy is enclosed with shipment. Shipments must be followed up promptly to see that they go out on time, and partial shipments must be handled carefully. For both purposes a tickler system is useful. + +**7. Accounting Department Routine** + +The order has now really reached the accounting department, although frequently the clerk who made out the ten copies is in the accounting department. The forms in which the record of sale reaches this department are as follows: + +- Invoice +- Posting ticket +- Office copy +- Shipping ticket +- Package receipt + +The billing clerk inserts the amounts upon the invoice and the posting ticket. The invoice is then sent the + +SALES ORDER ROUTINE 161 + +customer with the shipping receipt. The posting ticket goes to the bookkeeper. The billing clerk may keep a record of his billings so that at the end of each day the total may be given by the head bookkeeper for checking purposes. + +The posting ticket becomes the basis for the book- keeping entries in the books of account. It may be that these tickets by themselves, sorted in numerical order and placed in loose-leaf binders, form the sales book. It may be that they are entered upon a register, the totals of which when posted to the sales accounts in the general ledger give a record of sales and also a figure for the Accounts Receivable controlling account. Some sort of distribution of sales is made, at any rate. From these tickets the various amounts are posted to the customers' accounts on the customers ledger, or the tickets themselves may be sorted according to customers and considered as the make-up of each customer's account. For our purpose the procedure is immaterial, so long as a proper charge and credit to certain of the accounts, accompanied by efficiency and a reasonable amount of protection, is secured. + +REVIEW QUESTIONS + +1. What is the purpose of a sales register? Rule one. +2. If six copies of a sales order are made out, what disposition should be made of each one? +3. Describe the accounting department routine connected with the proper handling of a sales order. + +CHAPTER XVI + +SALES RECORDS + +**1. Recording Sales** + +Thus far we have traced in a general way the course of a purchase order through an establishment. We have considered the purchase recording system necessary to get our purchase upon the accounting records; and finally we have discussed the theoretical development of purchase records, so that when facing a certain problem we may know what possibilities are at our disposal. + +We have also traced the course of a sales order from the moment it is received to the moment it passes to the bookkeeper for entry in the books of account. It is now necessary to consider the recording of sales in the books of account. The documentary evidence is the starting point. + +**2. Necessity for Sales Records** + +The operation of selling for cash or promise of later payment transfers merchandise or service to others, called customers. Each sale, whether for cash or credit, should be recorded. If for cash, the record establishes accountability—custodianship—for the cash received. If on credit, the record establishes the amount with which the debtor is to be charged. The proper record of sales transactions determines what amount shall be credited to Sales account, and assists in the accurate ascertainment of income. + +162 + +SALES RECORDS 163 + +In ordinary merchandising it is not usual to attempt to keep a complete record of the value of goods purchased and sold. A record is made of the cost of the goods purchased, and another record, as the goods are sold, of the sales price received, without noting the relation between the cost of goods sold and the selling price. + +Before a knowledge of the profit can be secured, it is necessary to take a physical inventory, and this is done usually once a year, at a time when it is desired to ascertain the net profits of the business. This method is justified on the ground that the keeping of a complete record throughout the year would cost more than any benefits that could be derived therefrom. + +Some trading concerns, however, keep a complete stock record at all times, especially where the articles traded in are of little bulk and extremely valuable, and a danger from loss by theft exists. By this plan the cost of sales and the gross profit may be determined readily at any time. + +In sales for cash a record is made of each sale, and the daily total is checked against the actual cash receipts. In sales on credit the amount owed by each customer may be easily ascertained from the records, so that settlements may be made quickly and collections followed closely. + +3. Records of Sales on Credit + +When business is done on other than a cash basis, provision must be made for recording against customers the items involved in each sale—date, character, and price. As indicated previously, such provision varies, running from the duplicate sales slip filed by the small + +164 +PRINCIPLES AND PRACTICE + +retailer for each customer, to the elaborate methods used in large organizations. These various means, together with those used in sending periodical statements to customers, usually once a month, indicate what is needed to record the values connected with sales. + +**4. The Three-Column Journal** + +In discussing the three-column journal in connection with purchases (Chapter XI), it was stated that at all times information concerning the amount owed to any creditor should be available for immediate use in connection with the settlement of the account. To make this possible it was found that entries to creditors' accounts should be posted immediately, but that entries to the Purchases account could just as well be posted monthly in one total. With this idea as a basis a special column was introduced in the simple journal, in which only purchases should be recorded during any accounting period, and also a method of posting was shown by means of which nearly half the labor of posting was eliminated. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Month of August, 1919
ExplanationL.P.GeneralSales
Da.Cn.
+ +Form 38. Three-Column Journal, with Sales Column + +SALES RECORDS 165 + +If the development of the purchase record has these advantages, it seems reasonable to suppose that similar advantages should be secured somehow from the developed sales records. + +Since the sales transactions, from the standpoint of record, involve tendencies just the opposite from those disclosed in purchase transactions, it is obvious that the development of the records for sales should be fundamentally the same, except that in this case the credit side of the journal will be developed instead of the debit side. + +Bearing in mind what has been said, a three-column journal may be constructed to answer the purpose, as given in Form 28. It seems unnecessary to illustrate the use of this record. + +5. The Sales Book + +The simple three-column journal will prove inadequate for sales as well as for purchases, except in an establishment of the smallest kind. If used, the necessity of relieving the journal of its many entries would soon become so pronounced that a change would be imperative. + +In the case of purchases the first step in this direction was evidently to take this third column out of the journal and develop it into a separate record. This idea was followed out in the development of the purchase book, stripping the journal of all purchase transactions, and making a new journal for them—a separate book of original entry for purchases. + +Sales can now be considered with this idea in mind, placing them in a simple separate record, shown in Form + +A blank form titled "SALES RECORDS" with a page number "165". + +166 +PRINCIPLES AND PRACTICE + +29. For a small concern such a record may be useful. +Its advantages are: +1. It relieves the general journal. +2. It facilitates posting. +3. It facilitates recording merchandise sales. +4. It reveals clearly the volume of sales. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
SALES BOOK
Month of August, 1919
-1-
29Cary & Son$1,080.00
50 bbl. Sugar @ $2030.00
31Belmont & Jones81,030.00
10 sacks Flour @ $25.00
5 cases Grapefruit @ $5.00		$25.00
25.00
Merchandise Sales, Cr.$1,080.00
+ +Form 29. Sales Book—Simple Form + +**6. The Impression Book** + +This and the following two sections describe three different methods of making the original record of sales in a business of any magnitude: +1. The impression book +2. The bound book of invoices +3. Duplicate loose-leaf invoices + +Under the first method, which is now not in general use, an impression copy-book was used. The book was wide enough to provide space for copying in it the in- + +SALES RECORDS 167 + +voice made out for the customer and to have two or more columns in which the sales were distributed into classes. +The customer's invoice, which was originally printed or written in copying ink, was copied by the use of a letter press into this book. The different classes of goods shown on the invoice were then extended by hand into the columns. + +Each column was added monthly to show the total for that class of sales. This total was then posted to the credit of the proper sales account. The total of each invoice was debited to the customer's account. This posting was done from the impression book without the use of posting tickets such as described in the preceding chapter. + +As outlined here, this method required a sales account for each class of goods. Return sales were carried in a similar record, the posting from this being opposite to that for the sales book. The impression book was unsatisfactory because: +1. Much labor was required in copying each invoice. +2. The copy was likely to be illegible. +3. The number of distribution columns was limited. + +**7. Bound Book of Invoices** + +Another method of recording sales is built around a bound book of invoices. Each page of the record contains two or more invoices perforated so that they can be torn out and sent to a customer. Under each page is a blank sheet permanently bound in the book; by means of carbon paper a copy of each invoice is made on the blank sheet, which then serves as the post- + +168 PRINCIPLES AND PRACTICE + +ing medium for the debit to the customer's account. +Two or more columns for the distribution of sales are placed to the right of the space reserved for the invoices. The book is handled in the same manner as the impression book. It is unsatisfactory for much the same reasons: + +1. Invoices must be made with pencil in order to secure a good carbon copy, yet +2. An illegible copy is always possible. +3. The distribution is limited. +4. Much labor is required in copying each invoice. + +8. Duplicate Loose-Leaf Invoices + +In this method an original and a duplicate invoice are used; the invoices are consecutively numbered, and the duplicates punched for a loose-leaf binder. Since these invoices are loose they can be easily written on the typewriter, insuring that both original and duplicate shall be legible. The original copy is sent to the customer and constitutes the bill; the duplicate copy is retained. + +The duplicate copy may be entered in a sales book provided with columns in which to record the desired general information concerning each invoice, followed by columns, as many as necessary, in which the distribution is made in accordance with the different classes of sales. From this sales book, each customer is debited for the total amount of each of his invoices. At the end of the month the distributions in the various columns are added and posted to the credit of the respective sales accounts. The monthly postings of the distribution columns may be made directly from the sales record, or a + +SALES RECORDS 169 + +summary journal entry may be prepared and the postings made from that. +The posting to the debit of the customer may be made from the duplicate invoice directly. If so, the distribution usually would not be made on a sales book, but upon what is called a recapitulation sheet (see § 18), which is filed in the same binder with the invoice. + +9. The Billing Machine + +The billing machine is a special form of typewriter, which has, in addition to the writing keys, a contrivance for adding and subtracting amounts that have been written. It may be a flat-bed machine or one in the form of a regular typewriter. The former makes the use of cards possible. + +With this machine ten or more copies of the sales order may be made, the extensions calculated, and the total extended. When figures which do not enter into the addition are written, a stop-key prevents them from being taken up. Because of the many duplicates which may be made at one writing, almost any assortment of copies may be made. The original at least is sent to the customer. The posting ticket is filed in a post binder from which postings can be made to the ledger; in this case the binder becomes a sales register. Other duplicates may be used as desired. (See Chapter XV.) It is possible also, when detail amounts are desired on the ledger, to have the amounts written therein at the same time the copies are being made out, by placing the loose-leaf ledger page in the machine before writing. In this way, the invoice is prepared, the sales register is written, and the ledger is posted almost at one operation. + +170 +PRINCIPLES AND PRACTICE + +**10. The Billing Machine in a Department Store** + +The billing machine is especially useful in depart- +ment store work where a great number of charge items +are recorded. The bill-head is made in duplicate on one +sheet of paper, folded so that the duplicate is exactly +under the original. Customers are divided into groups +or classes, the division being made alphabetically. +Charge sales tickets are sorted in the auditing depart- +ment according to the classes, and each operator for a +class secures all the tickets for the day for that class. +The tickets are arranged alphabetically. On the first +of the month bill-heads are made out with the names +and addresses of customers who purchased goods on +that day, and subsequently, as other customers buy +goods, bill-heads are made out for them. Thus no more +than one bill-head is made out for each customer each +month, sales being entered from day to day. + +At the same time that the purchases are being entered +on the individual bill-heads the machine records all the +totals so that at the end of the day the grand total may +be obtained. If this grand total agrees with the figures +furnished by the auditing department, the day's work is +proved, except that wrong persons may have been +charged. The purchases are entered in black ink. The +credit tickets for returned goods are entered in red ink, +and their total is also compared with a total furnished +by the auditing department. This procedure is fol- +lowed each day during the month. + +At the end of the month each bill is added and the +black and red ink totals are inserted. The totals of all +debits and of all credits are run off on an adding ma- +chine. Then these two totals are balanced against the + +A diagram showing a billing machine with input for customers' names and addresses, and output for sales tickets. + +SALES RECORDS 171 + +auditing department's totals. If errors are found they are corrected. The bookkeeper then takes the bills, makes the necessary cash entries, posts the total debit and credit of each customer to the proper account from the duplicate, and sends the original itemized bill to the customer. + +11. Sales Book of a Wholesale Concern + +Suppose a wholesale dry goods company conducting three distinct departments, for which it wishes to keep the trading results separately, desires a system by means of which to record its sales. The company does an extensive business in all three lines, having at least 10,000 customers. These customers ledgers are kept, over which it is desired to provide for controlling accounts. The problem here is to construct a sales book to meet the above conditions. In the form given (Form 30) sales may be distributed on separate analysis sheets before entry on the sales book. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
SALES BOOK
DateExplanationTermsAmount L.P.ACCOUNTS DUED.EPARTMENTAL SALES
A-HL-O P-Z123
Form 30. Sales Book showing Rulings for Controlling Accounts and Departmental Distribution + +172 +PRINCIPLES AND PRACTICE + +**12. Alternate Sales System for a Small Concern** + +A convenient system of recording sales, for a small concern, uses specially ruled blanks (Form 31) + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
CARSON TRADING COMPANY
Term(s):Name:Order No.Date to Ship:Shipped By:
Batting:Address:
Date Rec'd:
Units Shipped:Salesmen:
+ + + + + + + + + + + + + + + + + + +
SHIP-QUARTERSIZEEXPLANATORYPRICETOTAL123
+ +Form 31. Sales Order Blank + +made up in duplicate or triplicate. The total order is posted direct to the ledger from the order blank. This system provides a check on the salesmen, since every numbered ticket must be accounted for. It also gives a check on the shipping department. The duplicate would be sent to the shipping room and retained there until the order is filled. When the order is filled, the shipping clerk enters on the duplicate the number of packages in the order, and a notation as to when and how shipped, and then returns it to the office. The original is held by the bookkeeper until the order is complete. Then he sends it to the purchaser as the bill, and makes his entries from the duplicate, which is then filed. + +**13. Sales Recapitulation** + +It is necessary, regardless of the manner in which sales have been recorded, to find out the total of sales + +SALES RECORDS 173 + +of each kind so that the proper credits may be made to the sales accounts. The customers are charged for goods received, and if one Sales account is carried, that account is credited. If the business is subdivided into departments, the total sales of each department must be ascertained separately so that the departmental sales accounts will be credited properly. A monthly recapitulation sheet with special columns for as many departments or subdivisions as may be necessary is used for this purpose. The two following forms illustrate the method. Form 32 provides for a recapitulation by departments, and Form 38 shows its use when ledgers are kept by territories. + +14. A Mechanical Account System + +Many small stores have found a mechanical account system very satisfactory. This system requires the use of a desklike cabinet, with sloping top, which is covered with glass to form a writing surface. Under this glass is an alphabetical index of customers' names with a number assigned to each customer. At the rear of the desk is an upright back, which contains stiff metal leaves, all indexed by numbers and hinged at the bottom so that they may be dropped forward easily and lie flat on the desk. On the front and back of each leaf are ten clips or holders, so that when a leaf is dropped forward twenty clips are exposed to view. Under each clip, which is marked with the customer's number as given in the cabinet, are filed the charge and credit slips of that customer. + +The charges are written on duplicate sales slips, every original having its reverse side carbonized so that + +174 +PRINCIPLES AND PRACTICE + +Form 32. Sales Recapitulation Sheet by Departments + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
SALES RECAPITULATION SHEET
DatesIssuance No.TotalBasic PriceGross ValueNomos GrossDiscounts & DeductionsDiscounts & Deductions
Lessons DueLessons Due
+ +Form 33. Sales Recapitulation Sheet by Departments + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
SALES RECAPITULATION SHEET
DatesIssuance No.TotalBasic PriceGross ValueNomos GrossDiscounts & DeductionsDiscounts & Deductions
Lessons DueLessons Due
+ +Form 34. Sales Recapitulation Sheet by Departments and Territories + +SALES RECORDS 175 + +a carbon copy is automatically made. When the clerk makes out a slip he enters first the balance from the last previous slip, so that the last figure on each slip is the net amount owed by the customer. One copy of the slip is retained to be placed under the clip in the cabinet, and the other given the customer as his receipt. Each customer is given a slip-holder to use for filing his slips. + +15. Returned Sales + +Returned sales are of importance. The returns may be either goods that can be resold or goods that have lost all or a part of their sales value. When returned sales occur frequently, and when a loss of sales value takes place in connection with the return, considerable attention must be given them, so that the loss may be kept as small as possible. In a dry goods store, for example, much help in the reduction of returns is secured by placing patented tickets on all articles possible so that they cannot be replaced by the customer, once they are removed. + +Goods are returned either because of rejection or because of needed repairs. Repairs must not be charged as an additional cost, but as an expense. The rejected goods must go back into stock at the same price as similar items. In most cases, any losses due to these returns are to be charged against the sales department, and the sales department must decide accordingly what is to be done with the returned goods. This matter may be handled in the following way. + +Before returned goods are placed in stock, a “returned goods memorandum” (Form 34) should be made in triplicate. One copy should be kept by the + +176 +PRINCIPLES AND PRACTICE + +RETRIEVED GOODS TO US +The following Goods have been received, returned from +DATE DATE OF RETURNED GOODS. +EXPLANATORY DETAILS +RETURN VALUE +TOTAL COST +Form SK, Returned Goods Memorandum +Received +Dated +Address of Concern certified +Last Charged To. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATEDESCRIPTIONL. EXCH.TOTAL COSTCONSIGNOR
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
+ +Form 38: Sales Ledger, with Contra-party Column + +SALES RECORDS 185 + +Received, a special column may be inserted in the cash book in which the credit for containers returned will be placed on the same line as the entry for the cash remittance. If containers are not returned at the time a cash remittance is received, a special record for "Returned Containers" may be kept. A sales ledger to use with the sales book in Form 38 is shown in Form 39. + +23. Instalment Sales + +Another difficult problem is presented at times by instalment sales. The following form (Form 40) will facilitate their handling and their collection. In connection with its use, a tickler file is suggested, the cards being filed according to the dates when payments are + +RECORD OF INSTALMENT SALES +____________ COMPANY + +NAME ____________ +ADDRESS ____________ +TERMS ____________ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
ARTICLESNO.PRICE
INSTALMENTSDUEPAYMENTSREMARKS
No.DateAmount InterestNo.DateAmount Interest
1
2
3
4
17.
18.
19.
20.
+ +Form 40. Record of Instalment Sales + +186 +PRINCIPLES AND PRACTICE + +due. When the sale takes place the following entry is made in the books of account: + +(1) Customer $.......... +To Instalment Sales $.......... +For amount of sale. + +When an instalment is paid: + +(1) Cash $.......... +To Customer $.......... +To record receipt of cash. + +(2) Instalment Sales $.......... +To Sales $.......... +To record transfer from Instalment Sales account to Sales account so that present period's actual sales may be determined. + +If the cost of the article sold is known, the profit can, of course, be easily determined by subtracting the cost from the selling price. In instalment selling, however, care must be exercised to credit Profit and Loss with only the proportion of the total profit to be realized which has actually been earned. That proportion is ascertained by determining first the proportion of the total selling price which has actually been received from the customer. Assuming that the customer has paid 3/5 of the selling price, it may be assumed that 3/5 of the profit has been earned. That proportion of the total profit may then be credited to Profit and Loss at the close of the fiscal period. The entry to effect this should close out the Sales account as follows: + +1. That part of the balance which represents profit (calculated as outlined above) should be credited to Profit and Loss. + +SALES RECORDS 187 + +2. The remainder of the balance necessarily represents the cost of goods sold and accordingly should be credited to Purchases account. + +The form of the entry should be the following: + + + + + + + + + + + + + + + + + + +
Sales$
To Profit and Loss$
" Purchases"
To credit Profit and Loss with the profit earned on instalment sales.
+ +24. Coupon Books + +Coupon books are used at times by railroads, street cars, restaurants, and in general business. The principle here is to sell a book of redeemable coupons worth, say, $5 for $4.50. When used properly such a plan may be considered a convenience to the user and a source of profit to the seller. If the buyer saves 5 or 10% by using coupons, the seller secures more business. + +A mercantile concern may be considered to illustrate the handling of coupon books. When coupons are sold no credit should be made to the Sales account since no merchandise has been transferred. On the other hand, the accounts ought to show the existing liability for coupons unredeemed. An account may be opened with Coupons to which their amount is credited: + +Cash (or Notes Receivable, if a note was given) $ + +To Coupons. + +For $ + +When coupons are redeemed for merchandise: + + + + + + + + + + + + + + +
Coupons$
To Sales$
For
+ +188 + +PRINCIPLES AND PRACTICE + +The books will then show correctly the profits at the close of business, and the credit balance in the Coupon account will represent the liability in favor of customers. + +REVIEW QUESTIONS + +1. Construct a form of sales record for a concern selling three general classes of merchandise, when customers' accounts are divided into three groups with a controlling account over each one. +2. Is a credit balance found in an account upon the customers ledger to be treated as a deduction from the total accounts receivable? How would you handle it? +3. Describe four methods of recording sales on credit. +4. Of what use is a billing machine? +5. How should cash sales be handled? +6. How should consignment sales be recorded on consignee's records? +7. Describe a method of handling approval and C. O. D. sales. +8. How should containers be taken care of? Construct a sales book and sales ledger providing for their inclusion. +9. What is a cash register? +10. A general merchandise store contains six departments. A farmer brings in a case of eggs to the grocery department, for which he receives an order which may either be cashed by the cashier at face value, or be redeemed, at the farmer's pleasure, wholly or in part, in merchandise in any department. How would you take care of this situation in the accounting system of the store? + +A black and white illustration of a farmer bringing eggs to a grocery store. + +CHAPTER XVII + +GENERAL CASH RECORDS* + +**1. The Separate Cash Record** + +The cash book is the most important of the books developed from the simple journal. Its relations to the journal as kept at present and to the records of sales and purchases need careful consideration. + +Sales are the life stream of a business enterprise. A sale takes place when goods are transferred to a customer and either cash is received in payment or there is the promise of payment later. Therefore, the receipt of cash is closely associated with sales. On the other hand, cash is closely associated with purchases, for which cash eventually must be paid, and with expenses which are incurred in both purchasing and selling. + +Even though one often finds, especially in small businesses, that purchases and sales are not as closely supervised as they should be, careful watch is nearly always given to the receipts and disbursements of cash. This state of affairs is of course inconsistent, in view of the fact that goods and cash are simply alternative forms of the assets of the same business. It will be found, however, that problems concerned with cash turn more often upon improving existing methods of cash control and accountability than upon installing methods of general control and accountability where none at present exists. + +*See chapters in Volume I on cash.* + +189 + +190 +PRINCIPLES AND PRACTICE + +The term cash, from the accounting viewpoint, comprises money, checks, coupons, and all other items which a bank accepts for deposit in the ordinary course of business. Cash transactions include the receipt and payment of cash, plus discounts allowed or received. Cash is the most liquid of assets. When misappropriated, it cannot be identified and traced like an article of merchandise; therefore special care is necessary for its protection. + +Through all the many forms of cash books in use runs one principle of construction, namely: a cash book should record cash receipts and payments and show the resulting balance. It is a record in which only cash transactions are recorded. Regardless of the name the book goes by, its function is as indicated. Since it is practically a journal kept solely for cash entries, it has all the characteristic features of a journal; but unlike the simple journal, and like both purchase and sales books, it records only one part of the transactions of the business. + +2. Reason for Distinct Records + +An examination of the journal of a business in which only a journal and ledger are used would disclose ordinarily that the greater number of entries relate to cash transactions, and that the posting connected with these entries is greater than the posting connected with any or all other transactions. + +Much of the monotonous and expensive labor of posting these frequently recurring cash transactions may be eliminated by using a distinct record for them similar in principle to the distinct record for purchases + +GENERAL CASH RECORDS 191 + +and sales. It is much better than passing them through the journal with the others. + +Again, in every business, payments are continually being made for purchases, pay-rolls, credits, and so on. To pay out cash intelligently it is essential to know how much is on hand; otherwise, an overdraft may occur and cause embarrassment. Since it is necessary to know the cash balance at all times, the work of posting cash items from the simple journal must be done daily, and since these items are numerous it is difficult to keep the cash account up to date. + +Finally, even in a business of moderate size, cash transactions may be so numerous that one person can well be employed continuously in recording them. It is necessary, therefore, to provide a record for their entry on which one person can work without interference from those who have to record other types of transactions. All these reasons have contributed to the development of separate records of cash transactions. + +3. Development of Cash Records + +In proceeding from the simple to the more complicated forms of cash records, cash transactions are handled in three ways: + +1. By means of the simple journal, in which cash transactions are handled along with all others. +2. By means of the simple cash book or the columnar cash book, in which cash transactions are handled separately as a group. +3. By making a distinction in the records and having separate books for cash receipts and + +192 +PRINCIPLES AND PRACTICE + +cash payments, by which means cash receipts are handled separately from cash payments. + +**4. The Essentials of a Cash System** + +Experience has conclusively demonstrated that the three essentials of any effective system of handling cash are as follows: + +1. The deposit of all cash receipts. If all receipts are deposited, the bank account shows all the cash that has come in. In this way it is an easy matter, first, to ascertain how much cash must be accounted for, and second, to have one employee check up another who is handling the cash. This would be difficult if not impossible if cash were paid out as it came in, without passing it through the bank. + +2. The payment of cash by check whenever possible. All payments should be made by check and receipts should be required. Except in the case of some form of voucher check, to be explained later, a canceled check should never be accepted as a receipt. + +3. Handling petty cash payments on the imprest (fund) basis. Some petty payments must, in every business, be made in cash. For this purpose, a fund is set aside which is estimated to last a certain length of time, which may be a day, a week, or a month. This sum is charged to the cashier upon the ledger. At the end of the period, the cashier makes up a statement and attaches to it the vouchers and receipts for his petty cash payments. A check is drawn for the amount of payments, the entry is passed through the cash book, and the various expense or other accounts are charged. The cash received for the vouchers and receipts turned over + +GENERAL CASH RECORDS 193 + +brings the fund again to its original amount. The ledger account with the cashier stands untouched until the fund is increased, diminished, or turned back into general cash. Then it is increased, diminished, or closed out and Cash is credited or debited accordingly. + +**5. The Simple Cash Book** + +The simple cash book, which answers all the requirements of a small business, has one page devoted to receipts and one page to payments. The ruling of each page is the same as that of the simple journal, except that customarily it has but one money column instead of two. + +Cash receipts are entered on the debit or left-hand side of the cash book, as shown in Form 41. The name + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Dr.CASH BOOK
DATEL.F.EXPLANATORY DETAILAMOUNT
1919
Jan. 718Arthur Lindsey paid on account$125.00
+ +Form 41. Simple Cash Book (left side) + +of the account that is to be credited is shown with date and explanation. From this entry the posting is made to the credit of the proper ledger account. The debit to Cash is suspended temporarily until the record is closed. Then the total receipts are added and posted as one amount to the debit of the ledger account of Cash. + +Payments are entered on the credit side—the right-hand side—and the procedure is the reverse of that explained for debits to Cash. If the balance of cash on hand at the beginning of a fiscal period is entered as + +194 +PRINCIPLES AND PRACTICE + +a debit, and all receipts are debited and all payments credited, the balance of the cash book at any time shows, if a debit, the amount of cash on hand, and, if a credit, the amount of the overdraft. + +6. The Cash Book Not a Ledger Account + +In the discussion presented above, the cash book has been considered entirely as a journal development, i.e., a section of the journal kept under separate covers. Some persons, however, assume that the cash book should be looked upon as a ledger account or a combination of journal and ledger features. Going to a source other than the ledger for figures necessary to complete a trial balance is really not justified under any condition in modern American bookkeeping practice. + +A ledger is a book of final entry, containing a complete record in summary form of the condition and operations of a business. The ledger should at all times be in equilibrium, a trial balance being drawn therefrom periodically to ascertain whether or not the total debits equal the total credits. If the cash book is considered a ledger account and no Cash account is carried in the ledger, the ledger will not be self-balancing. In a trial balance drawn from such a ledger the amount of cash on hand would have to be entered from the cash book. This would be inconvenient in practice as well as incorrect in theory. However elaborate the development of the cash book may be, a Cash account should invariably be maintained in the ledger. + +The principle shown in the simple diagram (Form 57, page 231) is developed simply and logically by considering all books of original entry as journal develop- + +GENERAL CASH RECORDS 195 + +ments. A Cash account, therefore, is carried on the ledger, to which is debited the beginning balance and the total receipts, and to which the total payments are credited. The balance agrees with the balance as shown on the cash book itself. + +7. Cash Book Entries + +On the left-hand page of a cash book every item is a credit to some account without any apparent debit being shown; and on the right-hand page every item is a debit to some account without any apparent credit being displayed. It might seem, therefore, that cash book entries were an exception to the rule that every credit must be offset by a debit, and every debit by a credit. But, if the cash book is analyzed, it is seen that this exception does not really exist, since every transaction recorded either increases or decreases the supply of cash. When the cash entries are expressed in the journal, the equality of the debits and credits is plainly seen. + +Take, for example, the left-hand page of a simple cash book. The total of the credit items is also a total of all the debits to Cash. Therefore, one debit to Cash at the end of a period is seen to be sufficient to balance the total of the credits. The equality of debits and credits is shown at the end of the period by posting this total to the debit of the ledger Cash account. "Dr." is placed on the left-hand page of the cash book to point out that the total of the credits on that page is debited to Cash. The reverse reasoning holds for the right-hand side of the cash book. + +Since the total of the left-hand page of the cash + +196 +PRINCIPLES AND PRACTICE + +book includes the balance brought forward from the preceding period it is necessary to deduct this balance from the total to find the actual amount of cash receipts for the period. This opening cash balance, the result of previous receipts and payments, is already in the ledger Cash account as its balance. Only the actual receipts, therefore, should be posted to the ledger. If it were not for the fact that the amount of cash on hand must be shown at any moment by the difference between the debit and the credit side of the cash book, the cash balance at the beginning could be eliminated from the cash book until all receipts had been entered and posted. + +8. Cash Book Columnarization + +If a simple cash book is examined, it will be found to contain many similar items on both debit and credit sides. The idea of entering like items in special columns and periodically posting totals from them instead of posting the individual items has already been developed. The principle may with profit be applied to the simple cash book, as well as to other books of original entry, when it is found that this record is not analytical and informative as it should be, and that further reduction in the volume of work is necessary. + +To illustrate the principle of columnarization, as applied here, the example may be taken of a business with two principal sources of cash receipts, namely, from customers on account and from cash sales of merchandise. The disbursements are chiefly to creditors on account of purchases and for office expense, freight, and salaries. If the simple cash book were used, each item would be posted in detail to its individual account. But + +A page from a book titled "PRINCIPLES AND PRACTICE" with a number 196 at the top left corner. + +GENERAL CASH RECORDS 197 + +if two other columns are added to the original one on each side and in these are entered respectively the receipts from customers and from cash sales, and the payments to creditors and for the office expense, freight, and salaries, it will then be necessary to post only one item, representing the total of each such special column, at the end of the period instead of the many items included in that total. + +In columnarizing the cash book, no matter how many columns are used, it is a good plan to reserve one column for net receipts and one for net payments, so that the balance may be ascertained quickly. The totals distributed to the special columns from which postings will be made periodically, plus the total of the miscellaneous column, can be proved against the column containing the net receipts or net payments, as the case may be. + +Since purchases ordinarily do not involve the immediate payment of cash, and sales do not involve the immediate receipt of cash, purchase and sales transactions are not given columns in the cash book of the ordinary enterprise. Therefore, the columnar development generally concerns only customers' and creditors' controlling accounts, and as a necessary incident, discount transactions relating to customers and creditors. However, if income is directly measured by the cash receipts, as in an amusement enterprise, income may be classified in the cash book; otherwise, not. + +9. Recording Cash Discount + +If a customer paying a bill is allowed 5% discount, the cash received is less than the balance of the account. + +198 +PRINCIPLES AND PRACTICE + +An adjustment entry must be made somehow to make up this difference. The journal entry would consist of two debits and one credit, one debit being for 95% of the bill, to Cash, and the other being to Discount for 5% of the bill. The credit would be to the customer's account for the full amount of the bill. + +There are three principal ways of treating cash discount transactions on the books. (See Form 42 illustrating preferred method.) + +1. Since the cash book should record only cash received and paid out, the net cash received may be debited, and the net cash paid may be credited, in the cash book. The discount allowed and received may be passed through the general journal. Each adjustment may be made individually or, if there are many, a page or two in the journal may be allotted to accounts opened with Discount Allowed and Discount Received, and the discount entries may be posted in totals. + +2. The total amount to be credited to the customer may be debited as a cash receipt, and the amount of the discount entered on the other side of the cash book as a payment. (Vice versa for total amount to be debited to a creditor.) + +3. The net amount of cash received may be entered on the cash book as a receipt and the discount entered in a separate column on the same side of the cash book. From here it is posted to the customer's account. (Vice versa for amounts paid creditors.) + +This last method is similar to the first method described with the journal handling of the discount on the cash book; that is, a section of the journal is really carried on the cash book. This method saves the writing + +GENERAL CASH RECORDS 199 + +CASH RECEIPTS + + + + + + + + + + + + + + + + + + + + + + +
SITENAMEG.E.R.CUMBERDISCOUNTDEPOSITS
+ +CASH PAYMENTS + + + + + + + + + + + + + + + + + + + + + + +
SITENAMEG.E.R.CUMBERDISCOUNTCHEQUE
+ +Form 42. Cash Book with Controlling and Discount Columns (left- and right-hand pages) + +200 +PRINCIPLES AND PRACTICE + +of the customer's name twice and also brings the dis- +count and the net cash together, which is as it should be. +The amount of the Discount columns is ignored when +the cash balance is determined. + +**10. Controlling Accounts with Debtors and Creditors** + +The usual method of posting controlling account +items is to post the details to the individual accounts +in the subsidiary ledgers throughout the month, and to +post the totals of the columns at the end of the month +to the controlling accounts in the general ledger. (See +Form 42.) + +For discussion of the proper use of the deposits col- +umn on the receipts side and of the checks column on +the payments side of this cash book, see Chapter +XVIII, § 1. + +REVIEW QUESTIONS + +1. In proceeding from the simple to the more complicated forms +of cash records, in what ways may cash transactions be +handled? +2. Describe the essentials of a proper cash system. +3. What is meant by the expression "handling petty cash payments +on an imprest basis"? +4. Rule a form of cash book to provide for controlling accounts of +debtor and creditors and for discounts in settlement of both +receivable and payable accounts. What is the usual method +of posting these figures? + +CHAPTER XVIII + +GENERAL CASH RECORDS (CONTINUED) + +1. General Cash Book for a Mercantile Concern + +Before developing the cash book further, one for a concern with six departments will be outlined. + +As was stated in the last chapter, all receipts must be deposited in the bank intact, and all payments except petty cash payments must be made by check. Bank deposits should be made promptly. If possible, a deposit should be made each day just before the close of banking hours, so that as little money as possible will be left undeposited overnight. The deposit should include all items received from the time of the preceding deposit up to 2 p.m. of the current day. On Saturdays the deposit should include items received up to 11 A.M. + +Whatever plan is followed in regard to the time and number of deposits, these rules should be observed: + +1. All receipts must be entered promptly in the cash book. +2. The deposit made must equal the receipts per cash book since the previous deposit. +3. Deposit slips should be made in duplicate, so that the duplicate can be kept on file and will be available to facilitate the audit of the cash book. +4. Receipts subsequent to the final daily deposit are treated as the next day's business. + +201 + +202 + +PRINCIPLES AND PRACTICE + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
GENERAL CASH
DUENAMESUPPLIERSSALESCASH SALESDEPT ADEPT BDEPT CDEPT DDEPT EDEPT FDEPT GDEPT H
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MONTH OF:203 + +The form of general cash book illustrated (Form 43) provides for cash receipts and cash payments in the same book. Should the receipts become numerous, this form can be divided so that the receipts section is in one binder and the payments section in another. More will be said about this subdivision later. + +The items in the following columns must be posted individually: + +1. Receipts side: + Customers Ledger + Sundries + +2. Payments side: + Purchase Ledger + Sundries + +The totals of the following columns must be posted at the end of the month to the appropriate general ledger account: + +1. Receipts side: + Customers Ledger, to Customers Ledger control + Discount, to Discount Allowed account + Cash Sales, to Cash Sales accounts + +2. Payments side: + Purchase Ledger, to Purchase Ledger control + Discount, to Discount Received account + +The bank balance is carried on the cash book. At the end of the month the footings of the total receipts and total checks columns should be checked against and should equal the totals of the "Bank Account, Dr." and the "Bank Account, Cr." columns respectively. These + +204 +PRINCIPLES AND PRACTICE + +bank account columns must be written up each day, the deposits being entered individually, and the checks for the day in total. + +**2. Cash Sales** + +In the cash book just shown, provision is made for the entry of cash sales. It is assumed that in the case of cash sales a distinct entry would be made in the cash book for such transactions. If cash sales are to be distributed according to classes of merchandise, or by departments, the same distribution columns will be found in the cash book as in the sales book. It is evident, therefore, that the rulings will be duplicated—the total sales being divided between the two records—and that the cash record will contain a mass of detail. + +To avoid this condition, the sales book may be ruled to provide for the entry of both cash and credit sales. +In that case, at the end of each day the total daily amount of cash received is transferred to the cash book; the charges to cash because of cash sales and the charges to customers will equal exactly the amount of the postings to the various sales accounts at the end of any period. It may be advisable, too, to eliminate the cash sales columns from the cash book entirely, entering the amount thereof daily in the net receipts column from the departmental cash sales distribution columns of the sales book. + +**3. Charitable Institution Cash Book** + +In a charitable institution a large number of the transactions will consist of cash receipts from subscribers paying all or part of their subscriptions. It is + +GENERAL CASH RECORDS +205 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATEORIENTATIONLTOTALCASH
CASH RECEIPTSCASH PAYMENTS
LEADERLEADER
DATEORIENTATIONFTOTALINHABITANTS' INCOME
CASH RECEIPTSCASH PAYMENTS
ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUITY - ANNUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-ANUIVITY-
LEADERLEADER
DATEORIENTATIONFTOTALBUILDINGS
CASH RECEIPTSCASH PAYMENTS
LEADERLEADER
DATEORIENTATIONFTOTALTAXABLE INCOME
CASH RECEIPTSCASH PAYMENTS
LEADERLEADER
DATEORIENTATIONFTOTALEXPENSES
CASH RECEIPTSCASH PAYMENTS
LEADERLEADER
DATEORIENTATIONFTOTALMONTH OR CR.
CASH RECEIPTSCASH PAYMENTS
LEADERLEADER
DATEORIENTATIONFTOTALBOOK DATE NO. TOTAL F TOTAL F BUILDINGS TAXABLE INCOME EXPENSES CASH RECEIPTS CASH PAYMENTS LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEADER LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEader LEder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leeder Leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedr leedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleedarleadarlereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereadereaddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddareddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddarreaddress +Form #4, Charitable Institution Cash Book (left-and right-hand pages) + +206 +PRINCIPLES AND PRACTICE + +advisable to open a ledger account with each subscriber upon a subsidiary ledger, charging him with the amount of his subscription and crediting "Income from Subscribers" account. This separate subsidiary ledger will have a controlling account on the general ledger. When cash is received for subscriptions the amount is entered in the subscription ledger column on the cash book and posted, the column total being posted to the controlling account and the items to the subscription ledger accounts. + +If the endowments of the institution are large the investment and income transactions will be numerous, and another subsidiary ledger should be used in which may be kept accounts with the various classes of investments and the income from them. This separate ledger also will have a controlling account on the general ledger. + +The income from inmates, capital, legacies, and donations other than subscriptions, involves but few transactions, and may be carried in the general ledger columns on the cash book. + +The cash book of a charitable institution should not contain a column for every known item of expense, as this makes the book awkward and wastes space. Care should be taken to avoid expansion of the cash book beyond the items suggested in Form 44. + +**4. The Cash Receipts Register** + +The receipts register is the development of the left-hand or debit side of the cash book into a separate record. The volume of business may be sufficiently large so that the cash book will be divided into two parts, one + +GENERAL CASH RECORDS 207 + +for receipts and one for disbursements, or the volume of business may require one or more books for receipts and one or more for payments. + +Some of the reasons for using a receipts register are as follows: + +1. There may be a great number of cash receipts and very few disbursements. Instead of filling up the general cash book with all these details and wasting a number of corresponding pages on the disbursement side, a separate book may be used in which to record cash receipts. + +2. The accounts with customers may be so numerous that several customers ledgers are necessary. In this event, a controlling account is used for each ledger, which necessitates providing columns on the cash book in which to collect the necessary details for each ledger. These columns may be so numerous that including them in one cash book would be very cumbersome and awkward. + +3. Recording cash receipts with cash payments may involve more work than one employee can handle. In this case the cash record is divided and a separate clerk is given charge of each book. + +More than one receipts register may be used. One may be used for the even days and one for the odd days, or one for two days' receipts and the other for the next two days' receipts, and so on alternately. Such alternation is employed to facilitate posting because the transactions may be so numerous as to require that two persons work with the record at the same time. There may be several cashiers, each one using a separate receipts register. There may be several departments, + +208 +PRINCIPLES AND PRACTICE + +Form 45. Cash Receipts Register + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATE RECEIVED FROM:CASH RECEIPTS REGISTER FROM TOCREDITCREDITCREDITCREDIT
RECEIVED FROM K. BERNARD, M.A.S., F.P.S.A.1935-19361937-19381939-19401941-19421943-1944
Received by:
Approved:
+ +Form 46. Check Register + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATE PAYABLE TO CASH REGISTER FROM TOCREDIT DONATECREDIT DONATECREDIT DONATECREDIT DONATE
P.O. NO. DATE NO. DESCRIPTION QUANTITY AMOUNT
Received by:
Approved:
+ +Form 47. Check Register + +GENERAL CASH RECORDS 209 + +each one requiring a separate register. The possibilities are many. Even when only one register for receipts is used, and still more when there are several, it is desirable to summarize the receipts and payments in a separate record so that the daily totals of all receipts and payments may be displayed together with the resulting balance. + +Form 45 illustrates the principle of a separate record of all cash received. It takes the place of the debit side of the ordinary cash book. The sheets on which it is printed are numbered consecutively when printed, and every sheet should be accounted for, whether used or not. This last precaution facilitates auditing. + +**5. The Check Register** + +The check register is the development of the right-hand or credit side of the cash book. The reasons for its use have already been suggested in the section on the receipts register. The record shows the transactions with each bank, and should display the deposits as well. When this is done, the use of check book stubs on which to keep track of the bank account is unnecessary and checks numbered and bound in pads can be used. If a check is spoiled, or if it is not used after being made out, the space assigned it in the check register must be marked "void," since every check must be accounted for. Form 46 assumes that all cash payments are provided for by checks and a petty cash system. + +If a voucher register is used, the expenditures of various kinds—labor, material, etc.—are not distributed + +210 +PRINCIPLES AND PRACTICE + +in detail in the check record, according to the common method in the ordinary cash book, but the voucher record itself is used for all such distributions. There must be a voucher for every disbursement, but when no analysis is desired in the cash book, checks are entered in the "Vouchers Payable" column. The voucher number is entered on the check register. A column is provided for showing discounts allowed by creditors. + +The check register combines the following functions: + +1. That of the check stubs. +2. That of showing bank deposits by banks. +3. That of the credit side of the cash book, taking into consideration the recording of creditors' discounts. + +The preceding form of check register (Form 46) is presented because it is used in connection with that of the receipts register above. The use of the form needs no explanation except in regard to the deposits. In the deposits column is entered the amount of each bank deposit. The total amount of this column (or if more than one check record is kept, the grand total of the various deposits columns) should agree with the net cash column on the receipts register. The daily balances of cash in bank should be shown in the balance column. A separate check record should be kept for each bank in which an account is carried, and a distinct series of numbers used for each check record sheet and for the checks. It is possible to combine all the bank accounts on the one record, but the result is not as satisfactory as when a separate check record is kept for each bank. + + + + + + + + + + + + + + +
1.That of the check stubs.
2.That of showing bank deposits by banks.
3.That of the credit side of the cash book, taking into consideration the recording of creditors' discounts.
+ + + + + + +
1.The preceding form of check register (Form 46) is presented because it is used in connection with that of the receipts register above. The use of the form needs no explanation except in regard to the deposits. In the deposits column is entered the amount of each bank deposit. The total amount of this column (or if more than one check record is kept, the grand total of the various deposits columns) should agree with the net cash column on the receipts register. The daily balances of cash in bank should be shown in the balance column. A separate check record should be kept for each bank in which an account is carried, and a distinct series of numbers used for each check record sheet and for the checks. It is possible to combine all the bank accounts on the one record, but the result is not as satisfactory as when a separate check record is kept for each bank.
+ +GENERAL CASH RECORDS 211 + +When checks are drawn on one bank for the purpose of transferring money to another, the amounts should be entered in the sundry column of the check record of the bank from which the amount is withdrawn. They should also be entered in the deposits column of the check register of the bank to which the amount is transferred. + +6. Cash Recapitulation Record + +It has been shown above that the bookkeeping record for cash received and paid out may be divided to such an extent that several receipts registers and check registers are needed. When such is the case, control over these many records is secured by the use of what may be called a cash recapitulation record (Form 47), + +RECAPITULATION RECORD + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESHOLD THRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRESH OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTHRES OLDTV +
DATEBANK ABANK BBANK CTOTAL
DepositDrawnBalanceDepositDrawnBalanceDepositDrawnBalanceDepositDrawnBalance
TOTAL DEPOSITSTOTAL DRAWNSTOTAL BALANCES
+ +Form 47. Cash Recapitulation Record + +which provides a better means of keeping a record of the deposits in banks than does the check register alone. +It is convenient to transfer deposits from the check register to the respective bank columns on the recapitulation record. Totals of checks drawn are also entered in this record. + +212 +PRINCIPLES AND PRACTICE + +**7. The Voucher Check** + +An ordinary check, even though indorsed by the payee before collection, is not satisfactory as a receipt because it does not show the specific bills it pays. For this reason the payee, unless he has been given express instructions to the contrary, may apply the amount to any account. If the voucher system is in use, it is customary to send with the check the bill it covers (or the voucher relating thereto), in order to obtain a definite receipt. When a business is large the voucher system involves a great amount of labor in following up and filing the receipts and vouchers. To avoid this labor and expense, many concerns have adopted the plan of taking no receipts, but of merely preserving the indorsed check instead, as evidence of payment. Unless the check indicates the bill which is paid, this practice is distinctly bad. + +To obviate the difficulty experienced in using ordinary checks, a most useful combination form of voucher check has been devised. Upon the face or back of this voucher check are set forth the items it covers. The voucher check is especially convenient, it may be remarked, when dividends are paid, because the number and amount of the dividend are clearly indicated on the check. + +The voucher check must not be confused with the form of voucher described in connection with the voucher system; it may or may not be used as a part of that system. If used as part of the voucher system the check should show that it has been given in settlement of items set forth on a certain voucher; the original or duplicate of this voucher would be sent to the creditor + +GENERAL CASH RECORDS 213 + +with the check; and the indorsement of the check by the creditor would serve as a receipt for the items set forth on the voucher. + +Voucher checks are printed in many and various forms; some very satisfactory, others rather clumsy. The following principles should govern the construction of the voucher check: + +1. It should be of standard check size. If necessary to use a folded form, this form when folded should be of standard check size, with the check or draft on top. +2. It should be negotiable in form. +3. If a detachable check is used, that also should be negotiable in form. +4. The original should be easily distinguishable from the duplicate, and should be of good quality of paper. +5. No extraneous matters, such as advertising, should be placed thereon. + +The following form (Form 48) meets all requirements of a proper voucher check. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
PAYMENT OF INVOICESVoucher No.Check No.
DATEAMOUNTNew York City
Pay to the Order of:8
To theDollars
THE CARSON TRADING COMPANY
No Receipt RequiredFIRST NATIONAL BANK OF NEW YORKTreas.
Mgr.
+ +Form 48. Voucher Check + +214 +PRINCIPLES AND PRACTICE + +8. Opening the Mail + +The purpose of this section is to present a method for an internal check on the receipts passing through the hands of the cashier in charge of the receipts register. By this method the misappropriation of any receipts which come through the mail is rendered more difficult. + +As soon as the letters have been opened, the examination of the mail begins. The person who opens the mail is the one to check the enclosures. This person ought to be a confidential employee. In a large office, it is very unusual for the mail to be answered by the one who takes it from the envelopes. + +The method of reading and checking should proceed in the following manner: First, each letter is examined to see that the signature and address are somewhere on the letter. If the signature is missing, the letter is put aside with the envelope, which has the town or city post-mark, so that the file clerk may be able to trace it. A hasty glance through the letter will tell whether or not there should be any enclosures, because somewhere in the letter the writer will refer to the fact. The reader + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
MAIL RECEIPTS
January 14, 1919
FromTown or CityAmountReceived For
+ +Form 40. Mail Receipts Memorandum + +GENERAL CASH RECORDS 215 + +should determine that the enclosure is received and that it agrees with the amount stated in the letter. Then he indicates on the letter the receipt of the enclosure, so that a record will be available if the enclosure is mislaid or lost. The examining clerk should have beside him a memorandum pad upon which he can note the particulars of the receipts before they are turned over to the cashier. Form 49 is suggested for such a memorandum. + +The receipts and necessary correspondence are turned over to the cashier for his record. The memorandum sheet is retained to be used later in checking up the entries on the receipts register. + +**9. The Mechanical Cash Register** + +The cash register is a well-known mechanical device which exists in many forms, such as those used in stores, in amusement parks, on street-cars, etc. The amount received is rung up, and a record is made in the machine at the same time, this record charging the person who collects with the amount deposited in the register. The moral effect of the use of a cash register is considerable, since, if the employee receiving cash fails to deposit and ring up the amount, he lays himself open to the suspicion of the customer. The key to the register should be kept in the hands of a responsible employee, perhaps the one into whose custody is given the sheet containing the list of mail receipts discussed in the last section. This person then has at hand the proper means for checking up the accuracy of the receiving cashier's accounts or records. The checking up should be done each day prior to taking the daily receipts to the bank for deposit. + +216 +PRINCIPLES AND PRACTICE + +REVIEW QUESTIONS + +1. Indicate the rules that should be observed in handling cash, regard being paid to the time and the number of deposits. +2. Rule a general cash book that would be suitable for a mercantile concern with five departments, the cash transactions of each department being separated from those of the others. +3. Rule a general cash book that would be suitable for a charitable institution. The institution receives cash from different sources among which may be mentioned the following: + Subscriptions + Endowments + Inmates' charges + Miscellaneous +4. What are the purposes of a: + (a) Cash receipts register? + (b) Check register? +How may control over these records be secured? +5. What principles should govern the construction of voucher checks? +6. What method of protection would you suggest in connection with cash receipts which come through the mail? +7. A book store keeps $25 in its cash register at all times as a fund from which change is made. The store sells books both for cash and on time. Briefly outline a system for handling the store's cash sales based upon the use of a cash register. + +CHAPTER XIX + +PETTY CASH RECORDS + +**1. The Imprest System** + +The course of development of the various cash book records has been outlined and most of the forms now in use have been described. There are, however, a few other problems for consideration, the most important of which have to do with petty cash. Since the imprest system is now accepted as the only modern method to be used in the handling of petty cash payments, no other will here be considered. + +The principle of the imprest system is that all money to be expended for petty expenses is advanced from the general funds to a special fund out of which it is then disbursed as required. The petty cashier is required to secure a voucher or receipt for every payment, however trivial, so that the total of these slips added to the total cash remaining in the petty fund will at all times equal the original amount advanced. + +**2. The Fixed Fund and Account for Petty Cash** + +The fixed ledger account shows the petty cash fund in the ledger charged with the fixed amount. No other entry is made in the account unless the fund has been increased, decreased, or discontinued. The fixed amount equals petty cash on hand plus petty cash vouchers in charge of the petty cashier. + +To create the fund, a check is drawn in favor of + +217 + +218 +PRINCIPLES AND PRACTICE + +“Petty Cash Fund” for an amount sufficient to meet the ordinary cash expenses for a week, or a month. This check is entered in the general cash book and charged to the “Petty Cash Fund” account. That account remains on the ledger as an asset and will not be changed in any way until the amount of the fund is increased, reduced, or discontinued. + +The proceeds of this check are given to the petty cashier. As payments are made from this fund, petty cash vouchers, O. K’d by someone in authority, must be secured by the cashier. + +When the fund gets low, the cashier will turn in the vouchers for the payments made after making up a proper analysis of them from the petty cash sheet, and then a check will be drawn in favor of “Petty Cash Fund” for the total amount of the vouchers. This check is cashed, and the fund restored to its original amount. + +The asset on the ledger called “Petty Cash Fund” must always be represented in the hands of the cashier by its full equivalent in cash, or cash and vouchers, or in vouchers alone. When the petty cash vouchers are turned in by the cashier, the petty cash sheet showing the accounts to which the payments are to be charged must accompany them. An entry will be made in the cash book debiting the appropriate accounts and crediting Cash. + +3. The Petty Cash Book as a Posting Medium + +It may be desirable to record petty cash transactions in a bound book and to use this record as a direct posting medium. A slight modification of the imprest method + +PETTY CASH DISBURSEMENTS + + + + + + + + + + + + + + + + + + + + + + + +
Sheet No.
No.
Date From:
Date To:
Excess
Excess
Excess
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Dine No.To WnsonAmountForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessForeign ExcessTotal Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.)Total Disbursements Amounts (Rs.) +
+ +Form No. Petty Cash Book + +PETTY CASH RECORDS +219 + +Pamphlet No. +Sheet No. +Page No. + +See Key by +Paid by Cheque No. +Date +Amount brought forward +Amount forwarded + +220 +PRINCIPLES AND PRACTICE + +will enable this to be done. The book used is ruled according to the desired classification. The voucher system is still followed, but the person in charge of petty cash, instead of handing the vouchers to the bookkeeper to be used as records for entry in the main cash book, retains them. Postings of the totals of the analyzed payments are made directly from the classified columns of the petty cash book to the respective ledger accounts. + +The total of the postings is credited to the Petty Cash account, and a check is then drawn to Petty Cash for the same amount and entered upon the general cash book, thus replenishing the fund. + +A form meeting the requirements for Petty Cash disbursements is outlined in Form 50. + +**4. Petty Cash Vouchers** + +Petty cash vouchers (Form 51) should be prepared and numbered in advance. Before any disbursement is made the person responsible should prepare a voucher, + + + + + + + + + + + + + + + + + + + + + + + + + + +
CARSON TRADING CO.No. 27
PETTY CASH VOUCHER
Charge
Entered Ledger,
Signature
Approved by:
+ +Form 51. Petty Cash Voucher + +PETTY CASH RECORDS 221 + +filling in the details. Usually a formal voucher is unnecessary; any slip of paper properly filled out with amount, purpose of the expenditure, and with the signatures of the receiver of the money and the necessary approval, is sufficient. A form about 3 x 5 inches is large enough. + +**5. Handling Many Items of a Similar Kind** + +At times it is found that a large number of petty cash transactions of a like nature take place daily. For example, there may be over a hundred demands for car-fare alone. To save time and labor the vouchers are classified and those of each group added together at the end of the day, each group total requiring but one entry on the petty cash book, which may be posted direct to its proper ledger account. Then the next morning a check is drawn for the amount of this expenditure. The balance on hand is always ample for the day's needs and yet not too much for normal and reasonable requirements. If the amounts are transferred to a columnar summary book, previous to being posted to the ledger accounts, a "tick" column should be provided on the record for checking the amounts. + +--- + +**REVIEW QUESTIONS** + +1. Enumerate and describe the methods of handling petty cash on the imprest basis: + (a) As regards the fund + (b) As regards the ledger account + +2. How can the petty cash book be used as a posting medium? + +3. Rule a form in which petty cash disbursements may be recorded. + +4. What is the purpose of a petty cash voucher? Rule one. + +CHAPTER XX +MISCELLANEOUS CASH RECORDS + +1. The Cash Journal + +This chapter discusses methods of handling various minor matters relating to cash that frequently require attention. + +The cash journal is a combination of the columnar cash book and journal, or better, it is the journal developed in columnar form to include cash transactions. For a small business or for household or professional accounting its use may be worth while. A cash journal for a professional man is described in connection with the discussion of an accounting system for an attorney in Chapter XXXIII. + +In some lines of business the cash journal is popular, although its use is so limited and usually so undesirable that but brief consideration need be given it here. Its disadvantages, usually overbalancing its advantages, are: + +1. Only one person can work on the accounts at a time. +2. Only a few accounts can be handled by totals in a book of workable size. + +The form of a cash journal here submitted (Form 52) is suitable for a small manufacturing concern with six production departments. + +223 + +MISCELLANEOUS CASH RECORDS 223 + +All the entries on the right-hand page are debits, the credits offsetting each entry being on the left-hand page. The headings of the columns are virtually self-explanatory. When raw material is purchased, the total amount is entered in the debit columns for merchandise of the department or departments where the material will be consumed, and the credit is entered either in the bank credit column, if paid by check, or to the credit of accounts payable, if bought on time. All bills should be filed alphabetically and indexed for ready reference. + +When checks are drawn for salaries and wages, the total amount is entered in the bank credit column and the distribution into departments is secured from the pay-roll book and entered in the expense column of each department. + +Every entry made in the cash journal should be supplemented with a brief but clear explanation. Whenever entries are made involving accounts for which no columns have been provided, the general ledger column is used for the amounts and the accounts column for the names of the accounts concerned. All cash received is entered in the cash debit column, and when deposited is transferred to the cash credit column and finally transferred to the bank debit column. Accounts receivable and payable are posted daily to the proper personal accounts, folios being given for cross-reference. The only other daily postings are the items entered in the general ledger column. + +At the end of the month each column is added. The total debits must equal the total credits. The totals are entered on one line across the page and ruled off with + +224 +PRINCIPLES AND PRACTICE + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATEEXPLANATIONCASHGROSSNET
K.CashDiscountBankSalesAccess Div.Access Div.Access Div.Access Div.Access Div.
Dbl.Cls.Dbl.Cls.Dbl.Cls.Dbl.Cls.Dbl.Cls.
JOURNAL
Dorp. ADorp. BDorp. CDorp. DDorp. E
Cash Journal (left- and right-hand page)
Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- and right-hand page)Form #0 Cash Journal (left- + +MISCELLANEOUS CASH RECORDS 285 + +a double line. After this is done, the monthly postings are carried into the general ledger. Certain accounts like discount, interest, and expense may need to be analyzed before posting, such as sales discounts, discount on notes receivable, etc. Since the general ledger column has been posted in detail each day, the total is not posted again. + +At the end of the fiscal period when the books are closed certain journal entries must be made, such as Inventory New to Inventory Old, Interest Payable to Interest Payable Accrued, etc., in order that a correct profit and loss statement and a balance sheet may be secured. The names of these accounts are entered, before closing the books, in the accounts column of the cash journal, and the amounts are entered in the general ledger column. + +2. Cash Memorandum for Goods Returned + +All adjustments should be placed in the hands of one special person. Demand for the correction of errors should be made to this adjuster. If satisfied with the demand, this person notes the fact on a cash refund ticket. + +On the form suggested (Form 33) the adjuster punches out the amount of the adjustment. Such cash refund tickets may be made in duplicate, one for the customer and one for the office. They are numbered consecutively. They are transferable and may be collected in cash or passed in as payment or part payment on additional purchases. Cash adjustments are handled easily through the petty cash fund, the memorandum being the voucher for the expenditure. + +226 +PRINCIPLES AND PRACTICE + +3. Cashier's Cash Distribution +The daily cash detail sheet shown in Form 54 may be used by the cashier of a mercantile concern, + +No. 417 +CASH MEMO +CARSON TRADING COMPANY +New York City + +Sold by ____________ Department ____________ Date ____________ +Name of Customer ____________ + +Reason for Return ____________ + +Approved: + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +Form 83. Cash Refund Ticket + +as the cash sales checks come in. After the daily balance is secured the totals are transferred to the general cash book. + +When the record has been entered in the general + +MISCELLANEOUS CASH RECORDS 227 + +cash book, the sheets may be placed in a cheap sectional post-binder or a spring-back cover, where they may be referred to at any time required. + +If desired, this sheet may be omitted from a system in which many cash sales must be accounted for, the cash sales receipts being entered directly on the general cash book, or on the sales book if sales distribution columns are not placed in the cash book. Greater neatness, however, in the appearance of the general cash book will result if this cash distribution form be used, as more attention can be paid to the arrangement and entry of items from these forms to the cash book than would be possible if entered direct from the sales checks. + +
Tens810Cts.QUANTITYARTICLESAMOUNT
000
111
222
333
444
555
666
777
888
999
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
Cashier No.DEPT ADEPT BDEPT CDEPT DDEPT EDEPT F
Form 54. Cash Distribution Sheet
+ +Customers' payments of accounts, it must be remembered, are always entered directly on the general cash book. + +4. Daily Cash Report + +The following form (Form 55) is suggested as a daily report of cash, which may well be required of the cashier. It is self-explanatory. Each report should be + +Sheet No. ____________ Day- ____________ + +228 PRINCIPLES AND PRACTICE + +signed by the cashier making it. This requirement of a guarantee of correctness has a moral effect which is worthy of consideration. + +DAILY CASH REPORT +19 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
ReceiptsPayments
Customers' Aecta (Group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less Discounts. ☐Accounts Payable (Group) ☐
Less Discounts. ☐Less Discounts. ☐
Less Sales Tax. ☐Less Sales Tax. ☐
Other Items. ☐Other Items. ☐
Total Receipts to-day ☐Total Payments today ☐
Rush Balance - end yesterday. ☐Rush Balance - end yesterday. ☐
+ +Form 55. Daily Cash Report + +5. The Private Cash Book + +The private cash book is still another outgrowth of the general cash book. It is used in connection with a private ledger (Chapter XXII, § 18) to record as they occur all transactions incident to the financing of the enterprise. A column headed "Private Cash Book" would be found on both the debit and credit sides of the general cash book. Financial transactions kept in a private cash book by a trusted employee would not be available for scrutiny except by those persons directly interested. A suggested form for such a cash book is shown in Form 56. + +MISCELLANEOUS CASH RECORDS 529 + +PRIVATE CASH BOOK + +Form 56. Private Cash Book + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DatePayeeDescriptionAmountDatePayeeDescriptionAmount
FORM NO. 56-1000-1973
+ +230 +PRINCIPLES AND PRACTICE + +REVIEW QUESTIONS + +1. What is a cash journal? When is its use worth while? +2. Rule a cash journal for a wholesale commission merchant who sells to 50 customers. +3. What is the purpose of a cashier's daily cash distribution sheet? +4. Rule a form for a cashier's daily cash report. +5. What is the purpose of a private cash book? Outline the book-keeping entries in connection with its use. + +CHAPTER XXI + +THE JOURNAL + +1. Books of Original Entry + +In a mercantile or trading business today, as already observed, the usual books of original entry, bound, loose, or card form, are the journal, purchase book, sales + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
PURCHASE BOOKSALES BOOKCASH BOOKGENERAL JOURNAL
JOURNAL
Dr. Total to MasterDr. Items to PurchaseDr. Total received to Cash accountEnter all Trans- actions herein which cannot be entered in any of the other three original records.
Dr. Items to AccountDr. Total to MasterDr. Receipt Items
Cr. Total Payments
% Cash account
+ +LEDGER +(The Cash account is carried in the ledger.) + +Form 57. Chart of Books of Original Entry +251 + +232 +PRINCIPLES AND PRACTICE + +book, and cash book. The latter three are but sections of the journal kept separately and developed individually. The preceding simple diagram (Form 37) shows this subdivision. + +The journal, therefore, is at present largely displaced by special books of original entry, their subdivision sometimes being carried very far. Though this be true, the former function of the journal must be, and still is, performed. Every book of the original entry, no matter how specialized it may be, is in effect and function a journal. As has already been indicated, a book of original entry, to serve properly as a posting medium, must be kept with two purposes in mind: + +1. The business transaction must be so recorded that later, if necessary, it can be reproduced in detail. +2. The elements of the business transaction must be set out clearly, so that the proper ledger accounts can be debited and credited. + +2. Entries in the General Journal + +From what has been indicated, it may properly be assumed that the present-day journal contains only entries which find no place in any other record of original entry. If any one set of transactions is sufficiently large to be carried profitably in a special original entry record, a form is constructed, the new record is tied into the system, and thereafter such transactions are entered in it. This development is evidently a natural consequence of the large scale on which so much of modern business is conducted. + +This process of elimination has stripped the general + +THE JOURNAL 233 + +journal gradually to such a point that at present only the following types of entries are carried in it: + +1. Opening entries +2. Adjustment entries, including also entries of a peculiar character which are essentially adjustments +3. Closing entries + +Where returned purchases and sales and customers' allowances are many, a separate record (a journal) is used for each class, these being kept on the basic principle which has already been explained. + +**3. Opening and Closing Entries** + +The first entries in a present-day general journal are usually of great importance. By means of such entries the opening condition of a concern is formally recorded. For a partnership, opening entries will be made to show the amount of the assets contributed to the enterprise, and the interest of each of the contributors in these assets. + +Opening entries for a partnership: + + + + + + + + + + + + + + + + + + + + + + +
Cash$5,000.00
Merchandise6,000.00
To Richard Smith, Capital84,500.00
" Henry Martin, Capital"6,500.00
(Explanation.)
+ +For a corporation, opening entries will be made to show the issue of capital stock and the assets acquired for it. Except for the capital stock, these entries are similar in general to those of a partnership or of a sole proprietorship. + +234 + +**PRINCIPLES AND PRACTICE** + +Opening entries for a corporation: + + + + + + + + + + + + + + +
Cash$25,000.00
Patent Rights60,000.00
To Capital Stock$85,000.00
+ +(Explanation.) + +Special journal entries are made also, on the date of closing the books, as preparatory to presenting the periodical profit and loss account or statement and the balance sheet, whether the business be that of a sole proprietorship, partnership, or corporation. + +These classes of entries may be said to be the only ones which are at the present time passed through the business record now known as the journal. The entries for nearly all other business transactions are made in journal records which carry names other than "journal," as the cash book, purchase book, sales book, returned purchases book, returned sales book, allowances journal, etc. + +**4. Journal Vouchers** + +Many adjusting journal entries are merely routine in character. For making such entries frequently no explicit authority need be secured. However, since it is impossible to tell whether any entry will later be disputed, it is better to have every entry vouched for, that is, approved by someone in authority, as a measure of protection to minimize the disputes. To illustrate, a journal entry may have an important bearing on the cash account, as when a journal entry debit may be used to record an allowance to a customer; or it may have an important bearing on certain individuals, as when an entry adjusts personal accounts. An entry of this + +THE JOURNAL 235 + +kind may later be questioned, perhaps long after the details of the transaction have been forgotten. + +A voucher is written evidence of a fact which is to be entered in a permanent accounting record. (See Volume I, Chapter XXII.) The form of voucher is a matter of choice, and it differs in most businesses. Journal voucher forms (Form 58), sometimes made in + + + + + + + + + + + + + + + + + + +
JOURNAL VOUCHER
DateNo.19
AccountDk.Ck.
+ Explanation +

+ Made by +

+ Authorised by +

+ Checked by +

+ Entered Journal page. +
+ +Form 58. Journal Voucher + +duplicate, are generally furnished the bookkeeper in pads. The vouchers are numbered consecutively and they are entered in the journal in the same consecutive order. When a voucher has been prepared, dated, signed, and approved, with the accompanying papers attached to it, it is turned over to the bookkeeper for entry in the journal. In journalizing, no particulars need be given except the voucher number, date, accounts to be debited and credited, and amounts. + +236 +PRINCIPLES AND PRACTICE + +5. The Two-Column Journal + +The simple journal ruling provides for two money columns, debit and credit, one alongside the other, at the right of the page. The space to the left of these two columns is used to show the details as to accounts, dates, remarks, etc. This arrangement with the two money columns is the simplest form of Journal. By the use of this journal a complete record of every business transaction with its relation to the existing account classifications may be secured. The use of two columns in journals is not peculiar to either single or double entry. Both methods could use indiscriminately either one or two journal columns. Originally both methods used one column, the debit earmarked "Dr." alongside the amount affected, the credit being earmarked "Cr." + +While the day-book used under single-entry book-keeping may very conveniently make use of the one column only, two columns ought to be used in the double-entry journal, so that both the debit and credit of every transaction entered may be set out clearly. This calls attention to the exact nature of each transaction. The left-hand amount column of a journal is always used for debits, and the right-hand column for credits. The same rule prevails as to the use of the cash book and of all ledger accounts. This is the unvarying practice. + +Perhaps the first step in the development of the sim-ple two-column journal was to separate the two columns so as to make a sharper contrast between debits and credits, and to condense the amount of detail given in the explanation. The form presented below (Form 59) shows this development. This form of Journal + +A blank form labeled "Form 59" showing a two-column journal. + +THE JOURNAL. +287 + +proved more desirable as a posting medium than the original form. Debits and credits were set out clearly, and less confusion in posting resulted. + + + + + + + + + + + + + + + + + + + +
Month of 19
DebitsL.F.EXPLANATIONL.F.Credits
500.0010 Merchandise From J. JonesNotes Payable15500.00
+ +Form 38. Two-Column Journal + +**6. Three-Column Journal** + +A three-column journal may be similar to a two-column journal except that at the right of each page there are three columns instead of two. It is desirable, when introducing a form of this sort, to indicate at the top of each column the use which will be made of it. In the form given herewith (Form 60) the first two columns are headed "General Ledger" with the word "Debit" under the general heading for the first column and the word "Credit" for the second column. The third column is headed "Accounts Receivable Credit." + +Even though it may not be necessary to identify columns where a bookkeeper is well experienced, it is usually a good plan to do so. Especially is this so where a new system is being installed; experience shows that fewer mistakes are made and a better understanding of + +238 +**PRINCIPLES AND PRACTICE** + +the system is secured if the title of every column is given. +At all times there is the possibility that employees who are somewhat inexperienced may work on the records. Illustrative entries in a three-column journal are shown below. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
August, 1919
DateEXPLANATIONGENERAL LEDGER L.F.ACCOUNTS RECEIVABLE Dr.Ca.
- 17 -
Allowance To John Smith8 75.95
" Richard Doe814.13
" David Roe13.78
" Edwin Kahn29.97
For allowances approved this day on account of breakages on consumer's orders.18.10
+
James Cameron1,000.00
To Notes Payable For note this day given.1,000.00
+ +
+ +Form 60. Three-Column Journal + +The totals of the two credit columns should equal the total of the one debit column. This proves the mathematical accuracy of each journal entry. + +The third column in the three-column journal illustrated is designed for the purpose of collecting the detail adjustment items to be credited to individual customers' accounts in such form that they are not likely to be posted to the wrong ledger, and of arranging them so that a monthly total can be secured quickly for the + +THE JOURNAL 239 + +controlling account. It may be assumed here that the items are not numerous enough to demand a separate record, but of sufficient importance to require a separate column in the journal. + +This type of journal lends itself readily to transactions of a similar nature. Its use may be summarized by the statement that where there are numerous detail adjustment postings to one subsidiary ledger which is controlled by an account in the general ledger, one additional column may be added to a two-column journal in which these detail items may be collected for posting to the subsidiary ledger and for easy determination of their total. + +A three-column journal may conveniently be used in other ways than that indicated above. By heading the second and third columns, "General Ledger Debit" and "General Ledger Credit" respectively, the first column may be used for detail calculations and the listing of items which are not to be posted but which are involved in the calculation of the debit or credit which is to be posted. For example, if several freight bills are to be charged to a customer, the bills may be listed in detail in the first column, the debit to the customer's account given in the second, and in the third the credit to the freight or other account which is involved. + +7. Four-Column Journal + +With certain types of business many transactions must be recorded in two kinds of money. In such a case a four-column journal (Form 61) can be used to advantage. Concerns engaged to any extent in foreign trade usually make their entries in this way. + +240 + +**PRINCIPLES AND PRACTICE** + +A certain concern has two plants—one in New York and the other in Paris; each office purchases for the other. Purchases made in New York for Paris would be entered upon the New York books in dollars and francs respectively. The reverse order would be employed upon the books of the Paris office when purchases were made for New York. The form given here- with illustrates the arrangement of the journal for such a concern. + + + + + + + + + + + + + + + + + + + + +
DateExplanatory DetailEx-CHANGE RateDollarsCredits
+ +Month of ____________ 19___ + +Form 61. Four-Column Journal + +Under these conditions each ledger account must be ruled with two debit and two credit columns. At the end of the fiscal period only one adjustment need be made in each set of books, and the balance can be discharged by an actual exchange of cash. Furthermore, during periods when the exchange rate may be fluctuating rapidly, certain advantages may accrue to both branches of the business if they make use of the greater purchasing power of money in one country over another. A four-column journal simplifies the recording of these transactions. + +In a small business the purchases and sales might not be sufficient in number to require a separate record + +THE JOURNAL 241 + +for each, yet numerous enough for each to be given a column in the journal. Following the idea of the three-column journal considered in the preceding section, the three-column journal recording sales in a separate column could be expanded by the addition of another column for purchases. This is perhaps the most frequent use to which the four-column journal is devoted. + +8. Six-Column Journal + +A six-column journal serves many useful purposes. In a journal of this type each transaction may be analyzed by entering component elements under the debits or credits in which they fall. In a form such as is shown below (Form 62), the three columns on the left are used for debit and the three on the right for credit entries. The columns are headed “General,” “Accounts Receivable,” and “Accounts Payable.” + +Detail postings are made to the respective accounts affected. The totals of the columns shown on the left should equal those on the right. When this verification has been made, the totals of the controlling account columns are posted to the proper general ledger accounts. By making only two postings from the journal to the controlling accounts of Accounts Receivable and Accounts Payable, respectively, time can be saved. Explanatory matter is written in the center space immediately alongside the entry to which it refers. When amounts are to be shown in more than two monetary columns, a line is allotted to each amount. The totals of the monetary columns are carried forward from page to page until the end of the month, when a proof of the journal footings is made. + +242 +PRINCIPLES AND PRACTICE + +Form 62 - Site-Columbia Journal + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
CLIENTSJANUARY 1919CERTIFS
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
ACQUISITION (ACQ)ACQUISITION CLASSIFICATIONACQUISITION REVENUE
Form 62 - Site-Columbia Journal
+ +
+ + + + + +
570-24-5
Cable & Wire Co.
+ + + + + +
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$ + +THE JOURNAL 243 + +**9. "Left and Right" Journal** + +This type of journal, somewhat resembling in form the six-column journal just mentioned, provides writing spaces in the center of the page, with columns on either side properly headed for the entry of amounts. + +A sufficient number of columns should in all cases be provided to cover all information to which reference must frequently be made. Not all the columns should be given printed headings; some should be left blank for unforeseen requirements. The usual form is shown in Form 63. + +Where a large number of journal entries are necessary, many of which are similar and recur from day to day, it is not always expedient to write long detailed explanations. Not infrequently the character of the entry itself is sufficiently explanatory. When this is the case it is practical to employ only two lines for each entry, writing the names of the accounts and the amounts upon the first line. The second line can be used to give a brief description of the record. + +With a form of this kind an analysis of the journal entries can readily be made, the respective columns can be totaled without difficulty, and postings can be made conveniently to the controlling accounts at the end of the month. Each journal entry may well be separated from the other entries by a blank space, and the line upon which the date is placed answers this purpose. In this way, the text and monetary values are shown in logical and intelligible manner. It must be remembered that where the greater number of journal entries require considerable explanation a journal of this type may be of but little practical service. + +244 + +PRINCIPLES AND PRACTICE + +MONTHS OF +F. EXPLANATION +ENTRIES +EXPLANATION OF +ENTRIES + +From 63 "Left and Right" Journal + +Form 64 Cut Sheet Journal + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
MONTHSDECJANUARYFEBRUARYMARCHAPRILMAJUARYSEPTEMBEROCTOBERNOVEMBERDECEMBER
0508050805080508050805
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
+ + + + + + + + +
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
FORM 64 CUT SHEET JOURNAL
MONTHS OF
+ + + + +
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
MONTHS OF
+ + + + +
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
MONTHS OF
+ + + + +
+ + +THE JOURNAL 245 + +10. Cut Sheet Journal + +When a number of like entries need to be made at the end of regular periods of time, a cut sheet journal (Form 64) can be used advantageously. The master sheets upon which the text of each entry is written are wider than the insert sheets-those upon which amounts alone are shown. The master sheet may include a few columns for amounts, but the insert sheet is wholly made up of these columns. + +A debit and credit column is provided for each month of the year. The text of the entries, which is the same for each month, is written on the master sheet in the space provided. Postings are made from the amounts shown in the columns headed with the respective months of the year. By ruling every fifth horizontal line more heavily than the others, the spaces between can readily be used for separate journal entries and explanations. A cut sheet journal can often be used advantageously in an office where it is the practice to close the general books at the end of each month, and where many of the journal entries are similar from month to month. Examples of entries of this kind follow: + +Profit and Loss................. $.......... +To Reserve for Depreciation............ $.......... +(Explanation.) + +Insurance Expense.............. $.......... +To Insurance Paid in Advance........... $.......... +(Explanation.) + +Shipping Room Expense............. $.......... +To Shipping Room Inventory............ $.......... +(Explanation.) + +246 +PRINCIPLES AND PRACTICE + +REVIEW QUESTIONS + +1. Is the use of debit and credit columns in journals essentially an attribute of either the single-entry or the double-entry system of bookkeeping? +2. Compare the former use of the journal with its present use. +3. What difficulties may the bookkeeper encounter if a journal entry is not supported by a proper voucher? +4. At what point in the development of a business should the simple journal, recording all transactions, be expanded: + (a) Into the columnar journal? + (b) Into separate journals in which to record separate classes of transactions? +5. What is the purpose of: + (a) The cut sheet journal? + (b) The left and right journal? + +CHAPTER XXII + +THE LEDGER + +1. General Use +The ledger is a book used for collecting and classifying all the debits and credits resulting from entries of transactions made in the records of original entry and books of summarization. The debits and credits are entered under the names of the persons, things, or activities involved. A page, or section of a page, in the ledger is reserved for, and headed with, the name of each person, thing, or activity under which classification is desired; under that name the required account is kept so that its debit and credit facts are displayed. The exact procedure to be followed has been explained fully in Volume I. + +2. Records of Original Entry +These are records which show the first or original entries of business transactions. The journal, cash book, duplicate bills or sales books, purchase book, voucher record, or invoice book, are examples of records of original entry. + +3. Records of Summarization +The term, "records of summarization," has not been mentioned before, although records of this sort have been discussed and considered in their relation to an accounting system. Records of this nature are the bound + +257 + +248 +PRINCIPLES AND PRACTICE + +or loose-leaf books used for summarizing the transactions shown on certain books of original entry. An example of such a book would be the Sales Summaries when the duplicate billing system is used—the duplicate copies being the original record of sales and the summary being required to secure monthly totals for general ledger postings. + +**4. Standard Ledger Form** + +The standard ledger ruling is familiar to everyone who keeps accounts. If the distinction between the debit and credit items is the only one of sufficient importance to be embodied in the record, the standard form of the ledger page should be used. + +In using the standard form, two separate records are actually displayed side by side, each occupying half the page from left to right, and each including the same kind of columns, namely: columns for date, explanation, folio, and amount. The debit is on the left and the credit on the right side of the page. (See Form 63.) + +**5. Development of Ledger Ruling** + +Sometimes a classification other than that of debits and credits may be so important that it must be provided for on the ledger page. In such a case, the standard form will be superseded by whatever form is better adapted to fit the special need. These variations of the standard ledger ruling are considered in the present chapter. + +In the development of the ledger from the point of view of constructive accounting, several variations in + +THE LEDGER +249 + +
MONTHS OF
+ + + + + + + + + + + + + + + + + + +
DATEEXPLANATIONAMOUNTDATEEXPLANATIONAMOUNTDATE
+ +Form 65. Standard Ledger Form + + + + + + + + + + + + + + + + + + + + +
DATEEXPLANATIONAMOUNTDATEEXPLANATIONAMOUNTDATE
+ +Form 66. Ledger with Memory Column in Center for Balancing Purposes + +250 +PRINCIPLES AND PRACTICE + +the ruling are to be considered. This development may occur along any of the following lines: + +1. Bringing the debit and the credit columns together. +2. Adding a column for balances. +3. Adding a column subsidiary to the main column for the analysis of the main column amount. + +6. Ledger Form with Debits and Credits in Center + +In a journal it is usually desirable to keep the money columns separated one from the other so as to eliminate as much as possible any chance for error due to posting items of one kind as items of the other. In a ledger, however, the opposite principle seems to give more satisfaction. Columns may be placed close together to provide for easy cross-reference. + +If the plan of the business is such that a balance is needed frequently, although not after every transaction, the specially ruled form shown in Form 66 answers the purpose. The money columns are placed close together, an arrangement which simplifies the work of abstracting a balance. + +7. The Journal-Ruled Ledger Form + +Another form of ledger ruling is that which has the appearance of a journal (Form 67). Under certain conditions it is a space-saver. If the number of debit entries is much larger or much smaller than the number of credit entries, this form of ledger will prove useful in the elimination of unused space. + +At times it is desirable to include a balance column + +THE LEDGER +251 + +on the journal-ruled ledger. If so, the usual place for it is to the right of the credit column. + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DateEXPLANATIONFOLDDEBITCREDIT
Form 67. Journal-Ruled Ledger
+ +8. Tabular Ledgers + +The tabular ledger is a development of the journal-ruled ledger. The chronological record moves from left to right instead of from top downward. Individual names are placed at the left, and the columns for recording information go from left to right by days, weeks, etc., with a common fund for debits and credits, and at times one for the balance. This type of ledger is known familiarly as the Boston ledger. It is used to advantage under the following conditions: + +1. When debits or credits must be recorded at regularly recurring times—for example, at the end of each month. +2. Where debits or credits for each period are few. +3. When it is necessary to prove work by totals. +4. When it is desirable to show the balance of each account. + +The tabular ledger is especially useful as a: + +1. Bank depositors ledger +2. Club members ledger +3. Rent register + +253 +PRINCIPLES AND PRACTICE + +FORM 68 Bank Depositors Ledger + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DAYSMONDAYTUESDAYWEDNESDAYTHURSDAYFRIDAYSATURDAYSUNDAY
DEPOSITORSACCOUNTSPENNSYLVANIASAVINGSUNIT'SBANKS' PRIVATEUNIT'S PRIVATEUNIT'S PRIVATE
WEEKS
+ +A blank ledger form for bank depositors. + +THE LEDGER 253 + +**9. Bank Depositors Ledger** + +In a bank the books must be balanced each day, and the condition of each depositor's account must be known at all times. The ledger provides columns to show balances at the beginning of the day, deposits during the day, checks cashed during the day, and balances at the end of the day. The arrangement of the columns is illustrated in Form 68. + +**10. Club Members Ledger** + +A set of records for a club ought to include at least a journal, a cash book, a general ledger, and a members ledger. The members ledger is described in Chapter XXXVII on "Clubs." + +**11. Rent Register** + +Rents are usually collected once a month. A proper record form will facilitate the keeping of accounts with tenants. Since the four conditions specified in § 8 are found, a tabular ledger will be useful. A rent register is shown in Form 69. + +**12. Ledger Account with Wide Explanation Column** + +One side of an account may require fuller information than is needed for the other side. For example, the debits to customers' accounts might require full ledger explanations to facilitate the preparation of statements, whereas the credits may not--for instance, the credit entries consist only of cash and discount items. In this case a wide explanation column on the debit side would be necessary and a narrow one on the credit side would be sufficient. + +254 +PRINCIPLES AND PRACTICE + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
RENT REGISTERFEBRUARY
Year B.P.Jan.Feb.Mar.Apr.May
TenantCashCashCashCashCash
SpaceDateAmountBALANCEBALANCEBALANCE
Form 60. Rent Register
Form 70. Ledger with Balance Column in Center
DATEEXPLANATIONAMOUNT BALANCE AMOUNTEXPLANATION DATEEXPLANATION DATEEXPLANATION DATE
+ +A table titled "RENT REGISTER" with columns for Year B.P., Space, Tenant, Date, Amount, Cash, and Balance. The table is divided into two months: January and February. The right side of the table shows the balance for each month. Form 70 is mentioned at the bottom of the table. + +Form 70. Ledger with Balance Column in Center + +THE LEDGER +255 + +Form 71. Standard Ledger Form with Balance Column at Right + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATEEXPLANATIONFIELDAMOUNTDATEEXPLANATIONSPOB.WEIGHTCEC.BALANCE
+ + + + + + + + + +
DateSale DateAmountBalance
+ +Form 72. Special Sales Ledger + +256 +PRINCIPLES AND PRACTICE + +**13. Ledger Form with Balance Column in Center** + +The form of ledger described in § 6 facilitates the taking of a balance if that is done only fairly often, but does not answer the purpose when the balance must be taken after every transaction, or when a balance is to be indicated upon the individual ledger accounts at the time of drawing a trial balance. + +Therefore, to the form with debits and credits in the center is added a balance column, placed between the other two columns. This form answers the two requirements set out in the preceding paragraph, especially the first one. The second requirement is perhaps better met by Form 71, as explained in the next section. + +When Form 70 is used, the first entry for each month, debit or credit, should be entered at least one line below the balance figure. In this way the transactions of a single month are shown grouped between the opening and closing balances. + +**14. Standard Ledger Form with Balance Column at Right** + +While Form 70 may be used in showing the balances at the time each trial balance is taken, yet, if this is the only reason for which a balance column is desired, it is perhaps better to place that column at the extreme right of the standard ledger form, where it will be out of the way until it is needed. (See Form 71.) + +**15. Special Form of Sales Ledger** + +The preceding form of customers ledger (Form 72) is ruled to provide a balance column. The balance at the beginning of the year or transferred from an old + +THE LEDGER 257 + +account at any period should be placed in the balance column (showing the amount due) and not in either of the other columns. Credit balances are indicated by a pencil ring around the amount, or writing the amount in red ink. + +A column is provided to indicate the salesman who has conducted the transaction. + +The form submitted is about 10½ x 7 inches, and in duplicate. When a bill is fully paid, the original sheet is given the customer and the duplicate is retained. The original should not be taken out of the ledger without proper authorization. The duplicate should never be taken out except by the bookkeeper. At stated intervals the duplicates of accounts paid in full should be removed and filed away in alphabetical order. + +Such a ledger would be of value to almost any kind of retail store except a department store. Because of the duplicate form of its pages its size would be too cumbersome for a department store with its large number of charge transactions. For such a store the method shown in connection with the use of the billing machine (Chapter XVI, §§ 9 and 10) is far more satisfactory. + +**16. Standard Ledger Form with Double Columns** + +In certain lines of business it is necessary that the books show all transactions as soon as they occur; even though the books may be out of balance, it is necessary to post from day to day. It is very difficult, of course, to prove the work under these circumstances, but the use of a standard ledger form with an additional column to the right of each amount column will prove helpful. (See Form 73.) + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Account at any period should be placed in the balance column (showing the amount due) and not in either of the other columns.
Credit balances are indicated by a pencil ring around the amount, or writing the amount in red ink.
A column is provided to indicate the salesman who has conducted the transaction.
The form submitted is about 10½ x 7 inches, and in duplicate.
When a bill is fully paid, the original sheet is given the customer and the duplicate is retained.
The original should not be taken out of the ledger without proper authorization.
The duplicate should never be taken out except by the bookkeeper.
At stated intervals the duplicates of accounts paid in full should be removed and filed away in alphabetical order.
Such a ledger would be of value to almost any kind of retail store except a department store.
Because of the duplicate form of its pages its size would be too cumbersome for a department store with its large number of charge transactions.
For such a store the method shown in connection with the use of the billing machine (Chapter XVI, §§ 9 and 10) is far more satisfactory.
+ + + + + + + + +
In certain lines of business it is necessary that the books show all transactions as soon as they occur; even though the books may be out of balance, it is necessary to post from day to day.
It is very difficult, of course, to prove the work under these circumstances, but the use of a standard ledger form with an additional column to the right of each amount column will prove helpful. (See Form 73.)
+ +258 + +PRINCIPLES AND PRACTICE + +Form 73. Standard Ledger with Double Columns + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
DATEEXPLANATIONAMOUNTBALANCEDATEEXPLANATIONAMOUNTBALANCE
+ + + + + > + + > + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +THE LEDGER 259 + +When such a form is used, the totals of the debits and credits for each month are placed in their respective columns. New entries may then be inserted in the inner columns without disturbing the work of a previous period. + +17. The Columnar Ledger + +The columnar ledger may be used when it is desired to show in detail the items which compose the total of an entry. In a large business the columnar method may make use of summary ledger accounts supported by analysis sheets. In other words, where the classifications are numerous, summary accounts are supported by separate analyses, and when not numerous the ledger account itself is analysed. + +To show in detail the items which compose an entry, when classifications are not numerous, one or more columns may be placed alongside the one containing the item to be analyzed. The main column may, for example, contain the total debit to plant, which amount is subdivided in the analytical columns to show the items in detail. + +Then again, accounts may be so closely allied that it is convenient to combine them in a single account. It may be desirable to display in a customer's account not only the open items he owes, but the notes as well. In this case there is one column for notes and one for account items. The same principle may be used to display values in two currencies: American and foreign. An account with income-producing property is another example. Two money columns would be carried on each side of the account. In the first col- + +260 +PRINCIPLES AND PRACTICE + +umn on each side would be recorded income or expense items, and in the second all capital items. + +In some cases it is unnecessary to use both sides of the account, since either the debit or the credit entries may be infrequent. To summarize only the active side is then sufficient. Detail items on the other side may be entered in red ink, or may be entered in black ink and a subtraction made at once. + +18. The Private Ledger + +In the private ledger are kept all accounts of a confidential nature. It is usually a bound book which can be locked, the key being held by a trusted employee or by the proprietor. When the private ledger is used the original entries are made in a private journal, which in form need not differ from the simple journal. Only entries for the private ledger are passed through it. + +The accounts found on a private ledger depend more or less upon the desires of the management and upon whether the enterprise is that of a sole trader, partnership, or corporation. In general, the following are representative of private ledger accounts as found in many concerns: + +1. Inventory—(Inventory entries furnish the key-stone in the determination of a period's profit or loss.) +2. Capital +3. Surplus +4. Profit and Loss +5. Officers' Salaries +6. Bonuses +7. Financing Loans + +THE LEDGER 261 + +These accounts are by no means the only ones found in private ledgers but they are typical. + +When the private ledger is used, the general cash book and general journal must be ruled with debit and credit columns in which will be placed the private ledger entries. The general ledger contains a controlling account with the private ledger and the private ledger contains one with the general ledger. The two controlling accounts must at all times agree; a debit balance on one equalling a credit balance on the other. Each ledger is self-balancing. A trial balance can be taken from each ledger to cover its own accounts, but if a statement of the whole business is desired, the trial balance of the general ledger must be combined with that of the private ledger, the offsetting balances being eliminated. + +When the books are closed, the employee in charge of the general books debits or credits the private ledger with any balances on the general ledger that concern profit and loss. The actual closing entries are made, of course, in the private journal. The results of the operation of the business for the period under consideration are not available to anyone who has not access to the private ledger. + +19. Corporation Stock Ledger + +A corporation stock ledger may or may not be ruled to provide money columns. Form 74 (page 258) provides money columns and will indicate the general form of any stock ledger. + +The stockholder is charged with the par value of his stock at the time of subscription. His payments are entered in the amount column under "Credit." The + +262 +PRINCIPLES AND PRACTICE + +number of shares is shown in the shares column under "Credit." The amount columns show the amount paid and the balance owed. Every transfer is also provided for. This ledger contains the detail of the Capital Stock account on the general ledger and must in total agree with its balance. + +20. Investment Ledger + +When extensive investments in securities are made, the accounts connected with the investments may be handled in separate books. A separate ledger would be used containing an account with each security purchased. This ledger would be controlled by an account on the general ledger. A separate journal might be used in connection with such a ledger. + +21. Ledger Control + +The use of the controlling account has been considered fully in Volume I. What was said there should be reviewed by the reader at this time. It may here be pointed out again that ledger control is secured usually by comparing totals which have been obtained independently. Yet the accuracy of these totals is proved only in the aggregate. Errors in posting to the individual accounts from books of original entry would not be disclosed in the controlling account. + +REVIEW QUESTIONS + +1. Along what lines, from the viewpoint of constructive accounting, has the ledger developed? +2. When would a Journal-ruled ledger be used? + +THE LEDGER 263 + +3. What is the purpose of the Boston ledger? +4. Rule a suitable form of ledger in which to record the charge accounts of a retail store and a form of ledger to facilitate the preparation of customers' statements at the end of each month. +5. Under what circumstances would you recommend the use of a columnar ledger? +6. Rule a form to be used as a corporation stock ledger. + +CHAPTER XXIII + +CLASSIFICATION OF ACCOUNTS + +1. The Two-Group Classification of Accounts + +Groups of like transactions are given convenient names so that they may be interpreted easily and quickly, and so that a saving in labor may be secured in the amount of time required to determine into what classifications (groupings), transactions shall be placed best to picture business conditions. Whatever the classification may be, it is adopted for convenience only. + +All accounts may be classified as follows: + +1. Balance Sheet Accounts. These are accounts necessary to the preparation of statements of condition, statements drawn periodically to show condition as at a specific moment of time. Such accounts may be divided into the following groups: + +(a) Assets +(b) Liabilities +(c) Proprietorship, or Capital + +2. Profit and Loss Accounts. These comprise the nominal accounts, those necessary to the preparation of the statements of profit and loss, statements drawn periodically to show causes of fluctuation in proprietorship or capital for an elapsed period. Such accounts may be divided into the following groups: + +(a) Income +(b) Expense + +264 + +CLASSIFICATION OF ACCOUNTS 265 + +**2. Scope of Functions of an Account** + +The results which the accounting system is expected to show determine the scope of the field served by any one account. An account with Plant, for example, may show the total amount invested in the productive plant, if this is the result the system is designed to attain. If it is desired, however, to analyze this account with Plant, to know the amounts invested in land, in buildings, and in machinery and equipment separate accounts with each of these main items may be kept. These separate accounts are, of course, subdivisions of the Plant account, and for statement purposes may be shown as divisions of the controlling account of Plant, as: + +**1. Land and Improvements to Land:** + +(a) Land + +(b) Improvements to Land + +Sidewalks + +Pavements + +Gutters + +Lawn + +Graveled Yards + +**2. Buildings and Building Fixtures:** + +(a) Power Plant + +(b) Shop A + +(c) Shop B + +(d) Warehouse + +(e) Office Building + +**3. Machinery and Equipment:** + +(a) Power Plant + +(b) Shop A + +(c) Shop B + +266 +PRINCIPLES AND PRACTICE + +(d) Warehouse +(e) Office Building + +The detail accounts are found in the ledger. For statement purposes the account balances of each group are added and the total is shown in one amount. + +The details to be recorded can be determined only after the passing of a period long enough to indicate their relative importance. Only then may an accounting system be permanently established. In an existing business such details can be determined from the accounting forms in use. In a new enterprise such details must be collected from various sources by using whatever means are at hand. Liberal notes should be made and simple forms should be used upon which to collect data. The use of working balance sheets will disclose the principal features of the business. The facts secured in this manner may be supplemented by questioning persons connected with the concern—both owners and employees. The questions to be asked will be suggested by the information desired. In this manner, it is possible to bring out the peculiar features of the business and to ascertain which need special consideration. + +When the conditions to be met have been brought to light and classified, the first step in designing the accounting system is to determine what accounts are to be kept. All transactions of a business may be properly journalized in the books of original entry—journal, cash book, sales book, etc., without setting up any accounts. But it is necessary to know what accounts are to be kept before records are made in the books of original entry, if the journalizations are to + +CLASSIFICATION OF ACCOUNTS 267 + +express the debits and credits in terms of the accounts to which such debits and credits are to be posted later. + +3. Classification Methods + +Classification and subclassification proceed from that which is general to that which is more specific or particular. The more minute a classification is made, the more exacting that classification is going to be, and the more difficult the task of keeping up the records. + +A classification may be applied merely to a general type of transactions, or it may in addition be applied to a number of subtypes of transactions, either general or specific, or a combination of both. Expenses, for example, is a general term. As such, it includes many kinds of expenses. All expense may, perhaps, be included in one account called Expense, no regard being paid to the specific kinds. If, on the other hand, this Expense account should be classified into kinds of expense, an account would be set up with each kind, and after the specific accounts had been debited, any expense remaining unallocated would be charged to an account bearing the general title Expense. + +Similarly a classification may concern a whole unit of the business organization, or it may concern the parts of this unit; for instance, the departments of a store. If we take the Expense account again for illustration, this account in the case of a store might be subdivided into accounts for departmental expense, following the divisions of the entire store into its separate parts or departments. For another example of this type, examine the classification in § 2. + +Personal accounts, in general, may be handled most + +268 +PRINCIPLES AND PRACTICE + +conveniently if alphabetically arranged. As the busi- +ness outgrows the capacity of a simple alphabetical ar- +rangement, the classification may be expanded by in- +creasing the number of index characters, employing, +instead of the initial letter, the first two or three letters +of the name for each subdivision. + +Retail business usually operates within a limited ter- +ritory. The needs of such a business are met readily +by the alphabetical arrangement of customers' names. +At times, however, classifications may be made geo- +graphically. The conditions existing, for example, in +a wholesale business are reversed, usually, from those +of a retail concern. Efficient management will then re- +quire that the territory covered be divided into districts. +These divisions may be countries, states, cities, or even +parts of a city. The system of handling customers' ac- +counts will usually follow the general plan of business organization. + +The numeric system of classification is another one +that is sometimes made use of, though usually in con- +nection with other classifications—Venture No. 1, Route +No. 8, etc. The numeric system may be used also when +the number of accounts with customers runs into the +thousands, and the transactions into hundreds of thou- +sands, sometimes even millions. In this case the ordi- +nary alphabetical system becomes inadequate, and num- +bers are made use of instead of letters, a number being +substituted for a name. The essential difference between +the simplest alphabetical and the most complex numeri- +cal system is that the latter necessitates a separate and distinct index. + +In any business, transactions are recorded in order + +CLASSIFICATION OF ACCOUNTS 209 + +as they occur, or as they are concerned with definite units of time. This gives a chronological classification. Accounting records should facilitate the presentation of the facts which it is necessary to report at specified times to the management. + +Of course, many combinations of these classifications will be met with; a certain combination may be most useful at one time; at another time an entirely different combination may be needed. + +**4. Variation in Size of Classification Groups** + +While there are certain classification groups which neither increase nor decrease in size, but remain constant—for example, those based upon periods of time, as a year, a month, etc.—most classification groups fluctuate greatly according to the particular group of transactions served. In the case of accounts receivable there is a constant change in the number of accounts. There may also be a change from time to time in the matter of sources of income; the specific accounts provided for income record may be insufficient. It is always advisable, therefore, to provide a Miscellaneous Income account to contain all items not classified otherwise. This same principle may be applied in many other instances. However, accounts of a miscellaneous nature should be avoided as much as possible. + +**5. Names Given Accounts in a Classification** + +The name of an account does not always indicate what should be charged or credited to it. The purpose for which the account is set up is a much better guide to follow. Therefore, name and purpose should be consid- + +270 PRINCIPLES AND PRACTICE + +ered together. If the purpose for which an account is set up is not kept in mind when an entry is to be made, unlike elements are apt to be recorded in one account, and as a result the interpretative value of that account, as it concerns business progress or conditions, will amount to nothing. The entire purpose of the classification may be defeated. + +6. Ledger Arrangement of Accounts + +The arrangement of accounts in the ledger is often left to the individual ideas of the persons keeping them, or to chance. Yet there is every reason why such arrangement should follow some definite plan. The basic plan ought to be such that statement preparation will be facilitated. + +If the accounts are not too numerous to be in one ledger, they may be arranged in the following manner: + +Capital accounts +Asset accounts other than accounts receivable +Liability accounts +Profit and loss accounts +Debtors' accounts +Creditors' accounts + +If a business is of considerable size, the debtors' and creditors' accounts are set up in subsidiary ledgers, each of these ledgers represented in the general ledger by a controlling account. In certain cases, debtors' accounts are classified and arranged according to the location of the debtor's residence, as, for instance, the customers' accounts of a public utility company (gas, water, etc.). + +CLASSIFICATION OF ACCOUNTS 271 + +**7. Numbering of Accounts** + +The numbering of accounts facilitates locating them in the ledger and saves time and effort in indicating accounts on vouchers, journal entries, etc. + +Two general schemes are used: + +1. The Universal System. This scheme is based on the maximum number of each class of accounts that the particular business is apt to need. It is the one most frequently used. Each account is indicated by a number, and the separate groups of the accounts, such as assets, liabilities, income and expense, are indicated by using a separate series of numbers for each, as 190, 100-199, etc. (See No. 9, Classification No. 1.) Numbers not needed at first are left blank for future use. +Each department is indicated by a letter, a given account in the various departments always bearing the same number. For example, advertising for department A in the classification referred to would be A1604, that for department B B1604. + +2. The Decimal System. Here the relationship of subheadings to main headings is expressed by means of numbers used decimally, each group classification running from 1 to 9, and subdivisions being expressed by the addition of a digit at the right, so that the analysis can be carried out almost indefinitely. A decimal point may or may not be used. Each number serves to allocate the account in the entire classification, and any later expansion can be made without a change of the numbers of existing accounts. While in practice both systems may work out with equal effectiveness, it will be seen that the decimal system is, at least in theory, more flexible. + +272 +PRINCIPLES AND PRACTICE + +8. General Classification of Accounts for a Manufacturing or a Trading Company + +The following general outline shows how the ledger accounts of a manufacturing or a trading company may be classified: + +1. Balance Sheet Accounts + (a) Assets + Fixed + Current + Deferred + (b) Liabilities + Fixed + Current + Deferred + (c) Proprietary Accounts + Capital + Surplus + Reserved + Available for Distribution + +2. Profit and Loss Accounts + (a) Income + Trade + Financing + (b) Expenses + Operating + General + Manufacturing + Trading + Maintenance + Financing + +The application of the general outline shown above to the ledger accounts of a business is illustrated in the following classification of accounts for a concern engaged in both manufacturing and selling. The classi- + +CLASSIFICATION OF ACCOUNTS 273 + +fication illustrates general principles observed by accountants in the classification of accounts. Many questions raised by the study of the classification will be discussed in later sections. + +CLASSIFICATION OF ACCOUNTS FOR MANUFACTURERS AND TRADERS + +BALANCE SHEET ACCOUNTS + +
B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.B.A.L.
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Fixed
TangibleLand and Improvements to Land
Buildings and Building Fixtures
Power Plant
Factory Building
Warehouse
Office Building
Machinery and Equipment
Power Plant
Factory Building
Warehouse
Office Building
Furniture and Fixtures
Power Plant
Factory Building
Warehouse
Office Building
Laboratory Apparatus
Investments
Intangible
Good-Will
Patent Rights
+ +CURRENT + + + + + + +
+ 274
+ PRINCIPLES AND PRACTICE
+ Notes Receivable
+ Accounts Receivable
+ Raw Material Inventory
+ Goods in Process Inventory
+ Finished Goods Inventory
+ Deferred
+ Organization Expense
+ Prepaid Insurance
+ Prepaid Interest
+ Prepaid Taxes
+ Liabilities
+ Fixed
+ Bonds Payable
+ Mortgages Payable
+ Plant
+ Other Real Estate
+ Chattel Mortgage on Machinery or Equipment
+ Current
+ Notes Payable
+ Accounts Payable (Unpaid Audited Vouchers)
+ Accrued Interest Payable
+ Accrued Taxes
+ Accrued Wages
+ Deferred
+ Deposits and Advance Payments by Customers
+ Income Collected or Charged in Advance
+ Proprietorship Accounts + 		+ If Sole Proprietorship or Partnership Capital, for Each Proprietor Reserves Undistributed Profits If Corporation Preferred Stock Common Stock +
+ +CLASSIFICATION OF ACCOUNTS 275 + +Reserves +Surplus + +**PROFIT AND LOSS ACCOUNTS** + +**Income** +TRADE REVENUE +Sales of Finished Goods +Sales of Raw Materials + +**Expense** +OPERATING +General +Officers' Salaries +Office Salaries +Traveling Expenses +Stationery and Printing +Telephone and Telegraph +Postage +Office Supplies +Insurance on Office Furniture +Heat and Light +Depreciation + +Manufacturing +Productive Labor +Raw Materials Used +Freight Inward +Manufacturing Overhead +Indirect Labor +Factory Clerk Hire +Insurance on Machinery +Superintendent and Foremen's Salaries +Small Tools Rent +Royalties on Leased Machinery +Heat and Light +Power +Taxes +Depreciation + +276 +PRINCIPLES AND PRACTICE + +Trading +Salesmen's Salaries +Salesmen's Commissions +Salesmen's Traveling Expenses +Advertising +Freight Outward +Shipping Department +Shipping Clerks' Salaries +Footing Materials Used + +MAINTENANCE +Land and Improvements to Land +Buildings and Building Fixtures +Power Plant +Factory Building +Warehouse +Office Building +Machinery and Equipment +Power Plant +Warehouse +Factory Building +Office Building +Furniture and Fixtures +Power Plant +Factory Building +Warehouse +Office Building +Laboratory Apparatus + +FINANCING REVENUE AND EXPENSE +Revenue +Interest Received +Discounts Received +Expense +Interest on Bonds +Interest on Notes cr 1 Accounts Payable +Discounts Lost +Brokerage Expenses + +CLASSIFICATION OF ACCOUNTS 277 + +**9. Detailed Classification of Accounts** + +The following three classifications not only illustrate the numbering of accounts, but also present variations in form from that shown in § 8. + +The first classification shows the typical accounts of a manufacturing concern, numbered universally. + +The second classification presents the typical accounts of a retail store, numbered decimally. + +In the third classification the accounts are divided into two groups: balance sheet accounts and operating accounts. No attempt at numbering is made. + +**CLASSIFICATION No. 1—MANUFACTURING** + +**SUMMARY ACCOUNTS** + +100-700 Assets and Deferred Charges to Profit and Loss +800-1200 Liabilities and Proprietorship +1300-2000 Profit and Loss Accounts + +**DETAIL ACCOUNTS** + +100-700 Assets and Deferred Charges to Profit and Loss +100 Land, Buildings and Equipment +Subsidiary accounts in a subsidiary ledger, numbered from 101-199 carry the details. +200 Materials and Supplies—Inventory +300 Customers +Subsidiary accounts in a subsidiary ledger or ledgers carry details. +400 Sundry Debtors +Subsidiary ledger carries details. +500 Notes Receivable +Subsidiary ledger or note register carries details. +600 Cash +601 Petty Cash +602 Bank Balance + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
278PRINCIPLES AND PRACTICE
700 Deferred Charges to Profit and Loss
701 Organization Expense
702 Prepaid Insurance
703 Prepaid Interest
704 Prepaid Taxes
800-1200 Liabilities and Proprietorship
800 Fixed Liabilities
801 Bonds Payable
802 Mortgages Payable
900 Floating Liabilities
901 Notes Payable
902 Accounts Payable (Unpaid Audited Vouchers)
903 Sundry Creditors
904 Accrued Interest
905 Accrued Taxes
906 Accrued Wages
1000 Capital
1001 Preferred Stock (stock ledger for details)
1002 Common Stock (stock ledger for details)
1100 Reserves
1101 Reserve for Depreciation—Buildings
1102 " " " " " " —Machinery and Equipment
1103 " " " " " " —Office Furniture and Fix- tures
1104 " " Bad and Doubtful Accounts
1105 " " Discounts and Freight
1200 Surplus Account
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
Account NumberDescriptionAmount
Raw Material Purchases
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Product Cost Values
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Surplus Account
Profit and Loss Accounts
Raw Material Purchases
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Product Cost Values
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Surplus Account
Profit and Loss Accounts
Raw Material Purchases
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Product Cost Values
Subsidiary Ledger and accounts used if necessary to dis- tribute among types of product.
Surplus Account
+ +CLASSIFICATION OF ACCOUNTS 279 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + +280 +PRINCIPLES AND PRACTICE + +CLASSIFICATION No. 2—TRADING + +SUMMARY ACCOUNTS + +
1500 Factory Expenses
1501 Superintendent's and Foremen's Salaries
1502 Indirect Labor
1503 Heat and Light
1504 Postage
1505 Supplies
1506 Repairs and Renewals
15061 Machinery and Equipment
15062 Buildings
1507 Taxes
1508 Insurance
1509 Depreciation
15091 Machinery and Equipment
15092 Buildings
1510 Miscellaneous
1600 Selling Expenses
1601 Salesmen's Salaries
1602 Salesmen's Commissions
1603 Salesmen's Traveling Expenses
1604 Advertising
1605 Miscellaneous
1700 General and Administrative Expenses
1701 Officers' Salaries
1702 Office Salaries
1703 Traveling Expenses
1704 Stationery and Printing
1705 Telephone and Telegraph
1706 Postal Service
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
1.Fixed Assets
2.Floating Assets
3.Fixed Liabilities
4.Floating Liabilities
5.Proprietorship
6.Revenues
7.Operation Expenses
8.Maintenance Expenses
9.Financing Revenues and Expenses
+ +DETAIL ACCOUNTS + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
11Tangible
111Lands and Improvements to Land
112Buildings and Building Fixtures
1121Store
1122Warehouse
113Machinery and Equipment
1131Store
1132Warehouse
114Furniture and Fixtures
1141Store
1142Warehouse
115Investments
116Other Fixed Assets
12Intangible
121Good-will
+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +Note Receivable (Customers Ledger Control) + +CURRENT Accounts Receivable (Customers Ledger Control)
2 Floating Assets
CURRENTCash
CURRENTPetty Cash
CURRENTCash in Bank
CURRENT
+ + + +TABLE HEADINGS:                                  + + +TABLE BODY:                   + +
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+ +TABLE HEADINGS:  + + +TABLE BODY:  + +
+ +TABLE HEADINGS:  + + +TABLE BODY:  + +
+ +TABLE HEADINGS:  + + +TABLE BODY:  + +
+ + +
TANGIBLE ASSETS - LAND & BUILDING FIXTURES & EQUIPMENT & INVESTMENTS & OTHER FIXED ASSETS & GOOD-WILL & FURNITURE & FIXTURES & STORES & WAREHOUSES & MACHINERY & EQUIPMENT & PETTY CASH & CASH IN BANK & NOTES RECEIVABLE (CUSTOMERS LEDGER CONTROL) & ACCOUNTS RECEIVABLE (CUSTOMERS LEDGER CONTROL)', +FLO
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E.', +		FLO +A +D +O +N +E +S +E +R +A +N +E +S +E +R +A +N +E +S +E +R +A +N +E +S +E +R +A +N +E +S +E +R +A +N +E. +FLO +A +D +O +N +E +S +E +R +A +N +E +S +E +R +A +N +E. +FLO +A +D +O +N +E +S +E +R +A +N +E. +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +FLO + +TANGIBLE ASSETS - LAND & BUILDING FIXTURES & EQUIPMENT & INVESTMENTS & OTHER FIXED ASSETS & GOOD-WILL & FURNITURE & FIXTURES & STORES & WAREHOUSES & MACHINERY & EQUIPMENT & PETTY CASH & CASH IN BANK & NOTES RECEIVABLE (CUSTOMERS LEDGER CONTROL) & ACCOUNTS RECEIVABLE (CUSTOMERS LEDGER CONTROL)', +FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - FLOW OF FUNDS - Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Funds Flow of Fun + +CLASSIFICATION OF ACCOUNTS <page_number>281</page_number> + +<table> + <tr> + <td>214 Stock Inventory, Purchases</td> + <td></td> + </tr> + <tr> + <td>2141 Dept. A</td> + <td></td> + </tr> + <tr> + <td>2142 Dept. B</td> + <td></td> + </tr> + <tr> + <td>215 Freight, Incoming</td> + <td></td> + </tr> + <tr> + <td>2151 Dept. A</td> + <td></td> + </tr> + <tr> + <td>2152 Dept. B</td> + <td></td> + </tr> + <tr> + <td>22 Deferred Charges to Profit and Loss</td> + <td></td> + </tr> + <tr> + <td>221 Prepaid Insurance (By departments if necessary)</td> + <td></td> + </tr> + <tr> + <td>222 Contracted Advertising (By departments if necessary)</td> + <td></td> + </tr> + <tr> + <td><strong>3 Fixed Liabilities</strong></td> + <td></td> + </tr> + <tr> + <td><strong>4 Floating Liabilities</strong></td> + <td></td> + </tr> + <tr> + <td><strong>5 Proprietorship</strong></td> + <td></td> + </tr> + <tr> + <td><strong>6 Revenues</strong></td> + <td></td> + </tr> + <tr> + <td><strong>7 Operation Expenses</strong></td> + <td></td> + </tr> +</table> + +<table> + <thead> + <tr> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <th>Account Number(s)</th> + <th>Description</th> + <br/> + </thead> + + <!-- Rows --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + + <!-- Example Row --> + <!-- Description: Notes Payable --> + <!-- Account Number(s): 41 --> + <!-- Description: Accounts Payable (Creditors Ledger Control) --> + <!-- Account Number(s): 42 --> + <!-- Description: Accrued Interest Payable --> + <!-- Account Number(s): 43 --> + <!-- Description: Accrued Taxes --> + <!-- Account Number(s): 44 --> + <!-- Description: Accrued Wages --> + <!-- Account Number(s): 45 --> + + <!-- Example Row --> + <!-- Description: Reserves --> + <!-- Account Number(s): 50 --> + + <!-- Example Row --> + <!-- Description: Sales and Gross Profits --> + <!-- Account Number(s): 60 --> + + <!-- Example Row --> + <!-- Description: General --> + <!-- Account Number(s): 70 --> + +</table> + +<table> + +<tr><td colspan="3">CLASSIFICATION OF ACCOUNTS</td><td colspan="3"><page_number>281</page_number></td></tr> + +<tr><td colspan="3">214 Stock Inventory, Purchases</td><td colspan="3"></td></tr> + +<tr><td colspan="3">2141 Dept. A</td><td colspan="3"></td></tr> + +<tr><td colspan="3">2142 Dept. B</td><td colspan="3"></td></tr> + +<tr><td colspan="3">215 Freight, Incoming</td><td colspan="3"></td></tr> + +<tr><td colspan="3">2151 Dept. A</td><td colspan="3"></td></tr> + +<tr><td colspan="3">2152 Dept. B</td><td colspan="3"></td></tr> + +<tr><td colspan="3">22 Deferred Charges to Profit and Loss</td><td colspan="3"></td></tr> + +<tr><td colspan="3">221 Prepaid Insurance (By departments if necessary)</td><td colspan="3"></td></tr> + +<tr><td colspan="3">222 Contracted Advertising (By departments if necessary)</td><td colspan="3"></td></tr> + +<tr><td colspan="3"><strong>3 Fixed Liabilities</strong></td><td colspan="3"></td></tr> + +<tr><td colspan="3"><strong>4 Floating Liabilities</strong></td><td colspan="3"></td></tr> + +<tr><td colspan="3"><strong>5 Proprietorship</strong></td><td colspan="3"></td></tr> + +<tr><td colspan="3"><strong>6 Revenues</strong></td><td colspan="3"></td></tr> + +<tr><td colspan="3"><strong>7 Operation Expenses</strong></td><td colspan="3"></ td></tr> + +<tr><tbody> + +<td style='vertical-align:top;'>Description:</tbody> + +<td style='vertical-align:top;'>Account Number(s):<tbody style='vertical-align:top;'> +<td style='vertical-align:top;'>Notes Payable<br/>41<br/></tbody> + +<td style='vertical-align:top;'>Accounts Payable (Creditors Ledger Control)<br/>42<br/></tbody> + +<td style='vertical-align:top;'>Accrued Interest Payable<br/>43<br/></tbody> + +<td style='vertical-align:top;'>Accrued Taxes<br/>44<br/></tbody> + +<td style='vertical-align:top;'>Accrued Wages<br/>45<br/></tbody> + +<td style='vertical-align:top;'>Reserves<br/>50<br/></tbody> + +<td style='vertical-align:top;'>Sales and Gross Profits<br/>60<br/></tbody> + +<td style='vertical-align:top;'>General<br/>70<br/></tbody> + +<td style='vertical-align:top;'>Deferred Charges to Profit and Loss<br/>22<br/></tbody> + +<td style='vertical-align:top;'>Prepaid Insurance (By departments if necessary)<br/>221<br/></tbody> + +<td style='vertical-align:top;'>Contracted Advertising (By departments if necessary)<br/>222<br/></tbody> + +<td style='vertical-align:top;'>Fixed Liabilities<br/><strong>Fixed Liabilities</strong><br/></tbody> + +<td style='vertical-align:top;'>Floating Liabilities<br/><strong>Floating Liabilities</strong><br/></tbody> + +<td style='vertical-align:top;'>Proprietorship<br/><strong>Proprietorship</strong><br/></tbody> + +<td style='vertical-align:top;'>Revenues<br/><strong>Revenues</strong><br/></tbody> + +<td style='vertical-align:top;'>Operation Expenses<br/><strong>Operation Expenses</strong><br/></tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:top;'> </tbody> + +<td style='vertical-align:bottom;'><span id=total_row>Total:</span></body></table> + +<page_number>282</page_number> +PRINCIPLES AND PRACTICE + +711 Office Salaries +7112 Office Wages +712 Traveling Expenses +713 Stationery and Printing +714 Telephone and Telegraph +715 Postage +716 Store Supplies +717 Donations +718 Subscriptions +7181 Trade Journals +7182 Agencies and Associations +719 Exchange +71A Attorney's Fees +71B Taxes + +72 Trading + +721 Clerks' Wages +7211 Dept. A +7212 Dept. B +722 Rent and Light and Heat +7221 Dept. A +7222 Dept. B +723 Advertising +7281 Dept. A +7282 Dept. B +724 Insurance +7241 Dept. A +7242 Dept. B +725 Freight on Returned Goods +726 Allowances and Rebates +727 Bad Debts +728 Depreciation +729 Wrapping Materials +7291 Twine +7299 Paper +730 Miscellaneous + +8 Maintenance Expenses + +81 Land and Improvements to Land + +CLASSIFICATION OF ACCOUNTS <page_number>283</page_number> + +82 Buildings and Building Fixtures +821 Store +822 Warehouse + +83 Machinery and Equipment +831 Store +832 Warehouse + +84 Furniture and Furnishings +841 Store +842 Warehouse + +9 Financing Revenues and Expenses + +91 Financing Revenues +911 Interest Received +912 Discounts Received +913 Cash Discounts Received + +92 Financing Expenses +921 Discount on Notes and Accounts Payable +922 Discounts Lost +923 Cash Discounts Allowed +924 Brokcrage Expenses + +--- + +CLASSIFICATION No. 5—MANUFACTURING + +BALANCE SHEET ACCOUNTS + +<table> + <tr> + <td>Cash</td> + <td>Notes Receivable</td> + <td>Accounts Receivable</td> + <td>Accrued Items Receivable</td> + <td>Inventories</td> + <td>Land</td> + <td>Buildings</td> + <td>Machinery</td> + <td>Tools and Plant Equipment</td> + <td>Patterns and Drawings</td> + <td>Office Furniture and Fixtures</td> + <td>Deferred Charges</td> + <td>Good-Will</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>Notes Payable</td> + <td>Accounts Payable</td> + <td>Accrued Items Payable</td> + <td>Mortgage Notes or Bonds</td> + <td>Capital Stock</td> + <td>Surplus</td> + <td>Reserves</td> + </tr> +</table> + +<page_number>284</page_number> +PRINCIPLES AND PRACTICE + +OPERATING ACCOUNTS + +Material Purchases +Ingredients (used in manufacturing processes) +Miscellaneous Material Purchases +Manufacturing Labor (subdivided into main subdivisions of manufacturing processes) +Manufacturing Expense (subdivided in any way desired but at least into: Superintendence +Indirect Labor +Miscellaneous Supplies +Power +Taxes +Insurance +Plant Depreciation +Miscellaneous +Salesmen's Salaries +Salmon's Expenses +Advertising +General Expense +Administrative Salaries +Sales Discounts +Interest Paid +Dividends + +10. Account Grouping to Facilitate Statement Preparation + +In any classification of accounts, the primary accounts should provide, as far as possible, the information needed in setting up condensed statements of financial progress and condition. Detail accounts grouped in the same order in the ledger as required in + +CLASSIFICATION OF ACCOUNTS <page_number>285</page_number> + +the statements aid the bookkeeper in drawing up his statements quickly as well as accurately. This relation between the ledger and the statement grouping is shown below: + +<table> + <tr> + <td colspan="2">BALANCE SHEET</td> + </tr> + <tr> + <td>Assets</td> + <td>Liabilities</td> + </tr> + <tr> + <td>Fixed Assets</td> + <td>Fixed Liabilities</td> + </tr> + <tr> + <td>Permanent</td> + <td>Current Liabilities</td> + </tr> + <tr> + <td>Intangible</td> + <td>Proprietorship</td> + </tr> + <tr> + <td>Current Assets</td> + <td>If Partnership:</td> + </tr> + <tr> + <td>Deferred Assets</td> + <td>Partners Capital</td> + </tr> + <tr> + <td></td> + <td>Reserves</td> + </tr> + <tr> + <td></td> + <td>Undistributed Profits</td> + </tr> + <tr> + <td></td> + <td>If Corporation:</td> + </tr> + <tr> + <td></td> + <td>Capital Stock</td> + </tr> + <tr> + <td></td> + <td>Preferred</td> + </tr> + <tr> + <td></td> + <td>Common</td> + </tr> + <tr> + <td></td> + <td>Reserves</td> + </tr> + <tr> + <td></td> + <td>Surplus</td> + </tr> +</table> + +PROFIT AND LOSS ACCOUNT + +<table border="1"> + <thead> + <tr><th colspan="3">Manufacturing</th></tr> + </thead> + <tbody> + <tr><th>Manufacturing Operation Expenditures</th><th>Cost of Production (to balance)</th><th></th></tr> + <tr><th>Maintenance Expenditures</th><th>(Omit General Overhead)</th><th></th></tr> + </tbody> +</table> + +<table border="1"> + <thead> + <tr><th colspan="2">Trading</th></tr> + </thead> + <tbody> + <tr><th>Cost of Production (Omit General Overhead)</th><th>Trading Revenues</th></tr> + <tr><th>Trading Operation Expenditures</th><th></th></tr> + <tr><th>Gross Trading Profit (to balance)</th><th></th></tr> + </tbody> +</table> + +<page_number>286</page_number> +PRINCIPLES AND PRACTICE + +Profit and Loss + +<table> + <tr> + <td>General Operation</td> + <td>Expenditures</td> + <td>Gross Trading Profit</td> + </tr> + <tr> + <td>Tires</td> + <td></td> + <td></td> + </tr> + <tr> + <td>Maintenance Expenditures (General)</td> + <td></td> + <td></td> + </tr> + <tr> + <td>Net Trading Profit (to balance)</td> + <td></td> + <td></td> + </tr> + <tr> + <td>Financing Expenditures</td> + <td></td> + <td>Net Trading Profit</td> + </tr> + <tr> + <td>Net Profit (to balance)</td> + <td></td> + <td>Financing Revenues</td> + </tr> + <tr> + <td>Reserves</td> + <td></td> + <td>Net Profit</td> + </tr> + <tr> + <td>Undistributed Profits or Surplus or Both Partners' Capital (if partnership)</td> + <td></td> + <td></td> + </tr> +</table> + +Accounts arranged upon the ledger in conformity with these two rough schedules will facilitate the preparation of practically any form of balance sheet or statement of profit and loss. Two statements suggested for use for credit purposes are the balance sheet and profit and loss statement recommended by the Federal Reserve Board. + +REVIEW QUESTIONS + +1. What is meant by a "classification of accounts"? +2. Show in outline form, the accounts of a manufacturing company with the operations of which you are acquainted. +3. How may accounts be arranged upon the ledger? +4. What is the purpose of numbering accounts? +5. Compare the classification of accounts with that of a real estate agent who collects rent for clients—for which service he receives a commission—and who collects rent from buildings owned by himself. He also from time to time purchases plots of undeveloped land which he develops and sells, usually but not necessarily, in the form of lots. + +CHAPTER XXIV + +STATEMENTS + +1. Constructive Importance +Statements show the financial results of transactions recorded in the books of account during a certain period. Statement designing is a most important phase of constructive accountancy. Accounting systems are devised and operated entirely from the managerial point of view, and there are many business facts of importance, as recorded in accounting systems, which must be presented to the management almost wholly by means of statements. Whatever classification of accounts is used on the ledger, many questions of interest concerning a business will remain unanswered unless statements are prepared to answer them. + +After the adjusting and closing entries have been posted, the resulting totals and balances must be rearranged in statement form. They must be carried into the statement accurately, must be set forth with careful regard to the importance of different classifications, and must be presented in as simple a form as is possible, at the same time giving all necessary details. Since the significant facts for one business may differ from those for another, the skill and ingenuity of the accountant are put to the test of showing these facts in the final form of the statement in the clearest and most logical manner possible. Unless laws or the rulings of official commissions require statements in a prescribed form, + +<page_number>287</page_number> + +<page_number>288</page_number> +**PRINCIPLES AND PRACTICE** + +the significant business facts of an enterprise may be presented in any way that seems desirable. + +In addition to constructive ability, the designer of statements must possess some technical knowledge of type, display, and paper, if the full effect is to be secured. + +The statements presenting financial facts to the management are closely associated with the classification of accounts adopted. The statements desired, therefore, should be determined and planned before the classification of accounts is adopted and before the rulings of the books are designed. This close association between statements and the classification of accounts has been referred to in Chapter XXIII. + +**2. Exhibits, Schedules, and Statements** + +For convenience of reference accountants, in making up reports, generally designate the balance sheet and statement of profit and loss as "Exhibit A" and "Exhibit B" respectively, and the grouped details on separate sheets explaining or supporting any item or items in them as "Schedules." If further figures are needed to support an item on a schedule, these are usually presented on a separate sheet which is technically termed a "Statement." + +Speaking more generally, an exhibit is a statement or presentation giving a complete view of certain grouped facts. The schedule presents the details that support one or more of these facts in the group and the statement elaborates the schedule. Every result to be obtained from a set of business transactions as recorded may be presented by means of exhibits, schedules, and statements. + +**STATEMENTS** <page_number>289</page_number> + +It is difficult for one untrained in accounting to get a complete view out of a mass of details. It is often impossible to present a complete view and many details in a single exhibit without making it too enmeshed, covering perhaps three or four separate sheets of paper. A better plan is to give the general facts by means of a condensed exhibit on a single sheet, and support that summary statement by one or more detailed schedules which may be examined by one who is interested. On the balance sheet, for example, accounts receivable would not ordinarily be stated in detail, but merely the total would be shown. This total would in all probability refer to a supporting schedule of accounts receivable given in detail. The item on the exhibit might be as follows: Accounts Receivable (per Schedule 1), $33,000." In a profit and loss statement, sales may be shown in total, and many be supported by a schedule showing the detailed make-up of this total. + +**3. Basic Statements** + +The balance sheet and the profit and loss statement are the two most important accounting statements. To these all others, of whatever nature, are subsidiary. The balance sheet shows the concern's financial condition as at a certain moment of time, usually the close of the last day of a month, half-year, or year. It is a mirror which reflects the condition of the business as a whole at that moment. It presents the assets of the enterprise valued on the basis of a going concern, together with the offsetting advances made by creditors, known as liabilities, and with the proprietorship interest which makes up the balance. Care must be taken + +<page_number>290</page_number> +PRINCIPLES AND PRACTICE + +not to confuse the balance sheet with the statement of assets and liabilities, or the statement of affairs. A statement of affairs is a special form showing the financial condition of an insolvent business. A statement of assets and liabilities is an informal type of balance sheet prepared from accounts not kept in balance under a double-entry system of bookkeeping. + +The profit and loss statement sets forth financial progress or retrogression for a certain elapsed period of time. It is a review of what the business as a whole has done in securing financial results, showing the gross returns—or gross income—offsetting all the costs offsetting such returns, and the net balance of returns over the costs. The net balance of returns over costs is net profit, and any net balance of costs over returns is net loss. Volume I of "Business Accounting" contains a detailed discussion of these two basic statements. In Volume IV a more advanced discussion of these will be found. + +4. Account Form versus Running Form of Statement + +Financial facts are presented usually in one of two forms of statements: + +1. Account Form. The account form of statement is similar to the ledger account in appearance. To an accountant it is easier of interpretation than the running form. It is simpler for him to comprehend the relation between the facts when they are thus presented. For example, current assets may be more easily compared with current liabilities in the account form of balance sheet than in the running form of balance sheet. The account form of statement has the disadvantage, + +**STATEMENTS** <page_number>291</page_number> + +however, that it is not so readily understood by the layman. + +The paper must be wider than for the running form; this may require the use of a wide-carriage typewriter. The purchase of such a machine may not be an economical investment because of its limited utility. + +2. Running Form. The running form of statement is growing in favor because of its general ease of comprehension as well as its simplicity of preparation. It is usually typed on an ordinary typewriter, on the usual letter-sized paper. The running form presents the items in an orderly arrangement, proceeding from the top of the sheet downward. In the balance sheet, for example, the assets are placed above the liabilities and run the full width of the paper. The capital, which is the excess of assets over liabilities, appears at the bottom of the sheet and is determined by subtracting the liabilities from the assets. + +When a form has once been adopted it should be changed only after careful consideration, because every change interferes with the comparison of succeeding statements with former ones. + +5. Periods of Time Covered by Statements + +Yearly statements are of great financial value whether or not statements for shorter periods have been prepared. It is customary, moreover, in all lines of business to secure a yearly statement of profit and loss and a yearly balance sheet. During the course of a year it is usually possible for a business to feel the effect of all regular business fluctuations. Statements covering shorter periods also are useful: half-yearly + +<page_number>292</page_number> +PRINCIPLES AND PRACTICE + +statements, for a business which has two main seasons a year; quarterly statements, as is required by govern- +ment authorities in the case of certain businesses; and monthly statements which are widely used. + +Monthly statements of profit and loss and balance sheets are almost as common as yearly statements. If physical inventories cannot be secured each month, the system of accounts should be such that book inventory figures may be secured for statement purposes. These book figures later, at the year's end, will be corrected by actual physical inventory figures. Where the percentage of gross profit is stable, book inventories are sufficient. Where the percentage of gross profit on certain lines of goods is fluctuating, it may be necessary to take physical inventory as to them, and to add this total to the approximate values of the other goods as determined by the fixed percentage of gross profit. + +Weekly statements are rare, yet in the case of summer enterprises, running as they do for but a few months, weekly statements would be of great value. Needed adjustments and changes pointed out by such statements might be introduced before the summer season was over, and a season's loss changed to a season's profit. + +6. Use of Percentages in Statements + +At times the relationship existing between amounts is best set forth by percentages. Yet unless the use of percentages is understood by those who examine statements, they may be useless and it may be a waste of time to prepare them. Percentages are used chiefly in statements relating to business progress, although they + +**STATEMENTS** <page_number>293</page_number> + +may be used in statements relating to condition; for example, to show the relation between current assets and current liabilities. + +Percentages based on cost are usually more accurate for selling price purposes than percentages based on selling price. The selling price fluctuates and may have no relation at all to the real value involved. The expenses remain nearly constant regardless of price, and the unit cost may be shown accurately by a proper accounting system. When the basis of calculation, namely, the actual expenditure of time and money, is more constant, the tendency toward error is accordingly lessened. + +**7. The Units Used in Statements** + +Statements are sometimes worked out so that the facts are presented in relation to units of product. This is truer in manufacturing than in trading enterprises. These units may be common ones in use, familiar to almost all persons concerned with weight, liquid and dry measure, etc., or they may be units not common in use, as the kilowatt-hour, the thermal heat unit, etc. + +**8. Comparison of Statistics** + +Comparison may be made of the condition of the business as at two or more different dates, or the progress for two or more different periods. It may involve departments, branches, territories, salesmen, one business with another, etc. The essential point is that comparison must be of like things or units. A day cannot be compared with a week. One month in one year ought usually to be compared with the same month. + +<page_number>294</page_number> +PRINCIPLES AND PRACTICE + +of the past year and not with another month of the pres- +ent year, because conditions from month to month each +year may vary greatly, whereas conditions of a present +month may be more nearly similar to those of the cor- +responding month of the preceding year. + +On the other hand, all facts tending to interfere +with results in one period as compared with another +must be considered. The sales in a certain town in July, +1918 may have been greatly in excess of sales in the +same town for July, 1917. The proximate cause for the +abnormal increase may have been a circus, or the +weather, or something else. Without taking such facts +into consideration, any comparison made may be mis- +leading. + +Comparative statements ought to give emphasis to +current facts, which are those of immediate importance, +and subordinate those of the past. In a comparative +statement current facts accordingly are generally placed +in the first columns, and the past facts, presented for +purposes of comparison, are placed in columns to the +right. + +9. Cumulation of Statistics—Graphs + +The principle of cumulation is generally made use of +in statements relating to progress, to show fluctua- +tions. If the fluctuation is rapid it is necessary to short- +en the unit period of examination so that closer super- +vision will result. Furthermore, in addition to pictur- +ing results over a short period, such as a day, or a +week, it is desirable to combine these daily or weekly +results into monthly and yearly results. If results are +cumulated day by day, the daily results ought to be + +**STATEMENTS** <page_number>295</page_number> + +cumulated each week to date, and then each month to date. + +In this connection, diagrams, charts, and graphs are all valuable. Such devices are employed to portray graphically particular phases of business, mainly for the purpose of comparison. A graph saves the reader valuable time and sets out the relation of facts much more clearly than does an ordinary statement. A graph will show development of certain business tendencies over a long period of time and makes possible a quick comparison of the present condition with a former condition. For example, a graph showing month by month the gross sales, the cost of goods sold, the expenses of handling, and the overhead expenses may be very valuable. Graphic methods are increasingly used in many forms and their study will repay any business man.* (See Volume III.) + +**REVIEW QUESTIONS** + +1. What do you regard as the proper method of presenting a balance sheet as to form and as to arrangement of the items? +2. Prepare for a $50,000 manufacturing corporation a specimen form of balance sheet which will clearly set forth the financial condition of the concern. +3. What relation exists between the financial statements and the accounting system of a concern? +4. Distinguish between the account and the running form of statement that would be used. +5. State your opinion on the use of diagrams, charts, or graphs. +State how you would prepare curves showing the monthly + +*Anyone having occasion to prepare charts for the presentation of facts will find a very useful and up-to-date work on descriptive presentation in "Graphic Methods for Presenting Facts" by William C. Britton.* + +<img>A page from a book about graphic methods for presenting facts.</img> + +<page_number>296</page_number> + +PRINCIPLES AND PRACTICE + +results accomplished, and what particular sets of figures you would use as conveying the most important information work- +ing up to the following totals: + +Gross Sales............ $320,000 per annum +Cost of Goods Sold... $60,000 " " +Expenses of Handling.. 80,000 " " +Expenses, Overhead... 10,000 " " + +CHAPTER XXV + +EXPENSES + +**1. Classes of Expense** + +It is a fundamental accounting principle that a very careful distinction should be made between all items belonging to the production activities of a business and those which may properly be charged against the selling or commercial end of the business. Each phase of the business activity should and must bear its proportionate share of certain expenses, found in every concern, which cannot be allocated at the time they are incurred to any one unit of product. In order not to go too far into a subject which is difficult, it may be well to take up merely a general consideration of three classes of such expense, following the division of the subject as indicated: + +1. Purchasing department expense +2. Administrative expense +3. Sales department expense + +**2. Purchasing Department Expense** + +The expense included under this caption may properly be considered as that of the buying and receiving departments. In other words, this department expense account summarizes the cost of securing, storing, handling, and delivering materials and supplies to the departments. The expense so incurred must be dis- + +<page_number>297</page_number> + +298 PRINCIPLES AND PRACTICE + +tributed. As a rule it is most equitably distributed over the various departments which make use of its services, on the basis of the value of the stores withdrawn. One department, for example, may withdraw items amounting to $1,000 in value, whereas another department may withdraw during the same period of time materials to the value of only $100. It is evident, therefore, that the service rendered in the first instance is much greater than in the second case, and the cost of this service should be distributed in the same proportion. + +As many subdivisions of this expense account may be made as are deemed desirable, and if thought necessary, each subsidiary account may be carried in a subsidiary record. This record fits into the system in such a way that at the close of each accounting period a detailed summary of these expenses may be readily made so that they may be distributed over the various departments. + +3. Administrative Expense + +The class of items included in the term administrative expense covers the salaries of the chief executives, their traveling expenses, and charges of such a general character that it is impossible to say whether or not they belong to, say, the factory end of the business or to the sales department. At any rate it is safe to assume that the production end of the business and the selling end should each bear its share of the administrative expense according to some more or less definite although perhaps arbitrary plan. The distribution of this expense should take into account the amount of time the administrative employees devote to the production and to the selling activities respectively. + +EXPENSES <page_number>299</page_number> + +**4. Selling Expense** + +All expenditures incurred in the shipping and distribution of the product dealt in are a proper charge against the selling department. When a sales or strictly commercial office is maintained, its operating expenses are chargeable to selling expense. + +Selling expense may be classified under the following chief heads: salesman's salaries and commissions, salesman's traveling expenses, advertising, cost of samples, freight outward, allowances made to customers, postage, printing, stationery, telephone, telegraph, messenger service, office salaries, depreciation on the sales office furniture, towel service, drinking water and ice, supper money for sales office employees working overtime, convention expenses, and association dues and expenses. As many subdivisions of selling expense may be made as desirable, and here also each subdivision may, if desirable, be kept in a subsidiary record, the operation of which is such that a detailed summary may be made at the close of each accounting period. + +The sum of all these charges to the selling department and the proportionate share of the administrative expense give the total of what may be considered as commercial burden. Where production is concerned with several lines of goods, it is necessary to find some method of distributing the selling burden to each class of goods handled. There are several methods which may be used. + +**5. Ratio of Selling Expense to Sales** + +One plan of distributing the selling burden is based on the ratio of selling expense to sales. It is perhaps + +300 +PRINCIPLES AND PRACTICE + +the one most frequently used. It is argued that the expenditure in time and effort is proportionate to the sales. The following illustrates the method of calculation: + +<table> + <tr> + <td>Selling Expense</td> + <td>April, 1919</td> + </tr> + <tr> + <td>Commissions</td> + <td>$ 900.00</td> + </tr> + <tr> + <td>Advertising</td> + <td>100.00</td> + </tr> + <tr> + <td>Salaries</td> + <td>2,600.00</td> + </tr> + <tr> + <td>Samples</td> + <td>60.00</td> + </tr> + <tr> + <td>Traveling</td> + <td>50.00</td> + </tr> + <tr> + <td>Allowances and Claims</td> + <td>400.00</td> + </tr> + <tr> + <td>Total Expense for the month.</td> + <td>$4,110.00</td> + </tr> +</table> + +Total Sales for the month: +Dept. A. $ 7,000.00 +Dept. B. 11,000.00 +Dept. C. 12,000.00 + +$80,000.00 + +Distribution of Selling Expense for month: +Dept. A. 23.33% of $4,110.00 $ 958.86 +Dept. B. 36.67% of $4,110.00 1,507.14 +Dept. C. 40.00% of $4,110.00 1,644.00 + +100% $4,110.00 + +6. Ratio of Selling Expense to the Cost of Production + +Another plan of distributing the selling burden is based on the ratio of selling expense to the cost of production. This method is advocated by some accountants, but does not seem to be as sound as the preceding + +EXPENSES <page_number>301</page_number> + +plan. In brief, the idea is as follows: If, for example, the selling expense of goods is found to be 20% of the total production cost, the selling cost of each line of goods is arrived at by adding 20% to its production cost. The total selling expense is thus distributed among all the departments or among the various lines of goods handled. + +7. Selling Expense as a Rate per Pound or per Ton of Product Shipped + +In certain lines of business the value of the product varies closely with the weight shipped. In such a case, it is a common practice to express the selling expense as a rate per pound or per ton of product shipped, the selling expense rate being based on normal trade conditions. + +8. Disposition of Selling Expense + +In all cases selling expense should be closed out eventually to profit and loss. Nearly every business has more or less selling expense, and it should be kept to the productive minimum. The financial report should contain a statistical summary of the selling expense—amounts, percentage of increase and decrease, and explanation. Upon whatever basis the figures may be compiled, they should give a good index of sales department efficiency from month to month. + +REVIEW QUESTIONS + +1. Into what classes would you divide, and how would you dispose of, purchase department expenses? + +302 +PRINCIPLES AND PRACTICE + +2. What are administrative expenses? How should they be handled and disposed of? +3. Outline classification of selling expenses for a concern manufacturing. +4. In what ways may selling expenses be distributed to each of the various classes of goods manufactured and handled? + +CHAPTER XXVI +LABOR AND SALARIES + +**1. Importance of Labor Records** + +The cost of services rendered by both salaried officers and wage earners is one of the principal items in any business. It must be determined carefully in order that accurate costs may be secured. A just proportion of labor costs must be distributed to the various units of product manufactured, if the concern is a manufacturing company—all the labor directly or indirectly engaged in production. A plant may be considered, for example, which has both a work force and an office force. + +Because labor is an important element of cost in nearly all enterprises, and because labor records are frequently used as a convenient place in which to cover thefts of cash, it is important that the distribution of labor costs be made as accurately as possible. To secure a correct distribution, proper reports are necessary. With this end in view, the following points demand attention: + +1. How much is paid each person? +2. What kind of service has each person rendered and to what account or accounts should it be charged? + +Without attempting to present a detailed solution of any particular problem, consideration will be given only to constructive accounting principles to be borne in + +<page_number>203</page_number> + +304 +PRINCIPLES AND PRACTICE + +mind when attacking the problem of labor and salaries, +whether the enterprise in question be that of manufac- +turing or trading. If a manufacturing concern is being +examined, as has been assumed, it is usually desirable +to handle salaries and workmen's pay separately at all +stages. + +2. The Rate Card + +An employee's rate card should be made out for each +employee in every concern of any size. This rate card +presents a running record of any and all changes af- +fecting an employee. No entries should be made on +this record, either additions or changes, without proper +authority. This authority should always be in writing. +In other words, all rate changes should be evidenced by +a voucher signed by a proper party, and perhaps ap- +proved by an officer of the concern. + +3. Pay Period + +All possible saving of labor in the handling of the +pay-roll should be secured. With this end in mind, it +is more efficient to pay four times a month than to pay +once a week. The need of carrying an extra ledger ac- +count to record accrued wages when the end of the +month does not coincide with the end of the week, is +eliminated, and the clerical labor is much reduced. +According to the four-times-a-month plan, the pay +period ends on the eighth, sixteenth, twenty-fourth, and +last day of the month. The pay-day is placed three or +four days after the close of each pay period, so that suffi- +cient time may be secured to make up and check the +pay-roll accurately. + +LABOR AND SALARIES <page_number>305</page_number> + +**4. Methods of Payment** + +Many general methods or plans of paying wages may be named, among which are the following: + +1. **Time basis.** This gives a flat rate per hour or day. +2. **Piece rate.** This gives a flat rate per unit of product produced. +3. **Premium basis.** This gives a flat rate per hour, with a premium for a saving in time. +4. **Bonus system.** This resembles the premium system, but provides the increase in pay by increasing the hourly rate as efficiency advances. +5. **Differential piece-rate plan.** A piece rate is fixed but if the production in a specified time exceeds a specified quantity the piece rate is increased on either the whole production or on the excess over the specified production. +6. **Taylor system.** A rate is fixed as a standard time for a job, and piece rates are based on that standard with higher rates for increased efficiency, and lower for decreased efficiency. +7. **Towers plan.** This divides an establishment into departments, and, having determined certain items of prime cost in each department, gives to the men in it a share of any gain they may make by reducing the labor time, decreasing waste, etc. +8. **Halsey system.** The standard is the average time in which a job has been done, and, if that time is lowered, wages for the time actually consumed, plus a percentage of the wages of the time saved, are paid. +9. **Rowan system.** A standard time rate is fixed, and a time for the performance of the job. If working + +<page_number>306</page_number> +PRINCIPLES AND PRACTICE + +time be cut, the rate of pay increases by the same percentage. + +10. Emerson system. A standard time rate is set, and a time for the performance of the job at 100% efficiency. A bonus on the time rate starts at 66 2/3% efficiency and increases to a maximum of 30% at 100% efficiency. Above 100% efficiency is rewarded by pay at the maximum rate for working time, plus standard pay for the time saved. + +An examination of this list of payment schemes—bases upon which computations of earnings are made—shows that the subject is a complicated one, and all that may be stated here is that the system to be preferred is a matter of individual taste and circumstance. One thing, however, is most desirable—and the simplification of pay-roll routine has now made it practicable—namely, that employees on a time basis should be paid each pay-day on a day rate basis, and on the first of each month they should be paid the difference between the day rate and what they have earned on the other basis that may be in use. Sometimes, this double payment date may not be desirable; if so, the day rate payment should be placed in a white envelope, and the extra pay in a colored envelope, because of the psychological effect produced on the workmen who see a comrade secure a colored envelope. + +5. The Original Records + +There are usually two labor records which may be considered as original in character. These are: + +1. Time clock cards or the gate record. These record the time employees enter and leave. + +LABOR AND SALARIES +<page_number>807</page_number> + +2. Job cards or work tickets. These are filled out to show how the time of the employees has been used and how it should be distributed to orders. + +Each of these records has a particular purpose. Together they present the necessary data which when properly assembled will give the correct labor costs. + +Consideration of the labor question, as has been indicated already, will be confined as far as possible to the work of recording the labor and salaries expense as such, and not with its distribution to the various expense and cost accounts, the latter being considered in Volume III. + +6. The Time Clock System + +As was mentioned in the last section, the time clock cards or gate record may be considered as one of the two original labor records. The primary purpose of such a card is to record the total amount of time worked by each employee in order to give a basis for computing the pay-roll. In some cases, however, the pay-roll is made up from the job cards. + +The methods and devices used to record the working time of employees are many and a discussion of all of them would be neither necessary nor profitable. One is practically as good as another, the crux of the whole matter being the accuracy with which they are carried out. It is more essential here to consider the results to be secured than how to secure them. To that end one simple illustration is sufficient. + +The best time-keeping system for a concern of any size is one based on the use of card time recorders. All employees should be required to "ring in" on a time + +308 +PRINCIPLES AND PRACTICE + +clock upon their arrival at the place in the morning, +"ring out" when they go to lunch, "in" when they return +from lunch, "out" again at night, "in" for extra time +and "out" for extra time. In many places it will be +found unnecessary for employees to ring out and in at +noon and out at night, because every employee must be +at work until the closing whistle has sounded. + +A time recorder is a clock with a recording mechan- +ism attached to it, for noting accurately the working +time of employees. There are many forms of time re- +corders, but since the general principles involved in their +use do not differ in many respects, one from another, +it is sufficient to describe one type only. Each time card +clock should be supplemented by two racks, one design- +ated as the "out rack" in which cards of the employees +are kept when not at work, and the other the "in rack" +to contain the cards of employees at work. + +Each time card should bear the name or number of +the employee, and all payments made by the company +should be based upon the time indicated upon it, except +of course in the case of piece-work or premium work. + +Someone should always be at the clocks when em- +ployees are ringing in and out to guard against a fraud +or "beating the clock." As soon as all employees are +in in the morning, the clock cards should be collected +and sent to the timekeeper's office for entry of the time +for the previous day on a time sheet. + +At the end of the pay period all cards are collected +so that the pay-roll may be made up. The total amount +for the various kinds of work done—day, regular, over- +time, piece-work, etc.—as shown on the time sheets, +is entered on the card after extensions are made and ad- + +<img>A page from a book titled "PRINCIPLES AND PRACTICE," page 308.</img> + +LABOR AND SALARIES +<page_number>809</page_number> + +vances deducted, and the pay-roll proper is then made up. Each card will show the kind of pay each employee is to receive, and the total amount he is to receive. The number of the time sheet which shows the total amount to be transferred to the time card is entered on the card. + +At the time of collection, new cards are placed in the racks for use during the next succeeding period. On pay-day each employee will find in his pocket in the "out rack" two cards, one being his current time card, and the second being the time card previously collected and extended as above described. The back of the card contains a form of receipt which the employee should sign and turn in to the cashier, or to the pay-master, or to whoever it is who makes the pay-roll payments. + +7. The Job Card + +The second source of labor cost information was found to be the job or work cards. These cards show the amount of time spent by the various employees on specific work. By this means a check is secured on labor efficiency through comparison of the time with the time recorded on the clock cards; also data are secured for calculating the labor cost of operations. A consideration of this phase of the subject leads immediately into cost accounting. Nothing more, therefore, will be said about it here. + +8. Pay-Roll Routine + +It was mentioned above that the primary purpose of the clock card is to record the total amount of time worked during each pay period so that a basis may be + +310 +PRINCIPLES AND PRACTICE + +secured upon which the pay-roll may be computed. +From an accounting point of view, it is necessary to ascertain the amount due each man day by day. There- +fore, the information recorded on the time clock must be recorded and summarized by pay periods upon what may be considered as time sheets, and later from the time sheets it must be transferred to the pay-roll, which when properly vouched becomes authority for the drawing of a pay-roll check. + +The time sheet contains columns for the department, +clock number, name or number of employee, and col- +umns for each day of the pay period subdivided into regular time and overtime. Other columns summarize the regular time and provide for the wages due; and they also summarize the overtime in the same way, pro- +viding also for the wages due on that account. Finally, the total amount payable to each man is shown. + +These time sheets are of value for purposes other than that of collection of time for the pay-roll. They may be used also as: +1. A check on the factory against the time clocks. +2. A means of showing the disposition of the time of each employee for each pay period. +3. A labor distribution sheet from which may be compiled various costs and statistics relative to the amount of time expended on the differ- +ent kinds of labor—day-work, overtime, non- +productive work, piece-work, etc. +4. Part of a self-balancing record to detect errors arising in connection with turning in and re- +cording the time tickets. Pay-roll figures are distribution figures. The total labor as + +LABOR AND SALARIES +<page_number>311</page_number> + +shown on the pay-roll must agree in amount with the total labor as distributed against product. + +The pay-roll sheets will cover the same period of time as that covered by the time sheets. Totals from the time sheets are carried over onto the pay-roll sheets, the total regular time and regular wage as one amount, the total overtime and overtime wage as another amount, and the total bonus as a third amount; each entered in a separate column opposite each man's name. Of course, it must be remembered that the bonus is something entirely independent of time and usually is not entered on the pay-roll from the time sheet. The pay-roll will contain also columns for deductions of various kinds. Finally, the total amount payable is taken care of in a column at the extreme right of the sheet. + +When a pay-roll is completed and checked, the following bookkeeping routine may take care of its subsequent progress through the organization. + +1. It may be attached to an account payable voucher which contains a classification of the various accounts against which, the amount is to be charged. The payment of this voucher is then properly authorized, and the pay-roll check drawn for the amount, after which the voucher is entered in the account payable register, as a credit against the Pay-Roll account and a debit against the various expense accounts. Subsequently, entry may be made from the voucher to the various factory ledger accounts and to the different cost records. The pay-roll check is passed through the cash book. + +2. Part of the above procedure may be eliminated. + +312 PRINCIPLES AND PRACTICE + +The pay-roll may be entered direct in the cash book, the Pay-Roll account being debited, instead of being attached to an account payable voucher. Subsequently, an entry is made, possibly through the journal, to distribute the amount of the Pay-Roll account against the various departments, units of product or processes, giving each its proper proportion of direct and indirect labor. + +9. Padding the Pay-Roll + +Padding the pay-roll is a fruitful means of peculation and one against which the accounting system followed should particularly guard. The risk of fraud should be reduced to the lowest possible point. To this end, two measures may be made use of: + +1. Arrange so that a fraud will require the collusion of as many persons as possible. For example, one person may be given the duty of figuring the pay-roll, another that of counting the money into the pay envelopes—if checks are not used for payment—and a third person that of delivering the envelopes to the employees. This suggestion is a matter of system entirely. The method of pay-roll preparation should be such that an independent check is given at each step by someone other than the persons in direct charge of the work. + +2. Comparative statistics should be made use of frequently as a means of uncovering pay-roll padding, should it exist in spite of these precautions. If a person is familiar with conditions existing in similar lines of endeavor—prices of raw material, wage rates, etc.—he is in a position to know whether or not his gross or net profit is smaller than that in these similar lines, + +LABOR AND SALARIES +<page_number>313</page_number> + +and if this difference is due to a high labor cost, analysis may disclose the padding of the pay-rolls. + +**10. Construction Work** + +A few remarks concerning construction jobs may not be amiss. In every case local conditions must be carefully noticed, and local laws followed. The local labor unions may have certain rules that require consideration. In other words, it may be impossible in Minnesota to follow the same procedure used in New York. + +The use of the time clock is usually unsatisfactory. Instead a timekeeper may be employed and given a group of men or a certain district within which he is responsible for the time-keeping. Each workman may be given a brass tag bearing his number, which he will show to the foreman each morning when he comes on the job. Upon showing this tag the foreman gives the workman a time card so that the latter may keep track of the time he spends each day upon the various tasks allotted to him. These time cards are turned in each evening and placed in the hands of the cost department at the earliest possible moment. + +An employment record of each workman, carefully kept up to date, should be found in the office. This is essential to the smooth working of each job. For example, a construction company engaged on a large building project may be employing some 10,000 men. These men are scattered over a number of square miles of territory. They may be placed in groups, a time-keeper with each group. In the local central office is found a complete employment record of each workman, + +314 PRINCIPLES AND PRACTICE + +so that he can be located at a moment's notice. If a workman is transferred to another group the office should be notified of the transfer at once, so that it in turn may promptly notify the timekeepers concerned in the transfer. Otherwise, not only will it be impossible to find this transferred person readily, but the transferred workman when pay-day comes will find that his pay envelope contains less money than it should contain, because the timekeeper of the first group reported him absent after he had been transferred, and the timekeeper of the second group, to which he had been transferred, failed to report him present. As a result, the pay records will be in a tangle and the workman dissatisfied. + +11. Salaries + +Nothing has been said directly concerning salaries except in the first section of this chapter, where a remark was made to the effect that it is usually desirable to handle salaries and workmen's pay separately throughout. Handling salaries is thus merely a subdivision of the regular pay-roll work for convenience, the consideration of principles other than those already mentioned not being necessary. In many instances, the payment of salaries is controlled by an automatic time recorder in the same manner as workmen's pay. + +REVIEW QUESTIONS + +1. What inconvenience is caused by the method of paying employees once a week? What remedy would you suggest? +2. Name nine general methods or plans of paying wages. Which one do you prefer? + +LABOR AND SALARIES +<page_number>315</page_number> + +3. Briefly outline the principles underlying the reporting and analysis of labor and salaries. +4. What plan would you suggest to minimize the risk of fraud in pay-rolls? +5. Briefly outline a time-keeping system for a concern employing at least 2,500 persons who are scattered in many places in the United States. +6. What factors should be borne in mind to insure the smooth working of a time-keeping system on a construction job employing at least 1,000 persons? + +CHAPTER XXVII + +THE BUDGET + +**1. Definition of Budget** + +A budget is defined as a "statement of probable revenue and expenditure and of financial proposals for the ensuing year as presented to or passed upon by a legislative body."* + +A business budget may be defined as an official forecast of the financial policy of a business for a certain future period (usually a year). It is in the nature of a prospective statement of the anticipated revenues and of the expenditures justified by these revenues or necessary to secure them. It should be based upon a careful study of the past and of the probabilities of the future. It should be assembled by an executive responsible for the administration of the enterprise. + +**2. Segregated and Lump Sum Budgets** + +The form in which the budget is drawn up is important. In order to be most useful in controlling expenditures, the estimates should be either segregated or arranged by lump sums, supported by cost schedules. The segregated budget provides separate appropriations covering each specific function of a department; the lump sum form is merely a blanket appropriation covering the needs of each department as a whole. Either form properly operated puts a curb on the + +*Standard Dictionary.* + +<page_number>316</page_number> + +THE BUDGET <page_number>317</page_number> + +spending propensities of departmental officers. The lump sum budget has the advantage of allowing departmental officers more freedom in the use of funds, while the accompanying cost schedules, by showing the work to be done and the unit cost of doing it, still keep the departments under control. Standards of efficiency can be thus set up and checks put on waste. + +**3. General Importance** + +Of late years there has grown up an increasing sense of the value to any civic or business organization of such an authoritative forecast. The organization which fails to provide for this essential element of modern financial policy is distinctly behind the times. + +The effective control of expenditures is a question of primary importance. The rapid increase with each succeeding year of the cost of doing business has alarmed business men. Estimates on future conditions are necessary if these increasing costs are to be met. + +Modern executives, moreover, recognize that to derive full benefit from commercial effort, plans must be laid carefully before a line of work is commenced. In too many cases no provision is made for the persons most interested to secure an intelligent knowledge of either necessary expenditures or of possible business extensions. The budget assembles this necessary information. It is as important for a commercial establishment as for a philanthropic or governmental institution. + +**4. Importance of a Budget to the Executive** + +In this connection the importance of a budget to the executive is obvious. It is his duty to outline matters + +318 +PRINCIPLES AND PRACTICE + +of future policy. He should propose what business or work shall be done in the year to come; what sort of business organization shall be utilized to carry into effect the business policies proposed; what amount of funds is needed for the kinds of work indicated, and how these funds shall be provided; what shall be the proportion of the expenditures authorized for carrying on each class of work—how much for expenses, how much for capital outlay (cost of land, buildings, equipment, and other properties acquired). + +A budget assists the executive in placing before the board of directors and his department assistants a definite, well-con sidered, comprehensive administrative program. Its advantage is that it brings together both the facts and the deductions from these facts necessary to the intelligent formulation of proposals for which he executive is willing actively to work as the responsible head. + +5. Importance to Other Organization Officials + +With respect to the administrative program, organization officials in lesser executive capacities also must assume responsibility for action. Since the business and technical needs of an organization are known to the minor officials better than to any others, the proper construction of a budget will give these officials an opportunity not only to state the needs of their departments but to support loyally the men higher up. + +6. Budget Preparation + +The actual work of preparing a budget usually falls upon the chief financial officer, such as the comptroller + +THE BUDGET <page_number>319</page_number> + +or the treasurer. He should require the department heads to submit detailed written estimates of their financial needs for the ensuing year. The facts presented are best arranged according to functions and activities. By prescribing the forms to be used in making these estimates, he secures uniformity in the departmental schedules. + +7. Matters to be Considered + +The points to be considered in devising a well-planned budget may be stated as follows: + +1. The work that is to be done by the organization as a whole and by each department. +2. The organization at present provided and to be provided for carrying on such work. +3. The character of expenditures authorized and to be authorized. +4. The methods employed and which should be employed for financing each unit of the organization. + +If an organization is to prosecute successfully its defined lines of work, proper financing methods are necessary. In the budget the proposed method of financing, and the classes of work or the character of expenditures provided for, may be indicated by estimates which are classified and summarized according to a well-laid-down classification of accounts. This lays a foundation for the consideration of methods of financing as a matter of house policy. + +As a result, where a budget policy is in existence, desirable changes in the existing organization and organization activities must be brought up at the time + +320 +PRINCIPLES AND PRACTICE + +the budget is drafted. In any event, desirable changes must be determined upon prior to or at the time of the annual meeting. How the existing organization and its activities present and proposed are to be financed must be determined then. + +8. Estimate of Revenue + +Every concern has some kind of a revenue policy. Yet even among those which make use of a budget, actual possible revenue is not always shown as a preliminary. Possible revenue is related closely to actual and possible expenditure. No concern can adopt safely a policy of expenditures which has no regard for the amount of its revenues. Careless methods in this respect may result in a series of overdrafts—revenue continually falling short of expenses—or at least in an impairment in the amount available for dividends and a consequent reduction in value of the company's stock. If revenues are not sufficient to meet the proper expenditures it may be necessary to secure more capital by the issue of bonds or more stock. Anything of this kind must of course be planned in advance. It is not enough to fix vaguely the amount of expenditures based on an equally vague possible revenue; the amount ought to be fixed definitely and with accurate information. + +Since any changes in organization and in the number and extent of activities can hardly fail to affect expenditures, a budget dealing with expenditures must of necessity be concerned primarily with anticipated revenues and secondarily with questions of organization and business activities. Even though other financial considerations control the decision of these ques- + +<page_number>9/22</page_number> + +THE BUDGET <page_number>381</page_number> + +tions, it must be remembered that no concern can enter upon an operating and administrative program, how- +ever desirable, if its financial resources do not permit the enterprise to assume the expenses of such a program. In other words, revenue estimates are of paramount im- +portance and must be considered before making ex- +pense estimates. + +9. Estimate of Expenditures + +In the second place the budget must carry an esti- +mate of expenditures to be made during the coming fiscal period, with a careful compilation of estimated costs. These estimates should, as a rule, be prepared and submitted by the heads of the various departments because they are acquainted fully with the details of their respective offices, and familiar with the expenses which may occur in the performance of their duties. The estimates should be presented to the executive charged with the preparation of the budget, who passes on them and distributes the appropriation over the sev- +eral schedules as he deems best. Against these esti- +mated expenditures are offset the estimated revenues. + +The salaries of regular employees must be distin- +guished from those of temporary employees. Usually, +a budget contains a provision that but one-twelfth of the yearly allowance for regular salaries is available each month, while the temporary salaries are available until the allowance is exhausted, or until the end of the year. + +Separate sheets should be filled out for each class of supplies or materials for which a budget allowance is requested. When a request is granted to a depart- + +<img>A page from a book about budgeting.</img> + +322 +PRINCIPLES AND PRACTICE + +ment, the amount allowed for the purchase of each class of supplies should be shown. Separate sheets, also, should be made out for each class of equipment requested and for services rendered by contract or agreement. + +**10. Budget Approval** + +The officer charged with the duty of preparing the budget gives departmental heads an opportunity to discuss their estimates and to present any information, not contained in the departmental estimate, which justifies increases over the previous budget. This officer, or his assistants, must be ready to give reasons for any modification of the recommended departmental estimates, and to meet any objection raised by departmental heads. + +When the hearings are completed, the estimated needs for the ensuing year should be arranged by departments. This tentative plan then goes to the board of directors, which sometimes makes changes in the estimates. When all these changes have been completed, the budget is accepted and the amounts therein stand as fixed. + +Budget modifications must always be submitted to the board for approval. + +**11. Estimate of Needs of Business as a Whole** + +Another essential element in the consideration of budgets involves a fiscal plan or program to be formulated for the needs of the business as a whole. This plan should be prepared in advance of its period of use so that it may be presented to the board of directors + +THE BUDGET <page_number>323</page_number> + +in time for careful consideration before being acted on. +This program for the ensuing year should be made up carefully. The estimated revenues and expenditures should be correlated and exhibited so that their relative amounts may be examined and compared. A comparison should be made between total expenditures and revenues and between the various items of each, so that the situation can be comprehended at a glance. In this way the amount proposed to be granted for one object in comparison with the amount available for another may be determined easily. The plan also involves a periodical audit of all accounts for the fiscal period in order to determine with what economy the previous authorizations have been spent. + +12. Plan for a Budget + +The complete budget plan of a concern should be based upon a periodic audit covering the following points: + +1. Present as compared with past financial conditions +2. Estimates + (a) Receipts + (b) Expenditures +3. Objects and policy changes to which special attention is to be directed, based upon the facts brought out in points 1 and 2 + +A well-laid-down classification of accounts presents the accounts against which the detailed amounts of possible revenue and expenditure may be entered. The revenue accounts will form one schedule, the expendi- + +324 +PRINCIPLES AND PRACTICE + +ture accounts another. All accounts should be stated specifically under their typical divisions. Columns in juxtaposition, in each schedule (Form 75), provide for the recording of amounts: + +<table> + <tr> + <td colspan="6" style="text-align: center;">BUDGET SCHEDULE</td> + </tr> + <tr> + <td colspan="6" style="text-align: center;">Class of Items.</td> + </tr> + <tr> + <td colspan="6" style="text-align: center;">Department or Purpose</td> + </tr> + <tr> + <td>Acct. No.</td> + <td>Description</td> + <td>ACTUAL</td> + <td>RECOM. OF Dept. Date</td> + <td>EXT. OF Dept. Date</td> + <td>RECOM. OF Dept. Date</td> + <td>REMARKER</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td>1916</td> + <td>1917</td> + <td>1918</td> + <td>1919</td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th colspan="7" style="border-top: 1px solid black;">Form 75 Budget Schedule</th> + </tr> +</table> + +13. Illustrative Budgets + +Enough material has been presented already in the different account classifications relative to revenue and expenditure to answer the purpose of almost any type of organization. The party, a budget, other than those concerning revenue and expenditure, present no difficulties from the point of view of accounting. + +In order to round out this subject, there are presented below two budget classifications of expenditures, one specifically designed for a charitable institution, club, or society; yet generally suitable for many other purposes; and the other intended for a trading business. The revenues are not considered. The trading budget assumes that the concern is located in a separate build- + +THE BUDGET <page_number>325</page_number> + +ing, for the care of which it is entirely responsible. In practice, any item not desired may be eliminated, and others may be added. In the institutional budget, the arrangement of the topical divisions is somewhat different from those presented in the above classifications, yet the same principles are seen. A vigorous attempt at condensation has been made. Provision is made in heading 64 for entering requests for funds for any items not otherwise listed. An explanation is given, when necessary, as to the kind of items to be considered under each heading. + +INSTITUTIONAL BUDGET* + +1 PHYSICAL CONTROL OF PLANT—ADMINISTRATION COST + +11 Salaries +111 Officers +112 Clerks +113 Other Employees +(Social workers, teachers, and nurses included under institutional operation.) + +12 Office Supplies and Equipment +121 Stationery +122 Printing +123 Postage +124 Equipment + +13 Telephone and Telegraph Service +14 Miscellaneous (itemized schedule) + +2 PHYSICAL OPERATION OF PLANT +(Plant running expenses. Not work done in buildings. Latter found under administration and institution operation.) +21 Janitor Service—Building Care +22 Janitorial Equipment +23 Supplies + +291 Agricultural—Botanical + +*Wherever possible support gross amount by schedule. + +326 +PRINCIPLES AND PRACTICE + +232 Automobile and Vehicle +233 Engine Room +234 Laundry—Cleaning—Disinfecting +24 Supplies for and Care of Animals +25 Fuel (cost for relief purposes and institutional operation; coal to be kept separately from wood) +26 Light To be supplied through an outside agency. Electric heat tric current and gas. Cost of operating machines, etc. +28 Power + +3 PHYSICAL MAINTENANCE—PLANT AND EQUIPMENT + +31 Repairs and Replacements +311 Plant and Equipment (floor repairs, new floor, roof repairs, painting, sanitary equipment repairs, etc., plumbing apparatus repairs, etc.) +312 Furniture and Furnishings (new to be kept separate from replacements) + +32 Repair Materials (lumber, nails, paint, etc., for work to be done on premises) + +4 INSTITUTIONAL OPERATION + +41 Supplies and Equipment +411 Food Supplies +412 Electrical Supplies and Equipment +413 Refrigeration Supplies and Equipment +414 Medical and Surgical Supplies and Equipment +415 Educational and Recreational + +42 Linens and Bedding +43 Wearing Apparel +44 Salaries +441 Turrets, Orderlies, etc. +442 Teachers, etc. +448 Professional Service +45 Relief (separate schedule to show purposes) +46 Funerals +47 Miscellaneous + +5 FIXED CHARGES +51 Rents +52 Taxes + +THE BUDGET <page_number>327</page_number> + +53 Interest +54 Insurance +55 Miscellaneous (such as boarding out dependents) +6 Miscellaneous +61 Carfare and Minor Incendials +62 Newspapers and Magazine Subscriptions +62 Freight and Carriage +63 Miscellaneous (items not listed; to be set out in detail) + +BUDGET FOR TRADING CONCERN + +<table> + <thead> + <tr> + <th>New Assets</th> + <th></th> + </tr> + </thead> + <tbody> + <tr> + <td>11 Office Building</td> + <td></td> + </tr> + <tr> + <td>111 General Administration</td> + <td></td> + </tr> + <tr> + <td>1111 Sidewalks, Curbing, Gutters, Fencing</td> + <td></td> + </tr> + <tr> + <td>1112 Trees, Shrubs (not replacements)</td> + <td></td> + </tr> + <tr> + <td>1113 Landscape Gardening. (grading, filling, sodding, etc.)</td> + <td></td> + </tr> + <tr> + <td>1114 Sewers and Water Systems</td> + <td></td> + </tr> + <tr> + <td>1115 Laboratory Apparatus</td> + <td></td> + </tr> + <tr> + <td>1116 Structures and Attached Fixtures</td> + <td></td> + </tr> + <tr> + <td>1117 Permanent Equipment (permanent)</td> + <td></td> + </tr> + <tr> + <td>11171 Heating Apparatus</td> + <td></td> + </tr> + <tr> + <td>11172 Electrical Apparatus</td> + <td></td> + </tr> + <tr> + <td>11173 Water Apparatus</td> + <td></td> + </tr> + <tr> + <td>11174 Ventilating Apparatus</td> + <td></td> + </tr> + <tr> + <td>1118 Furniture and Furnishings</td> + <td></td> + </tr> + <tr> + <td>1119 General Library</td> + <td></td> + </tr> + <tr> + <td>11A Special Equipment</td> + <td></td> + </tr> + <tr> + <td>President's Office (detailed schedule)</td> + <td></td> + </tr> + <tr> + <td>Controller's Office (detailed schedule)</td> + <td></td> + </tr> + <tr> + <td>General Manager's Office (detailed schedule)</td> + <td></td> + </tr> + <tr> + <td>Purchasing Department</td><br/> + 1130 Manager's Office<br/> + 1132 Department Library<br/> + 1133 Museum<br/> + 1134 Miscellaneous (detailed schedule) + </tr> + </tbody> +</table> + +328 + +PRINCIPLES AND PRACTICE + +<table> + <tr> + <td>116 Sales Department</td> + </tr> + <tr> + <td>1161 Manager's Office</td> + </tr> + <tr> + <td>1162 Department Library</td> + </tr> + <tr> + <td>1163 Museum</td> + </tr> + <tr> + <td>1164 Miscellaneous (detailed schedule)</td> + </tr> + <tr> + <td>117 Credit Department</td> + </tr> + <tr> + <td>1171 Manager's Office</td> + </tr> + <tr> + <td>1172 Department Library</td> + </tr> + <tr> + <td>1173 Miscellaneous (detailed schedule)</td> + </tr> + <tr> + <td>118 Correspondence and Stenographic Department</td> + </tr> + <tr> + <td>1181 Manager's Office</td> + </tr> + <tr> + <td>1182 Department Library</td> + </tr> + <tr> + <td>1183 Miscellaneous (detailed schedule)</td> + </tr> + <tr> + <td>119 Other Departments (detailed schedule)</td> + </tr> + <tr> + <td>11A Accounting Department</td> + </tr> + <tr> + <td>11A1 Auditor's Office</td> + </tr> + <tr> + <td>11A2 Department Library</td> + </tr> + <tr> + <td>11A3 Miscellaneous (detailed schedule)</td> + </tr> + <tr> + <td>11B Traffic and Shipping Department</td> + </tr> + <tr> + <td>11B1 Manager's Office</td> + </tr> + <tr> + <td>11B2 Department Library</td> + </tr> + <tr> + <td>11B3 Miscellaneous (detailed schedule)</td> + </tr> + <tr> + <td>11C Lunchroom</td> + </tr> + <tr> + <td>11C1 Furniture and Furnishings</td> + </tr> + <tr> + <td>11C2 Utensils and Dishes</td> + </tr> + <tr> + <td>11C3 Kitchen</td> + </tr> + <tr> + <td>12 Warehouse</td> + </tr> + <tr> + <td>121 Sidewalks, Curbing, Gutters, Fencing</td> + </tr> + <tr> + <td>122 Trees, Shrubs (not replacements)</td> + </tr> + <tr> + <td>123 Landscape Gardening (grading, filling, sodding, etc.)</td> + </tr> + <tr> + <td>124 Sewers and Water Systems</td> + </tr> + <tr> + <td>125 Structures and Attached Fixtures</td> + </tr> + <tr> + <td>126 Machinery and Equipment (permanent)</td> + </tr> + <tr> + <td>1261 Heating Apparatus</td> + </tr> + <tr> + <td>1262 Electrical Apparatus</td> + </tr> + <tr> + <td>1263 Water Apparatus</td> + </tr> + +<img>A page from a book or manual listing various departments and their corresponding codes.</img> + +<page_number>328</page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_number> + +<page_number></page_numbers> + +THE BUDGET <page_number>329</page_number> + +1264 Ventilating Apparatus +127 Furniture and Furnishings +128 Sundry Equipment + +**2 MAINTENANCE** +(Same divisions as presented for new assets) + +**3 OPERATIONS** + +**31 Buildings and Grounds** + +**311 Salaries and Wages** + +**3111 Janitors and Cleaners** +**3112 Watchmen and Policemen** +**3113 Elevator Operators** +**3114 Telephone Operators** +**3115 Landscape Gardener and Assistants** +**3116 Scrubbers** +**3117 Laborers** + +**312 Materials, Supplies, and Expense** + +**3121 Cleaning** + +**31211 Cleaning Supplies** +**31212 Toilet Supplies** +**31213 Miscellaneous (itemized schedule)** + +**3122 Lumber** + +**31221 Lumber** +**31222 Oils, Paints, etc.** +**31223 Keys** + +**3123 Expense** + +**31231 Heat, Light, Power** +**31232 Ice** +**31233 Water** + +**31234 Water Rent** +**31235 Mineral Spring Water** + +**31236 Rent-Taxes** +**31237 Office Building** +**31238 Warehouse** +**31239 Towel Supplies** +**31240 Miscellaneous (itemized schedule)** + +330 PRINCIPLES AND PRACTICE + +<table> + <tr> + <td>32 Office</td> + <td></td> + </tr> + <tr> + <td>321 General Administration</td> + <td></td> + </tr> + <tr> + <td>3211 Salary—President</td> + <td></td> + </tr> + <tr> + <td>3212 Salary—Controller</td> + <td></td> + </tr> + <tr> + <td>3213 Salary—General Manager</td> + <td></td> + </tr> + <tr> + <td>3214 Salaries and Wages</td> + <td></td> + </tr> + <tr> + <td>32141 Assistant General Manager</td> + <td></td> + </tr> + <tr> + <td>32142 Office Boys (itemized schedule)</td> + <td></td> + </tr> + <tr> + <td>32143 Private Secretary to President</td> + <td></td> + </tr> + <tr> + <td>32144 Private Secretary to Controller</td> + <td></td> + </tr> + <tr> + <td>32145 Private Secretary to General Man-ager</td> + <td></td> + </tr> + <tr> + <td>3215 Traveling Expense</td> + <td></td> + </tr> + <tr> + <td>3216 Carfare</td> + <td></td> + </tr> + <tr> + <td>3217 Stationery and Office Supplies</td> + <td></td> + </tr> + <tr> + <td>3218 Postage</td> + <td></td> + </tr> + <tr> + <td>3219 Telephone and Telegraph</td> + <td></td> + </tr> + <tr> + <td>321A Express, Freight, Drayage</td> + <td></td> + </tr> + <tr> + <td>321B Printing (not stationery)</td> + <td></td> + </tr> + <tr> + <td>321C Magazines and Periodicals</td> + <td></td> + </tr> + <tr> + <td>321D Organization Memberships</td> + <td></td> + </tr> + <tr> + <td>321E Charity</td> + <td></td> + </tr> + <tr> + <td>321F Miscellaneous (itemized schedule)</td> + <td></td> + </tr> + + <!-- Purchasing Department --> + + <!-- Salaries and Wages of Employees (itemized schedule) --> + + <!-- Traveling Expenses --> + + <!-- Carfare --> + + <!-- Stationery and Office Supplies --> + + <!-- Telephone and Telegraph --> + + <!-- Express, Freight, Drayage --> + + <!-- Printing (not stationery) --> + + <!-- Magazines and Periodicals --> + + <!-- Organization Memberships --> + + <!-- Miscellaneous (itemized schedule) --> +</table> + +<table border="1"> +<tr><th>Department</th><th>Description</th><th>Schedule Type</th><th>Schedule Number(s)</th><th>Schedule Title(s)</th></tr> + +<tr><th>Purchasing Department</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Salaries and Wages of Employees (itemized schedule)</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Traveling Expenses</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Carfare</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Stationery and Office Supplies</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Telephone and Telegraph</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Express, Freight, Drayage</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Printing (not stationery)</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Magazines and Periodicals</th><th></th><th></th><th></th><th></th></tr> + +<tr><th>Organization Memberships</th><th></th><th></th><th></th><th></h/></tr> + +<tr><eth>Miscellaneous (itemized schedule)</eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan="5"></eth> + +<th colspan " + +THE BUDGET <page_number>331</page_number> + +<table> + <tr> + <td>323 Sales Department</td> + <td></td> + </tr> + <tr> + <td>3231 Salary—Manager</td> + <td></td> + </tr> + <tr> + <td>3232 Salaries and Wages of Employees (itemized schedule)</td> + <td></td> + </tr> + <tr> + <td>3233 Traveling Expense</td> + <td></td> + </tr> + <tr> + <td>3234 Carfare</td> + <td></td> + </tr> + <tr> + <td>3235 Stationery and Office Supplies</td> + <td></td> + </tr> + <tr> + <td>3236 Postage</td> + <td></td> + </tr> + <tr> + <td>3237 Telephone and Telegraph</td> + <td></td> + </tr> + <tr> + <td>3238 Express, Freight, Drayage</td> + <td></td> + </tr> + <tr> + <td>3239 Printing (not stationery)</td> + <td></td> + </tr> + <tr> + <td>3240 Magazines and Periodicals</td> + <td></td> + </tr> + <tr> + <td>3241 Organization Memberships</td> + <td></td> + </tr> + <tr> + <td>3242 Entertainment of Customers</td> + <td></td> + </tr> + <tr> + <td>3243 Advertising (itemized schedule)</td> + <td></td> + </tr> + <tr> + <td>3245 Miscellaneous (itemized schedule)</td> + <td></td> + </tr> + <tr> + <td>324 Credit Department</td> + <td></td> + </tr> + <tr> + <td>3241 Salary—Manager</td> + <td></td> + </tr> + <tr> + <td>3242 Salaries and Wages of Employees (itemized schedule)</td> + <td></td> + </tr> + <tr> + <td>3243 Traveling Expense</td> + <td></td> + </tr> + <tr> + <td>3244 Carfare</td> + <td></td> + </tr> + <tr> + <td>3245 Stationery and Office Supplies</td> + <td></td> + </tr> + <tr> + <td>3246 Postage</td> + <td></td> + </tr> + <tr> + <td>3247 Telephone and Telegraph</td> + <td></td> + </tr> + <tr> + <td>3248 Express, Freight, Drayage</td> + <td></td> + </tr> + <tr> + <td>3249 Printing (not stationery)</td> + <td></td> + </tr> + <tr> + <td>3251 Magazines and Periodicals</td> + <td></td> + </tr> + <tr> + <td>3252 Organization Memberships</td> + <td></td> + </tr> + <tr> + <td>3254 Miscellaneous (itemized schedule)</td> + <table><tbody><tr><th colspan="2"></th></tr><tr><th>Description</th><th>Schedule Number(s)</th></tr><tr><th colspan="2">Correspondence and Stenographic Department</th></tr><tr><th colspan="2">3251 Salary—Manager</th></tr><tr><th colspan="2">3252 Salaries and Wages of Employees (itemized schedule)</th></tr><tr><th colspan="2">Traveling Expenses</th></tr><tr><th colspan="2">Carfare</th></tr><tr><th colspan="2">Stationery and Office Supplies</th></tr></tbody></table> + +<table><tbody><tr><th colspan="2"></th></tr><tr><th>Description</th><th>Schedule Number(s)</th></tr><tr><th colspan="2">Correspondence and Stenographic Department</th></tr><tr><th colspan="2">Salary—Manager</th></tr><tr><th colspan="2">Salaries and Wages of Employees (itemized schedule)</th></tr><tr><th colspan="2">Traveling Expenses</th></tr><tr><th colspan="2">Carfare</th></tr><tr><th colspan="2">Stationery and Office Supplies</th></tr></tbody></table> + +<table><tbody><tr><th colspan="2"></th></tr><tr><th>Description</th><th>Schedule Number(s)</th></tr><tr><th colspan="2">Correspondence and Stenographic Department</th></tr><tr><th colspan="2">Salary—Manager</th></tr><tr><th colspan="2">Salaries and Wages of Employees (itemized schedule)</th></tr><tr><th colspan="2">Traveling Expenses</th></tr><tr><th colspan="2">Carfare</th></tr><tr><th colspan="2">Stationery and Office Supplies</th></tr></tbody></table> + +<table><tbody><table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr> + +<td style='text-align:left;'>The Budget - Table of Contents:</table> + +<tr + +332 +PRINCIPLES AND PRACTICE + +<table> + <tr> + <td>3256</td> + <td>Postage</td> + </tr> + <tr> + <td>3257</td> + <td>Telephone and Telegraph</td> + </tr> + <tr> + <td>3258</td> + <td>Express, Freight, Drayage</td> + </tr> + <tr> + <td>3259</td> + <td>Printing (not stationery)</td> + </tr> + <tr> + <td>3260</td> + <td>Magazines and Periodicals</td> + </tr> + <tr> + <td>3261</td> + <td>Organization Memberships</td> + </tr> + <tr> + <td>3262</td> + <td>Miscellaneous (Itemized schedule)</td> + </tr> + <tr> + <td>326</td> + <td>Order Department</td> + </tr> + <tr> + <td>3261</td> + <td>Salary—Manager</td> + </tr> + <tr> + <td>3262</td> + <td>Salaries and Wages of Employees (Itemized schedule)</td> + </tr> + <tr> + <td>3263</td> + <td>Stationery and Office Supplies</td> + </tr> + <tr> + <td>3264</td> + <td>Printing (not stationery)</td> + </tr> + <tr> + <td>3265</td> + <td>Miscellaneous (Itemized schedule)</td> + </tr> + <tr> + <td>327</td> + <td>Accounting Department</td> + </tr> + <tr> + <td>3271</td> + <td>Salary—Auditor</td> + </tr> + <tr> + <td>3272</td> + <td>Salaries and Wages of Employees (Itemized schedule)</td> + </tr> + <tr> + <td>3273</td> + <td>Traveling Expenses</td> + </tr> + <tr> + <td>3274</td> + <td>Carfare</td> + </tr> + <tr> + <td>3275</td> + <td>Stationery and Office Supplies</td> + </tr> + <tr> + <td>3276</td> + <td>Postage</td> + </tr> + <tr> + <td>3277</td> + <td>Telephone and Telegraph</td> + </tr> + <tr> + <td>3278</td> + <td>Express, Freight, Drayage</td> + </tr> + <tr> + <td>3279</td> + <td>Printing (not stationery)</td> + </tr> + <tr> + <td>328A</td> + <td>Magazines and Periodicals</td> + </tr> + <tr> + <td>328B</td> + <td>Organization Memberships</td> + </tr> + <tr> + <td>328C</td> + <td>Miscellaneous (Itemized schedule)</td> + </tr> + +<tr><th colspan="2">328 Traffic and Shipping Department</th></tr> + +<tr><th colspan="2">3281 Salary—Manager</th></tr> + +<tr><th colspan="2">3282 Salaries and Wages of Employees (Itemized schedule)</th></tr> + +<tr><th colspan="2">3283 Traveling Expenses</th></tr> + +<tr><th colspan="2">3284 Carfare</th></tr> + +<tr><th colspan="2">3285 Stationery and Office Supplies</th></tr> + +<tr><th colspan="2">3286 Postage</th></tr> + +<tr><th colspan="2">3287 Telephone and Telegraph</th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><th colspan="2"></th></tr> + +<tr><<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan='1' class='table_header'>Table Header Row:</thead>', +<th rowspan ' + +THE BUDGET + +3288 Express, Freight, Drayage +3280 Printing (not stationery) +328A Magazines and Periodicals +328B Organization Memberships +328C Miscellaneous Supplies +328D Miscellaneous (itemized schedule) + +329 Lunch-room +3291 Salaries and Wages (itemized schedule) +3292 Food +32921 Fruits and Nuts +32922 Vegetables +32923 Meats +32924 Poultry and Eggs +32925 Fish and Game +32926 Flour and Cereals +32927 Sundries +3293 Utensils and Dishes +32981 Kitchen +32982 Lunch-room + +REVIEW QUESTIONS + +1. What is the relation of a budget to an accounting system? +2. What should be the share of the various departments and general officials in the preparation of a budget? +3. What advantages result from the use of a budget? + +CHAPTER XXVIII + +SPECIAL RECORDS + +**1. Miscellaneous Useful Records** + +This chapter describes certain special records which are not directly connected with the main problems of cash, purchases, and sales, and therefore were not discussed at the time these subjects were considered. + +These miscellaneous records are found useful in various special types of business organization. The list here given is not exhaustive but includes some of the most useful. + +**2. Notes Receivable and Notes Payable Registers** + +Although the construction of a notes receivable register (Form 76) and of a notes payable register (Form 77) permits their use as books of original entry, it is more common to find them used as auxiliary records. As such they merely furnish a description in full of all notes and drafts issued or received by a business. When used as an auxiliary record, entries for all notes and drafts when issued or received must be made in the journal; when paid, entry is made in the cash book. + +Separate registers for notes receivable and notes payable are of value when many notes are handled. Their advantages are as follows: + +1. A detailed record of every note and accepted draft is secured and further reference to the paper itself is unnecessary. + +<page_number>334</page_number> + +SPECIAL RECORDS <page_number>555</page_number> + +<table> + <tr> + <td colspan="3">NOTES RECEIVABLE REGISTER.</td> + <td colspan="3">NOTES PAYABLE REGISTER.</td> + </tr> + <tr> + <td>YR. DATE</td> + <td>NOTE DATE</td> + <td>NOTE AMOUNT</td> + <td>NOTE NAME</td> + <td>NOTE TYPE</td> + <td>NOTE AMOUNT</td> + <td>NOTE NAME</td> + <td>NOTE TYPE</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>10-28-1976</td> + <td>10-28-1976</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + </tr> + <tr> + <td>10-28-1976</td> + <td>10-28-1976</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + </tr> + <tr> + <td>10-28-1976</td> + <td>10-28-1976</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + </tr> + <tr> + <td>10-28-1976</td> + <td>10-28-1976</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + <td>$200.00</td> + <td>W. M. HARRIS</td> + <td>P.O. NO.</td> + </tr> + <tr> + <th colspan="3">Form No.: Notes Receivable Register</th><th colspan="3">Form No.: Notes Payable Register</th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><th colspan="3"></th><table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>YR.</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>DATE RECEIVED (MONTH)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>DATE PAID (MONTH)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (DOLLARS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align: center;'>AMOUNT PAID (CENTS)</table> + +<tr style='border-bottom: 1px solid black;'> +<td style='text-align:center'>Form No.: Notes Receivable Register + +From TT., Notes Payable Register + +336 +PRINCIPLES AND PRACTICE + +2. The amounts and maturity dates are set out. +3. A ready record is secured for future reference. + +**3. Capital Stock Transfer Record** + +The stock corporation law of New York requires every stock corporation to have at its principal office a book known as the "Stock Book." This book contains an alphabetical list of stockholders' names and addresses, the number of shares held by each of them, the time when they become owners, and the amounts paid on their shares. The law prescribes further that neglect to keep such a book entails a $50 penalty, and that neglect or refusal to make proper entries in this record, and neglect or refusal to exhibit the record or allow it to be inspected in the manner provided by law, involve a like penalty. Form 78 illustrates this book. + +**4. Allowance Journal** + +Allowances in some lines of business are so frequent and numerous that a separate record of them is desirable. This is true, for example, of a large coal company. An allowance journal here will assist in preventing the regular journal record from becoming cumbersome and will keep allowances in one place for ready reference. The principle of the record is readily applicable to many other types of business. Form 79 illustrates this record. + +**5. Drivers' Sales** + +In certain lines of business, for example bakeries and dairies, which permit drivers to make sales, a system should be used that will show proper accountability. The driver's book (Form 80) is the most important + +SPECIAL RECORDS +<page_number>837</page_number> + +Name: +Address: + +Date Received: +To Whom Delivered: +Transferred To: +Title: + +Certification: +No. of Shares: +No. of Certificates: +No. of Shares: +No. of Certificates + +Form 28. Corporations Stock Book. + +<table> + <tr> + <td>Date</td> + <td>Cust.</td> + <td>Case No.</td> + <td>Bill No.</td> + <td>Serial Number</td> + <td>Freight</td> + <td>Merchandise</td> + <td>Allowances</td> + <td>Total Y</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form 78. Allowance Journal + +<img>A form titled "Allowance Journal" with columns for Date, Cust., Case No., Bill No., Serial Number, Freight, Merchandise, Allowances, and Total Y.</img> + +338 PRINCIPLES AND PRACTICE + +part of the system. The names of the customers are entered on the sheet at the shop, the driver entering in the proper columns the number of loaves or bottles delivered and cash received, so that the record will be complete when returned to the office at the end of the day. If there are a number of drivers it may be necessary to have two books for each route, using them on alternate days. A record is also kept at the shop of the total number of loaves or bottles taken out and returned each day. + +<table> + <tr> + <td colspan="5" style="text-align:center;">DRIVER'S BOOK</td> + </tr> + <tr> + <td>Date:</td> + <td>CASH</td> + <td></td> + <td>CHANGE</td> + <td>TICKETS</td> + </tr> + <tr> + <td>Name</td> + <td>Paid<br>on Account</td> + <td>Retail</td> + <td>Wholesale</td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form 80. Driver's Book + +The bills, weekly or monthly, are made up from this record. A carbon copy of each is made and kept for reference. Any balance which may be due from the previous period is transferred from the carbon copy to the current copies. When a customer makes payment, the original, the customer's bill (Form 81), is receipted by the driver. This feature eliminates the opening of ledger accounts. + +Since a record is kept of the number of loaves + +SPECIAL RECORDS <page_number>339</page_number> + +<table> + <tr> + <td rowspan="2">Customer</td> + <td colspan="5" style="text-align:center;">WEEKLY ACCOUNTS</td> + <td rowspan="2">Address</td> + </tr> + <tr> + <td>Date</td> + <td>Month</td> + <td>Term</td> + <td>Wm.</td> + <td>Trum.</td> + <td>Fin.</td> + <td>Sale</td> + <td>Total No.</td> + <td>Paste on Laster</td> + </tr> + <tr> + <td>No. Leave</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>Received Payment</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>Name</td> + <td>Date</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th colspan="10">Form 81: Customer's Weekly Bill</th> + </tr> +</table> + +<table border="1"> + <thead> + <tr><th>Date</th><th>Name</th><th>Order No.</th><th>Sale Amount</th><th>Sale Date</th><th>Amount Due</th><th>Variance</th><th>Con. V</th><th>Order Variance</th><th>Retain</th></tr> + </thead> + <tbody> + <!-- Empty rows --> + </tbody> +</table> + +Form 82: Order Register, showing Sales and Agents' Commissions + +340 PRINCIPLES AND PRACTICE + +charged to each driver, and the number returned each day, it is possible by means of the forms suggested to secure a statement of the sales of each driver. Provision has been made for tickets in the driver's record sheet (Form 80). If tickets should be used, a ticket register form should be added to those here shown so that all issued tickets may be properly accounted for. In this way, used tickets cannot easily be turned in a second time without detection. + +6. Salesmen's Commissions + +The employment of salesmen who sell on commission presents a problem which requires some special consideration. It is necessary to keep their accounts in an accurate manner to show exactly what the salesman has earned in any given period. As an illustration, take a commission salesman selling an article upon the installment plan. + +Such a salesman is usually allowed a weekly drawing account, the amount of which is charged against his commissions. At certain intervals an accounting takes place, and the salesman is paid any excess standing to his credit over the amount drawn to date, or is charged with any excess in favor of the company if his drawings exceed commissions. When an excess in favor of the salesman is shown, he is paid a certain amount, usually one-half of the sum of total payments made on sales. For example, if sales made entitle the salesman to $100 commission, this amount will be paid him only when $200 has been paid by customers on the sales. + +The customers' accounts may be grouped according to agents, in a loose-leaf ledger. In connection with this + +SPECIAL RECORDS <page_number>841</page_number> + +ledger is an order register (Form 82), showing the total sales for a certain period, and the total commissions on these sales. From this register, postings are made to the customers' ledger accounts and to the agents' accounts. An identifying number is given to each order and is carried into the order register. When desired, group totals are secured, recapitulated, and checked against the order register. It is then an easy matter to determine from these totals what amount is due the agent above his drawing account. + +7. Pledge Record + +A charitable organization or a church should keep a record of pledges made and of the amounts paid upon them. The following card form (Form 83) is simple, and meets most requirements. It is printed on two sides, the reverse merely a continuation of the front. + +<table> + <tr> + <td colspan="5" style="text-align: center;">RECORD OF PLEDGES</td> + </tr> + <tr> + <td rowspan="2">U. M. E.</td> + <td rowspan="2">Name</td> + <td rowspan="2">Address</td> + <td rowspan="2">Remarks</td> + <td>Wk. Pledge</td> + </tr> + <tr> + <td>Mo. Pledge</td> + <td>Total Pledge</td> + </tr> + <tr> + <td colspan="5" style="text-align: center;">CHURCH</td> + </tr> + <tr> + <td>Wk.</td> + <td>Mo.</td> + <td>Paid</td> + <td>Unpaid</td> + <td>BALANCE</td> + <td>Wk.</td> + <td>Mo.</td> + <td>Paid</td> + <td>Unpaid</td> + <td>BALANCE</td> + </tr> + <tr> + <td>1</td> + <td></td> + <td></td> + <td></td> + <td>11</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>2</td> + <td></td> + <td></td> + <td></td> + <td>12</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>3</td> + <td></td> + <td></td> + <td></td> + <td>13</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>4</td> + <td></td> + <td></td> + <td></td> + <td>14</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>5</td> + <td></td> + <td></td> + <td></td> + <td>15</td> + <br/> + <!-- Additional rows for months --> + </tr> + +<!-- Form 83. Pledge Record --> +<table border="1"> +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th></tr> + +<tr><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</th><th>Mo.</th><th>Paid</th><th>Unpaid</th><th>BALANCE</strong></table> + +<img>A table with columns for Month, Paid, Unpaid, Balance, Mo., Paid, Unpaid, Balance. +The first row shows "Mo.", "Paid", "Unpaid", "Balance". +The second row shows "Mo.", "Paid", "Unpaid", "Balance". +The third row shows "Mo.", "Paid", "Unpaid", "Balance". +The fourth row shows "Mo.", "Paid", "Unpaid", "Balance". +The fifth row shows "Mo.", "Paid", "Unpaid", "Balance". +The sixth row shows "Mo.", "Paid", "Unpaid", "Balance". +The seventh row shows "Mo.", "Paid", "Unpaid", "Balance". +The eighth row shows "Mo.", "Paid", "Unpaid", "Balance". +The ninth row shows "Mo.", "Paid", "Unpaid", "Balance". +The tenth row shows "Mo.", "Paid", "Unpaid", "Balance". + +342 +PRINCIPLES AND PRACTICE + +It may be placed in a tickler file, to serve as the basis of a follow-up system. + +8. Diamond Register + +For a jewelry house, a register for precious stones, such as diamonds, is of value. The principle can of course be applied advantageously to other goods. + +In such a register loose stones, which are easily lost or stolen and represent great value in small quantities, should be separated from mounted goods. The register suggested in Form 84 for loose stones is simple, containing not nearly the number of columns found in some registers. It is in actual use, however, in a well-known wholesale jewelry establishment and meets all require- ments. Loose stones are purchased in papers, each paper containing stones of different sizes, all of them together totaling a certain number of karats. When the paper is received, the stones therein are examined and graded. Then as many numbers are given the paper as there are grades of stones contained in it. For example, the illustration shows three numbers on the same day. All three numbers make up the one paper of stones purchased, the identification of the total value of the entire paper being made possible by this means. This method of notation may seem somewhat peculiar, but it is used and works well. + +9. Insurance Register + +Fire insurance policies at times present a problem. Many times in checking over policies one finds that some important clause has been overlooked. Permits and other important clauses in the various policies cov- + +SPECIAL RECORDS <page_number>343</page_number> + +<table> + <tr> + <td colspan="5">DIAMOND REGISTER (LOOSE STONES)</td> + </tr> + <tr> + <td>No. Paper</td> + <td>Date Furnace</td> + <td>Name</td> + <td>No. Stones</td> + <td>Treaty Worthy</td> + </tr> + <tr> + <td>1001</td> + <td>10/4</td> + <td>J. Jones</td> + <td></td> + <td></td> + </tr> + <tr> + <td>1002</td> + <td>10/3</td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>1003</td> + <td>10/7</td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +<table> + <tr> + <td colspan="5">DIAMOND REGISTER (MOUNTED GOODS)</td> + </tr> + <tr> + <td>Case No.</td> + <td>Cuts No.</td> + <td>Date</td> + <td>No. Pairs</td> + <td>Worthy</td> + </tr> + <tr> + <td>1001</td> + <td>10/4</td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>1002</td> + <td>10/3</td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>1003</td> + <td>10/7</td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form BK- Diamond Register + +344 +PRINCIPLES AND PRACTICE + +<table> + <tr> + <td>No.</td> + <td>P.O.</td> + <td>Policy Number</td> + <td>Company</td> + <td>Award</td> + <td>From Term</td> + <td>To Term</td> + <td>Amount</td> + <td>Coverage</td> + <td>Remarks</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th colspan="10">REGISTER</th> + </tr> + <tr> + <th>Leasing Clause</th> + <th>Gas Engine Clause</th> + <th>Overstreet Clause</th> + <th>Be-Stay Clause</th> + <th>Co-Insurance Clause</th> + <th>Freight Clause</th> + <th>Other Clause</th> + <th>Other Clause</th> + <th>Other Clause</th> + </tr> + <tr><td colspan="10"></table> + +Form No. Insurance Register (left- and right-hand pages) + +SPECIAL RECORDS <page_number>345</page_number> + +ering a plant or a certain stock of goods ought to be similar in wording. If one policy allows a plant to be shut down for a certain length of time, the other policies on the same plant ought to provide for the same allowance. If not, a serious question may come up later as to whether or not the plant was covered by all its policies should it be shut down without notice. + +An insurance register is valuable. According to the register shown in Form 85, when a policy is received, it is entered on the page given to that special line of insurance. The particulars are entered on the left-hand page, and a check mark is placed under the proper headings on the right-hand page, which is made up of columns headed for the various clauses and permits required on that particular line of insurance. By using such a register, whenever a policy is received or renewed the necessary clauses on each policy will be checked automatically, without reference to the policy itself, and the danger of accidental omission of any particular clause is avoided. + +**10. Commission Merchants' Consignment Register** + +When a commission merchant receives goods to be sold on a consignment basis, he checks the goods as received with the invoice, or letter, or with whatever information he has received from the consignor regarding the shipment. He numbers the consignments in order as they arrive, each of them receiving the number next following that of the last preceding consignment. This number is marked on each package or article of the consignment, and is entered on a consignment register. + +In appearance, this register may be ruled like a simple two-column journal. In the case of a large business + +346 +PRINCIPLES AND PRACTICE + +<table> + <tr> + <td colspan="5">SECURITIES REGISTER</td> + </tr> + <tr> + <td>DATE</td> + <td>DESCRIPTION OF SECURITY</td> + <td>AMOUNT</td> + <td>RATA</td> + <td>INCOME ALLOCATED</td> + </tr> + <tr> + <td>PERIOD</td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form 86. Securities Register for Income Tax Purposes + +<table> + <tr> + <td colspan="5">INCOME RECORD</td> + </tr> + <tr> + <td>DUE DATE</td> + <td>DESCRIPTION OF SECURITY</td> + <td>AMOUNT PAID TO THE UNDERTAKING (IF ANY)</td> + <td>UNPAID AMOUNT (IF ANY)</td> + <td>INCOME ALLOCATED</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form 87. Income Record for Income Tax Purposes + +SPECIAL RECORDS +<page_number>347</page_number> + +ALLOWABLE DEDUCTIONS RECORD + +<table> + <tr> + <td>DATES</td> + <td>DESCRIPTION OF DEDUCTION</td> + <td>DEDUCTION AMOUNT</td> + <td>DATE OF DEDUCTION</td> + <td>REVENUE RECEIVED DATE</td> + <td>AMOUNT PAID</td> + <td>REVENUE RECEIVED DATE</td> + <td>AMOUNT PAID</td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES - OTHER THAN PAYROLL WITHHOLDING TAXES</td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th colspan="8">Form 88-Allowable Deductions Record for Income Tax Purposes</th> + </tr> +</table> + +<img>A scanned page of a form titled "Allowable Deductions Record" for income tax purposes.</img> + +348 +PRINCIPLES AND PRACTICE + +it has an index, containing name, address, page, and consignment number of each consignor. All charges are entered in the left-hand column and all credits in the right-hand column. The charges are (1) the cost to the consignor of all outlays, advances, etc., made on account of the consignment by the consignee, (2) the consignee's charges for his service, and (3) the proceeds remitted or credited to the consignor. The credits are the returns secured from sales, allowances, etc., received by the consignee for the account of the consignment. + +11. Income Tax Records + +When the income is derived from many sources, a complete income tax record has three parts: + +1. Securities register (Form 86) +2. Income record (Form 87) +3. Allowable deductions record (Form 88) + +The column heads shown on the forms are self-explanatory. The records shown serve the requirements of a business man whose income is derived from securities, rents, and business profits. + +REVIEW QUESTIONS + +1. Rule a notes receivable register which may be used as a posting medium. +2. Rule a corporation stock transfer record. +3. Rule an insurance register in which insurance schedules and clauses may be recorded. +4. Rule a form of consignment register for a commission merchant. +5. Rule a set of forms which will provide a complete income tax record for an individual. + +CHAPTER XXIX + +MECHANICAL AIDS + +**1. Importance of Mechanical Aids** + +In office work mechanical aids are of great and increasing importance. As a general rule, the clerical efficiency in many an office could be increased materially by the introduction of labor-saving machinery and the proper supervision of the work done upon it. But it would be too much to say that nothing should be done by hand which can be done by a machine, for the question of cost must be considered. + +The economy to be effected by the use of a machine may be tested by these requirements: + +1. There must be work enough to keep it in use. +2. Its cost of operation must be less than the old way of doing the work. +3. It should eliminate costly mistakes. +4. The work done should be of a class higher than that done in the old way. +5. The amount of work done should be greater than the amount done in the old way. + +Certain labor-saving machines are particularly useful in the accounting work of the office; those of chief importance in this connection are as follows: + +Calculating machine +Billing or bookkeeping machine + +<page_number>349</page_number> + +350 +PRINCIPLES AND PRACTICE + +Tabulating machine +Slide rule + +Other labor-saving devices facilitate the work of the accounting department, although not directly related to accounting. They are useful in various degrees and ways. Some devices are: + +- Typewriter +- Automatic register +- Photographing machine +- Cash register +- Time recorder +- Numbering machine +- Stamp affixer +- Pencil sharpener + +2. The Calculating Machine + +The bookkeeper's drudgery consists chiefly in the various mathematical operations he must perform every day. Not only do calculating machines relieve him of the drudgery that is connected with all arithmetical operations, but by their use a great saving in time is secured. A day's work can be accomplished on time, with no "hang-overs" from one day to the other. When mechanical action is substituted for mental computation, not only time and cost are saved, but office positions are opened to persons who otherwise would be debarred because of their inability to calculate rapidly and accurately. Rapidity in mental calculation is not now regarded as an essential part of a clerk's qualifications. + +One step in the application of machinery to office work was the introduction of the adding machine. The + +MECHANICAL AIDS <page_number>851</page_number> + +first machines were crude and slow in operation, but those now in use are both accurate and rapid. So far as the machine itself is concerned, it can make no mistakes, although, of course, the operator may. Machine calculations can be done with such absolute accuracy that no rechecking is necessary, but because of the element of human operation it is desirable that they be checked in all cases. As a practical matter mental calculation is never passed as correct until checked carefully. + +Calculating machines can be used for all sorts of calculation besides addition. Modern calculating machines are of two kinds: + +1. Those which make no permanent record of computations. +2. Those which record computations in permanent form. + +The first class is composed of the non-listing machines. They do satisfactorily the great mass of ordinary calculating which arises in the course of a day's work, where permanent records of these figures are not required. These machines are smaller in size than the other kind, and cheaper. They are operated more rapidly than the listing machines since they usually have no cranks or levers to manipulate. Because of their usual small size, they do not need to be given a fixed location in the office, and when necessary they may be moved easily from one place to another. Their rapidity of operation is such that calculation may be made twice over, to check its accuracy, in less time than it takes to do it once on the listing machine. + +352 +PRINCIPLES AND PRACTICE + +The listing calculating machine which makes records at the same time that it adds, is used for a variety of purposes in every field of commercial activity where it is necessary to keep a record of the figures in the calculations. Such machines are chiefly used, however, for additions. By the use of carbon paper, many lists may be prepared at one time. These pages can be inserted directly into loose-leaf binders. Perfect and accurate copies of every transaction are secured without the need of rewriting. + +In purchasing a calculating machine, attention must also be given to the size of the amounts the machine will handle, to its speed and durability, and to whether or not a partial or incomplete pressing down of the keys will cause an error in the calculation. + +3. The Billing or Bookkeeping Machine + +The billing machine, which was mentioned in Chapter XVI, is a combination effected either by the addition of an adding attachment to a typewriter, or of type keys to an adding machine. On the billing machine invoices for goods sold may be made out, and the invoices extended and totaled, with all discounts taken into consideration. In fact, a dozen or more different records may be made out at one time. The billing machine is now commonly known as a "bookkeeping machine." + +With the flat-bed machine, records may be made at will on the pages of regularly bound books, on loose leaves, and on any other sort of document or paper. The entire writing surface is exposed. Work may be done at any point on the exposed surface. Corrections may be made without disturbing or removing the forms. + +MECHANICAL AIDS <page_number>353</page_number> + +**4. Tabulating Machines** + +These machines are of great practical use in large offices where a great amount of statistical tabulating is required and where the accounting system is elaborate. Their operation is almost marvelous. By their use business statistics may be analyzed as minutely as desired. Any information in regard to any item or group of items may be secured in a few minutes. Business statistics are made available which, in the ordinary course of events, could be secured only after hours of laborious work, if at all. Even though certain statistics are passed over as unnecessary when the record is made, they are readily obtainable later should they be desired. If such details as are made available by use of these machines were derived from the ordinary records, it would not only be necessary to provide books with a multitude of columns, but the clerical labor in connection with keeping the records would be so great that the system would break down completely in a very short time. + +The complete machine consists of three units, as follows: + +1. Punching machine +2. Sorting machine +3. Tabulating machine + +The basis of the system is a small card on which the information is recorded. Each card has ten or twelve lines, and is wide enough for perhaps fifteen columns of three figures or letters each. A column three figures wide and ten lines long will accommodate any number less than 1000, but not fractions or decimals. The columns, of course, are made wider or narrower to meet + +354 +PRINCIPLES AND PRACTICE + +the needs of a given case. If an unusually large amount has to be recorded in a column too small to take it, it can be split and recorded on two cards, the sum of the two entries being the original number. + +Each transaction is recorded upon a separate card, by punching out the proper figures in each column. The punching machine operates like a typewriter, punching a round hole where a certain number is located. The position of the hole horizontally shows the nature of the transaction; its position vertically indicates the amount of the transaction. The numbers on the cards are arranged in a code covering every item in the classifications, each item being given a number. One number on the card, for example, may represent a state, another a town within that state, and so on. + +The original written document gives the information for the cards. This document is coded by one clerk, the code figures are checked by another clerk, and it is then ready for recording on the card. These code figures, for example, may show the month, the day, the department, the order number, the account to be charged, the quantity, and the amount. One clerk takes the original document and a fresh card and punches out the numbers on the card to correspond to the code figures on the original paper. Cards can usually be punched at the rate of 250 per hour. The original document is then filed away in a cabinet after this punching process has also been carefully checked to insure accuracy. + +After the cards are punched, it is an easy matter to sort them in any way desired. This is done by means of a sorting machine, which sorts the cards into any de- + +MECHANICAL AIDS <page_number>355</page_number> + +sired grouping according to the classifications, the ma- +chine being set to bring about the grouping selected. +In this way, transactions are classified and analyzed at +will. The cards as sorted are thrown out in piles at the +rate of almost 15,000 an hour. + +These cards are then run through the tabulating machine to secure automatically the total figures +desired. The proper totals are built up for as many compilations in connection with the transactions under +consideration as may be required. Nine thousand cards +an hour can be handled. + +**5. The Slide Rule** + +Although the slide rule is used principally by drafts- +men and engineers, its use in the office is very great. +Its manipulation is not as cumbersome and complicated +as many business men believe. Many different types of +arithmetic problems may be solved with it. It is es- +pecially adapted to multiplication and division where +approximate results are sufficient. It is also of use in +intricate problems in which two or more operations are +necessary and which involve higher mathematics, such as +roots, logarithms, etc. + +The slide rule is either plain or cylindrical. The +cylindrical rule is much more accurate than the plain +rule because of the increased number of scales. A cylin- +drical rule straightened out is equal in length to a +plain rule about 36 feet long. In statistical work the +cylindrical rule is invaluable; averages, unit costs, per- +centages, pro rata, etc., may be figured easily and rap- +idly, if approximate accuracy—that is, to about the fifth +figure—is all that is required. + +<page_number>356</page_number> +PRINCIPLES AND PRACTICE + +**6. The Typewriter** + +Perhaps the most important machine ever intro- +duced into office work is the typewriter. It is of such +universal use among business houses at the present time +that a description of it is unnecessary. + +There is universal agreement today as to the con- +venience of having business documents written legibly +so that they may be read rapidly and without hesitation. +Practically anyone can learn to operate a typewriter +fairly well in a comparatively short time, whereas only +a few clerks, relatively speaking, can ever learn to write +longhand legibly and at the same time with rapidity. +Again, one or more carbon copies of any paper can now +be made without extra effort, and the laborious and +unsatisfactory copying by longhand or by letter press +can be avoided. + +Modern methods of accounting could not have been +developed without the use of the typewriter. A third +advantage secured from the use of the typewriter is that +the output of documents has been increased and that in +cases of special need the documents desired can be pre- +pared in a very short time. + +**7. Automatic Register** + +One way of making out bills with the aid of ma- +chinery is by the use of the automatic register. This +register is constructed to present a hard, flat writing +surface on which the bill may be made out with either +pen or pencil. Three copies of each bill are made at a +writing. When the writing is completed, a crank is +turned and two of these copies come out at one end of +the machine so that they may be detached from a roll + +MECHANICAL AIDS <page_number>357</page_number> + +of paper inside the register. One of these two copies is given to the customer; the other is retained for checking against the third copy. The third copy, which winds onto a spool in the machine, cannot be taken out until someone in authority unlocks the register, usually at the end of the day. This copy is used for purposes of re-checking, auditing, and giving the management a complete and concise record of transactions. + +8. The Photographing Machine + +In large offices the photographing machine is a very useful instrument. With it, photographs of any sort of a document may be made very rapidly, in less than a minute. It is especially useful in an office requiring copies of statistical tables, or quick facsimiles of important documents. The copies may be made either as negatives or as positives of the original. + +9. The Stamp Affixer + +This is an automatic device to control the issue of stamps. Stamps are placed in a locked box and can be taken out only by being affixed to envelopes. The use of such a machine, instead of having stamps distributed generally to the several desks, will eliminate a considerable loss from carelessness or misuse. + +Every office is obliged to use postage stamps. Even if the amount expended each month on this item seems large it is usually passed over as unavoidable. In many cases when books do not balance, the bookkeeper will charge the difference to the postage account. The use of such a machine may eventually uncover extensive errors existing in the accounting records. + +358 +PRINCIPLES AND PRACTICE + +Stamp affixers are often attached to machines for sealing envelopes. + +**10. The Time Recorder** + +The time recorder, which has been discussed already in Chapter XXVI, is merely a clock with a recording mechanism attached to it, for noting accurately the working time of employees. Every large office should provide for the employees checking in and out, if for no other reason than to discourage their coming in late and leaving early. + +**11. The Numbering Machine** + +In an office where it is necessary often to number papers, cards, envelopes, requisitions, order blanks, etc., a numbering machine will be found useful. Such a machine numbers consecutively, in duplicate, or by repeating any number as many times as may be desired. + +**12. The Cash Register** + +The cash register has come to be looked upon as a necessity in modern business. Few firms get along without one, and in a retail business especially its use makes possible a correct record of cash details which otherwise would certainly be overlooked at times. The rapidity with which many retail transactions—often considerable in amount—are conducted, makes error or fraud easy. This the register, in part at least, prevents. + +The cash register can be used to advantage in the office for various other purposes, such as keeping the daily bank balance, for recording money received on account, and for recording petty cash expenditures. + +MECHANICAL AIDS <page_number>359</page_number> + +REVIEW QUESTIONS + +1. Mention the various factors which determine whether or not a machine installed in an office will be an economical purchase. +2. How would you make use of a tabulating machine unit in the office of a factory which manufactures steel drills of many sizes? The factory is located in Ohio. It has three branch selling agencies—one in Chicago, one in New York, and one in Canada. Goods are sold all over the world. + +<img>A page from a book or textbook discussing mechanical aids and review questions.</img> + +<img>A blank page with a faint vertical line on the right side.</img> + +Part II +Illustrative Systems + +[API_EMPTY_RESPONSE] + +CHAPTER XXX +RETAIL AND WHOLESALE ACCOUNTING + +1. The Retail Problem +Every retail business needs a simple and well-arranged system of accounts which will enable those interested to know at any time just how the business stands, what it owes, and what is owing to it. If such a system is not kept, a correct statement of condition is impossible, and as a result the securing of credit is jeopardized. Credit is given in most cases because the creditor believes the obligations will be paid when due. The creditor is most likely to receive this impression if he is shown a satisfactory statement of condition compiled from a well-kept set of books of account. Such a record, also, enables a merchant to meet competition, which frequently forces the making of close prices. A correct system by disclosing losses prevents their repetition. The retailer has fully as much need to know where he gains or loses as the wholesaler. + +2. The Wholesale Problem +The present tendency in the wholesale trade is toward the development of an organization similar in its essential features to that of the typical retail establishment. Success depends upon good buying and good selling just as it does in the retail business. What is said concerning retail accounts and concerning constructive principles is applicable also to wholesalers. +<page_number>363</page_number> + +<page_number>364</page_number> +ILLUSTRATIVE SYSTEMS + +**3. The Object of Business** + +The object of conducting a business is to make a profit, which means to sell the product for more than it costs to buy and place it before the public. Therefore, any business, large or small, to be successful must consider three things: + +1. The cost of doing business +2. The amount of business done +3. Profits and losses + +The accounting system in use must provide an intelligible record covering these points. The record must give a general outlook over the whole business and at the same time give detailed information for the control of particular transactions. + +**4. The Cost of Doing Business** + +Many directions as to what is to be included in the cost of doing business are found in books on accounting, as: + +1. Production +2. Selling +3. Overhead, including both administration and capital charges. + +All those expenses which follow the cost price must be taken into consideration in figuring the selling price. These expenses must all be known and likewise the relations they bear to one another and to the whole amount of business done. Fixed rules are useless for handling and determining expense, since what it is and how it is handled depends entirely upon the merchant. Almost every case requires different treatment. + +**RETAIL AND WHOLESALE ACCOUNTING** <page_number>365</page_number> + +**5. Profit on Sales** + +The most accurate means of determining profits is a physical inventory taken monthly. The time and interference with business which are involved render it impracticable, however. There are two substitutes for the monthly physical inventory that will secure approximate results: + +1. Adopt the practice of marking the cost price in conjunction with the selling price of each article to be sold. +2. Ascertain by experience the minimum gross profit made on each class or recognized group of sales. + +Practically correct results are secured by finding the profits on the total sales. Suppose in a certain business a minimum profit of 33% on $1,000 sales is assumed to be correct. $850 then is gross profit. If from this profit the total expenses are deducted the remaining balance will represent net profit. Although certain errors exist in such a method, due to the fact that 33% may be low or high as regards certain sales, the method is in general use in determining profits during the course of a year. At the end of the year the actual inventory is taken and the assumed profits can be then adjusted to their true amount. + +**6. Records and Statements** + +The essentials of any retail system of accounts are: + +1. Cash accountability records +2. Purchase records +3. Sales records + +366 +ILLUSTRATIVE SYSTEMS + +These essentials follow the principles presented in the first part of this volume. To operate such a system of accounts requires a journal, cash book, purchase book, creditors ledger, sales book, customers ledger, general ledger, sales tickets, and return sales tickets. + +Monthly statements should be prepared from these records to present the business results in comprehensive form. These statements would be: + +1. Statement of profit and loss +2. Balance sheet +3. Summary of business condition + +7. The Journal + +The ordinary two-column journal may be used. Its opening entry is a statement of the assets, liabilities, and capital of the firm. Transactions which do not go through either the cash book, purchase book, or sales books should be entered in the general journal. Adjusting and closing entries, entries concerning notes receivable and payable, and entries for allowances and corrections are typical journal entries. + +Journal entries affecting customers' and creditors' accounts should be posted respectively to the Accounts Receivable and Accounts Payable accounts in the general ledger as well as to individual accounts in subsidiary ledgers. Therefore, for each such entry, two ledger folio numbers should be found in the folio column. + +8. Cash Accountability + +When business is done on a cash basis, all purchases and sales being for cash, the problem is simple. Such a condition, however, seldom exists. + +RETAIL AND WHOLESALE ACCOUNTING <page_number>367</page_number> + +The accounting system to be worked out will vary of course with the kind of business in which the merchant is engaged. All cash receipts and all cash collected on account—the total cash receipts of each day —should be deposited in the bank. All payments except from petty cash should be made by check. A cash register should be used, and this should contain a petty cash fund sufficient in amount to meet the needs of each day. + +The cash book records all cash transactions. The column headings of the two sides of the record may be as follows: + +<table> + <tr> + <td>1. Receipts side:</td> + </tr> + <tr> + <td>Date</td> + </tr> + <tr> + <td>Account</td> + </tr> + <tr> + <td>Description</td> + </tr> + <tr> + <td>Ledger Folio (L. F.)</td> + </tr> + <tr> + <td>Accounts Receivable</td> + </tr> + <tr> + <td>Sales Discount</td> + </tr> + <tr> + <td>Cash Sales (if not entered in "General" col- umn)</td> + </tr> + <tr> + <td>General</td> + </tr> + <tr> + <td>Net Receipts</td> + </tr> +</table> + +<table> + <tr> + <td>2. Payments side:</td> + </tr> + <tr> + <td>Date</td> + </tr> + <tr> + <td>Account</td> + </tr> + <tr> + <td>Description</td> + </tr> + <tr> + <td>Check Number</td> + </tr> + <tr> + <td>Ledger Folio (L. F.)'</td> + </tr> + <tr> + <td>Accounts Payable</td> + </tr> + <tr> + <td>Purchase Discount</td> + </tr> +</table> + +<page_number>368</page_number> +**ILLUSTRATIVE SYSTEMS** + +**General** +**Net Payments** + +The monthly total of cash sales is checked against the total of cash sales tickets and then posted to the credit of Sales account. The total of cash collected on account is posted to the credit of Accounts Receivable. The total of payments on accounts payable is posted to the debit of Accounts Payable. The total purchase discount is debited to Accounts Payable, and the total sales discount is credited to Accounts Receivable. + +In order that each month may be charged with its proper amount of expenses, all expense bills should be paid at the end of the month. + +**9. Purchase Records** + +A record of merchandise bought should be kept. The purchase record or journal may be headed as follows: + +Date +Invoice +Date +Number +Creditor +Address +Ledger Folio (L. F.) +Amount—Credit Purchases +Amount—Cash Purchases + +By passing all purchases, cash or credit, through the purchase journal, the amounts necessary to post to the ledger account of merchandise are assembled in one place and it is an easy matter to watch the increase during the month. Postings are made direct from this + +RETAIL AND WHOLESALE ACCOUNTING <page_number>369</page_number> + +book into the purchase ledger, the monthly total being debited to Merchandise Purchases account and the monthly total of credit purchases being credited to Accounts Payable account in the general ledger. Cash purchases will be entered upon the cash book in total from the purchase record as a credit to cash. They may be handled, however, entirely through the cash book, not being entered at all upon the purchase journal. When credit purchases are paid for, Accounts Payable is debited and Cash is credited. + +The purchase invoices should be checked as to extensions and totals. Then they may be entered in the purchase ledger, and from there posted to the purchase ledger and to the general ledger as already indicated. If the business is departmentalized, they may be posted to a departmental distribution sheet. It is advisable at this point, also, to post each amount to a "Due Bill Register," described below. The departmental distribution sheet should be posted once a week, one sheet being sufficient to take care of from 25 to 30 departments. + +Each department may check in its own goods, the records being so arranged that those of each department are kept separate from the others. Invoices should be checked against a copy of the purchase order and then against the goods themselves when the goods are received. The weekly total of invoices in each department should equal in amount the departmental total as shown on the departmental distribution sheet. This practice provides a check which will catch a posting error or an error due to a lost invoice. + +The due bill register, which is posted from the purchase journal, contains the details needed in the pay- + +370 +ILLUSTRATIVE SYSTEMS + +ment of bills. On one or more sheets are listed the bills due each day for a period of three months or more in advance. On the sheet for each day are all the details necessary for paying every bill due that day. + +Each morning this record is examined and the bills due that day are noted on blank forms, each creditor being given a separate blank. This form is columnarized to record the date and amounts due according to the terms of payment. For each creditor a check is made out, which is fastened to the respective blank and is sent to the proper official for signature. Cash book entries for payments may come from the check book. From the cash book payments are posted to the debit of the respective creditors' accounts. + +An alternative to the due bill register is simply to file the invoices, after checking, in a tickler so that they will come up for payment on the proper day. When paid, they are stamped with the date of payment and filed in a permanent invoice file. + +10. Sales Records + +As each salesman makes sales during the day he enters them on serially numbered sales slips, the daily total of these slips representing the amount of sales for the day. These slips should be checked against the cash received. Charge sales slips go to the bookkeeper for entry in the customers ledger. Credit slips (for returns), which are made out as required during the day, go to the bookkeeper for entry in the accounts receivable ledger. As accounts are paid, a cash book entry is made charging Cash and crediting Accounts Receivable. + +RETAIL AND WHOLESALE ACCOUNTING <page_number>371</page_number> + +Invoices are made in duplicate, one copy to go to the customer and the other to be used as a posting medium. When these invoices are made out, it is a good plan to show on them only items and prices. To check the accuracy of the extensions, two persons should figure them separately, on the two copies. + +The copies to be used in posting are sorted first according to the bookkeeper's ledger divisions and then those for each ledger are put alphabetically. Before each group is posted, the profit thereon should be figured by means of a profit book. According to this plan every article sold by the firm has a number, and each department is numbered also; if a certain department, for example, is numbered 10, the first article listed therein may be numbered 101. The profit book contains the number of each article sold, and its cost, together with the percentage of profit, and from this record the amount billed to the customer may be verified. + +When the profit has been figured, the bookkeeper secures these sheets from which to make his ledger entries. When he has finished with them they are either filed away or used for statistical purposes. + +**11. The Ledger** + +The ledger may be a single book, although it is advisable usually to have a separate accounts receivable ledger, and where the volume of business warrants, a creditors ledger also. If one ledger be used, the account arrangement may be as follows: + +1. General accounts +2. Accounts payable +3. Accounts receivable + +372 +ILLUSTRATIVE SYSTEMS + +The accounts receivable ledger page should be made in duplicate, one page given to each account (see Form 72, page 255). The first page is perforated at the left. At the end of the month after the daily entries are completed and the entire month's business is recorded and footed, each customer's account is ready. The perforated first sheet contains an itemized statement of the month's transactions and is sent to the customer. The duplicate remains in the ledger as a permanent record. + +CHAPTER XXXI + +AGENCIES AND BRANCHES + +1. Agencies +Usually an agency is only a selling office. It does not collect or pass on credits; that is normally done at the home office. An agency often makes its own purchases, however, and pays its own bills. It may carry a stock of goods from which to ship, or it may have the goods shipped from the home office. Sometimes, indeed, contrary to usual practice, it may pass on certain credits under home office supervision. If the agency has a stock of goods from which shipments are made, it ought to be allowed the privilege of passing on credit risks in order to expedite matters; otherwise customers may have to wait too long for service. The customers' accounts would in this event still be handled at the home office, the agency reporting them, and the home office making collections. The home office treats these agency sales like traveling salesmen's sales, a memorandum Agency Sales account being kept for the purpose of ascertaining whether or not the agency is profitable. + +2. Agency Accounts +An agency's accounts are very simple. Its running expenses are paid from a fund furnished by the home office, and handled like a petty cash fund. If the agency is working on a commission basis, a settlement is made with the home office at stated periods. + +<page_number>373</page_number> + +<page_number>374</page_number> + +ILLUSTRATIVE SYSTEMS + +The agency charges Merchandise with goods re- +ceived from the home office at an agreed price and cred- +its the home office. Merchandise is credited with sales +at cost and the home office charged. If the agency de- +sires to show on its own books its own gross profits, Mer- +chandise will be credited and Sales charged with cost, +and the home office charged and Sales credited with the +selling price. The Sales account balance is only a tem- +porary one, belonging in home office records. + +3. Home Office Accounts with Agency + +As was mentioned above, a memorandum account +with agency sales is kept at the home office to show the +profitableness of the agency. In addition, since the +agency expenses are paid out of a fund similar to a +petty cash fund, an account must be kept with this. +Therefore, the home office keeps an Agency Expense +account to which are charged the checks drawn to re- +imburse the agency petty cash fund for expenses paid +from it. + +The home office must keep its accounts so that they +clearly show unsold goods at the agency as belonging +to the home office. + +4. Branches + +Systems of control of a branch by the home office +differ greatly. Sometimes the branch is practically free to do as it pleases, and again its powers may be +carefully curtailed. Generally speaking, a branch +makes its own sales, passes on its own credits, collects +its own accounts, and keeps its own bank account. It +may make purchases wholly or in part, it may pay its + +AGENCIES AND BRANCHES <page_number>375</page_number> + +own bills, but important purchases are usually made by the home office, the home office paying for them and charging the branch with them. + +Sometimes all branch collections are deposited to the credit of the home office. If this is done, the home office makes all branch payments. + +**5. Branch Accounts** + +Branch accounts are kept in many ways. In some cases all the original records are loose sheets, made up in duplicate. By means of carbon paper two copies of each record are made, one of which is sent to the home office. In this event, the home office keeps an exact duplicate set of branch records, except perhaps the detail of the accounts receivable and payable. At the end of the month, the accumulated monthly duplicate sheets are sent to the home office, and the branch starts new sheets for the next month. + +Again, the home office may receive daily, weekly, or monthly reports from the branch. These reports are made with sufficient detail so that the home office may write up a complete set of records in duplicate. According to a different plan, the branch may be practically free from home office supervision, only general reports being rendered at the end of each month, as for example, merely a copy of its general ledger trial balance. + +Branch books contain no permanent capital accounts, since the capital accounts are carried on the home office records. At the end of any period, branch books will contain only current assets and liabilities, and an account with the home office. Even the branch merchan- + +<img>A page from a book about agencies and branches.</img> + +376 +ILLUSTRATIVE SYSTEMS + +disc account is kept differently from that of a regular trading concern, since usually the branch secures its merchandise billed at an arbitrary figure so that its cost will not be known to the branch. Profit or loss for a period cannot be secured from branch records, because of the facts just stated, and also because, since the fixed assets are usually not found on such records, no depreciation charge can be determined. This is all done at the home office. + +**6. Home Office Accounts with Branch** + +The branch accounts at the home office are kept separate from those of the similar accounts pertaining to the home office business. Branch shipments are never credited to the home office Sales. They should be charged to Branch Merchandise account and credited to Branch Consignments account, regardless of the price at which the shipments are billed. At the end of the year, the difference between the debit balance in the Branch Merchandise account and the Branch Inventory is credited to Branch Merchandise and charged to Branch Consignments. These two accounts then exist with offsetting balances equal in amount to the inventory. When periodic statements are prepared, the branch inventory, taken at cost regardless of its value on the branch books, is added to the home office inventory. Branch sales are credited to Branch Profit and Loss, and branch expenses, depreciation, and cost of goods sold by branch are debited to Branch Profit and Loss. The resulting balance in the Branch Profit and Loss account sets forth the result of the branch operations for the period considered. + +AGENCIES AND BRANCHES <page_number>377</page_number> + +**7. Shipments To and Between Branches** + +The home office usually ships direct to its various branches when it is more profitable to do this than to buy the goods in the local market. In this event, the freight charge resulting must be added to the cost of the goods shipped. + +The cost price at any one branch will always be the same, although at one branch it may be more or less than at another, owing to the differences in the distance of the various branches from the home office. The practice of charging each branch with its own freight is sound accounting and actually involves little more trouble than one general freight account. + +Sometimes it is necessary to ship goods from one branch to another, and the reshipment means that an additional cost must be allocated somewhere. If on account of the reshipment the cost of the goods is more than it would be if the goods were shipped direct from the home office, the difference must not be added to the cost of the branch goods, but must be debited to an expense account on the home office books. Every branch should receive its goods by direct shipment and should not be penalized for a mistake made in sending too much to another branch in the first instance. + +**8. Books for a Chain Store System** + +The rest of this chapter is devoted to outlining roughly a system of accounts for a store with branches. The material presented plus what has already been said ought to be sufficient as a basis for any bookkeeper of experience to establish a branch system or revise an existing one. + +378 +ILLUSTRATIVE SYSTEMS + +**9. Classification of Accounts** + +The accounts are divided into four major groups: + +1. **Assets** +2. **Liabilities and Proprietorship** +3. **Income** +4. **Expense** + +--- + +**1. ASSET ACCOUNTS** + +<table> + <tr> + <td>Cash on Hand</td> + <td>Land</td> + </tr> + <tr> + <td>General Office</td> + <td>Store No. 1</td> + </tr> + <tr> + <td>Store No. 1</td> + <td>Store No. 2</td> + </tr> + <tr> + <td>Store No. 2</td> + <td>Store No. 3</td> + </tr> + <tr> + <td>Store No. 3</td> + <td>Buildings</td> + </tr> + <tr> + <td>Cash in Bank</td> + <td>Store No. 1</td> + </tr> + <tr> + <td>Notes Receivable</td> + <td>Store No. 2</td> + </tr> + <tr> + <td>Accounts Receivable</td> + <td>Store No. 3</td> + </tr> + <tr> + <td>Merchandise Inventories</td> + <td>Furniture and Fixtures</td> + </tr> + <tr> + <td>General Storeroom</td> + <td>General Office</td> + </tr> + <tr> + <td>Storeroom</td> + <td>Store No. 1</td> + </tr> + <tr> + <td>Store No. 1</td> + <td>Store No. 2</td> + </tr> + <tr> + <td>Store No. 2</td> + <td>Store No. 3</td> + </tr> + <tr> + <td>Store No. 3</td> + <td>Storeroom</td> + </tr> + <tr> + <td></td> + <td>Good-will</td> + </tr> +</table> + +--- + +**2. LIABILITY AND PROPRIETORSHIP ACCOUNTS** + +<table> + <tr> + <td>Accounts Payable</td> + <td>Interest on Notes Payable Accrued</td> + </tr> + <tr> + <td>Notes Payable</td> + <td>Interest on Mortgages Payable Accrued Taxes Accrued</td> + </tr> + <tr> + <td>Notes Receivable Dis- counted</td> + <td>Reserve for Depreciation Reserve for Bad Debts Surplus Capital Stock</td> + </tr> + <tr> + <td>Loans Payable</td><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br></table> + +--- + +AGENCIES AND BRANCHES <page_number>379</page_number> + +3. INCOME ACCOUNTS + +<table> + <tr> + <td>Sales</td> + <td>Discount on Purchases</td> + </tr> + <tr> + <td>Store Sales</td> + <td>Rentals</td> + </tr> + <tr> + <td>Dealer Sales</td> + <td></td> + </tr> +</table> + +4. EXPENSE ACCOUNTS + +<table> + <tr> + <td>Merchandise Purchases</td> + <td>Advertising</td> + </tr> + <tr> + <td>In-Freight and Cartage</td> + <td>Returned Sales</td> + </tr> + <tr> + <td>General Stock Issues</td> + <td>Discounts Given</td> + </tr> + <tr> + <td>Store No. 1</td> + <td>Storeroom and Delivery</td> + </tr> + <tr> + <td>Store No. 2</td> + <td>Wages</td> + </tr> + <tr> + <td>Store No. 3</td> + <td>Waste</td> + </tr> + <tr> + <td>Inventories Adjustment</td> + <td>General Stock</td> + </tr> + <tr> + <td>Clerk Hire</td> + <td>Store No. 1</td> + </tr> + <tr> + <td>General Office</td> + <td>Store No. 2</td> + </tr> + <tr> + <td>Store No. 1</td> + <td>Store No. 3</td> + </tr> + <tr> + <td>Store No. 2</td> + <td>Automobile Up-keep</td> + </tr> + <tr> + <td>Store No. 3</td> + <td>Office and Management</td> + </tr> + <tr> + <td>Rent</td> + <td>Salaried Employees</td> + </tr> + <tr> + <td>General Office</td> + <td>Stationery and Office Supplies</td> + </tr> + <tr> + <td>Store No. 1</td> + <td></td> + </tr> + <tr> + <td>Store No. 2</td> + <td>Postage</td> + </tr> + <tr> + <td>Store No. 3</td> + <td>Telephone and Telegraph Office Heat, Light, and Janitor Service</td> + </tr> + <tr> + <td>Miscellaneous Expenses</td> + <td></td> + </tr> + <tr> + <td>General Office</td> + <td>Legal Expenses Interest</td> + </tr> + <tr> + <td>Store No. 1</td><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><<br></table> + +10. Arrangement of Ledger Accounts + +The accounts as grouped above permit the usual statements to be prepared with little effort. It is not expected, however, that every accountant will find this order satisfactory to the last detail. The matter of arrangement is one for the exercise of individual judgment + +380 +ILLUSTRATIVE SYSTEMS + +The ledger accounts begin with assets arranged and listed according to availability in case of realization. Cash is first because it is available and ready for use at any time. Accounts and notes of customers come next, since they are most readily converted into cash. The liabilities are arranged much in the order in which they rank for payment and liquidation. The accrued liabilities are placed after the regular liabilities. Accounts and notes payable must usually be paid first, and capital stock is paid last of all. The expense accounts are grouped to facilitate statement preparation. + +Where a bound ledger is used, it is advisable to leave several pages blank in each section for any additional accounts that may be required during the course of business. If a loose-leaf or a card ledger is used, new accounts between sections can be added as required. + +11. Books and Records + +The books and records suggested for a system of chain-stores are as follows: + +1. **BUYING:** + - Order Book + - Receiving Book (double-column journal ruled) + - Purchase Journal + - Creditors Ledger (loose-leaf) + - General Stock Ledger (loose-leaf) + +2. **SELLING:** + - General Stock Book (loose-leaf) + - Shipping Book + - Sales Tickets for Dealers (duplicate—serially numbered) + - Price List + - Daily Stock Requisition + - Dealers Ledger (loose-leaf) + - Spoiled and Returned Goods Record + +AGENCIES AND BRANCHES <page_number>381</page_number> + +**3. CASH:** +- Columnar Cash Book +- Petty Cash Book +- Cash Sales Journal +- Check Books +- Pay-Bill Book + +**4. GENERAL:** +- General Journal (regular form) +- General Ledger (regular form) +- General Ledger Trial Balance Book +- Inventory Book +- Insurance Register +- Note Register +- Storage Register + +Many of these records have already been considered in other sections of this book. Their use is really self-explanatory and presents no difficulty to anyone at all familiar with branch stores and general trading. Several forms (Forms 89-97) are given here, either as variations from some already presented elsewhere or because a form for a like purpose has not thus far been considered. + +382 + +ILLUSTRATIVE SYSTEMS + +<table> + <tr> + <td colspan="5">STOCK LIST</td> + <td colspan="5">STOCK INDEX</td> + <td colspan="5">COMMODITY</td> + </tr> + <tr> + <td colspan="5">GENERAL STOCK RECORD</td> + <td colspan="5"></td> + <td colspan="5"></td> + </tr> + <tr> + <td colspan="5">FEBRUARY:</td> + <td colspan="5">MARCH:</td> + <td colspan="5">APRIL:</td> + <td colspan="5">MAY:</td> + <td colspan="5">JUNE:</td> + </tr> + <tr> + <td colspan="5">General Stock</td> + <td colspan="5">General Stock</td> + <td colspan="5">General Stock</td> + <td colspan="5">General Stock</td> + <td colspan="5">General Stock</td> + </tr> + <tr> + <td colspan="5">Jan.</td> + <td colspan="5">Feb.</td> + <td colspan="5">Mar.</td> + <td colspan="5">Apr.</td> + <td colspan="5">May</td> + </tr> + <tr> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + <td>OUT</td> + <td>IN</td> + </tr> + <tr> + <th>SQ. NO.</th><th>Date</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</th><th>Piece No.</than></tr> + <!-- Additional rows for each month --> + <!-- Example row for June --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> + <!-- ... --> +</table> + +Form #6 General Stock Record - China Stores + +AGENCIES AND BRANCHES <page_number>383</page_number> + +DATE ____________ STORE NO. ____________ REQ NO. ____________ + +DAILY STOCK REQUISITION + +Please issue the following: + +<table> + <thead> + <tr> + <th>NAME OF ARTICLE</th> + <th>QUANTITY</th> + <th>COST PRICE</th> + <th>SELLING PRICE</th> + <th>VALUE</th> + <th>REMARKS</th> + </tr> + </thead> + <tbody> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + </tbody> +</table> + +Form 90. Daily Stock Requisition—Chain Stores + +ISSUES FROM GENERAL STOCK + +MONTH + +<table> + <thead> + <tr> + <th>DUE DATE</th> + <th>REQUISITION NUMBER</th> + <th>DEALERS</th> + <th>STORE #1</th> + <th>STORE #2</th> + <th>STORE #3</th> + </tr> + </thead> + <tbody> + <tr><td>1</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>2</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>3</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>4</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>5</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>6</td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td>7</<td><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/></tr> + + </tbody> + + <!-- TOTAL ROW --> + <tfoot style="text-align:right;"> + Total: ____________ + </tfoot> + +</table> + +Form 91. Delessier Ledger—Chain Stores + +384 + +ILLUSTRATIVE SYSTEMS + +Form 65. Spoiled and Returned Goods Bread-Chain Stores + +<table> + <tr> + <td colspan="10">SPOILED AND RETURNED GOODS</td> + </tr> + <tr> + <td>DATE</td> + <td>STOCK #1</td> + <td>SPOILED</td> + <td>RETURNED</td> + <td>SPOILED (Bread)</td> + <td>RETURNED (Bread)</td> + <td>SPOILED (Sauces)</td> + <td>RETURNED (Sauces)</td> + <td>SPOILED (Sides)</td> + <td>RETURNED (Sides)</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + <td>1</td> + </tr> + <tr> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + <td>2</td> + </tr> + <tr> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + <td>3</td> + </tr> + <tr> + <th colspan="10">MONTHS:</th> + </tr> + <tr><th>SPOILED (Bread)</th><th>BREAD RETURNED (Bread)</th><th>SPOILED (Sauces)</th><th>SAUCE RETURNED (Sauces)</th><th>SPOILED (Sides)</th><th>SIDE RETURNED (Sides)</th><th>BREAD RETURNED (Bread)</th><th>SAUCE RETURNED (Sauces)</th><th>SPOILED (Sides)</th><th>SIDE RETURNED (Sides)</th></tr><tr><th colspan="10"></th></tr><tr><th colspan="10">TOTAL SPOILED AND RETURNED GOODS:</th></tr><tr><th colspan="10">3774L.</th></tr></table> + +<img>A form titled "Form 65. Spoiled and Returned Goods Bread-Chain Stores" with columns for date, stock number, spoiled bread, returned bread, spoiled sauces, returned sauces, spoiled sides, returned sides, and total spoiled and returned goods.</img> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_number> + +<page_number>3774L.</page_numbers + +AGENCIES AND BRANCHES <page_number>385</page_number> + +<table> + <tr> + <td colspan="2">CASH BOOK</td> + <td colspan="2">CASH BOOK</td> + </tr> + <tr> + <td>DATES</td> + <td>ACCOUNT</td> + <td>DEPLANATION</td> + <td>ACCOUNT</td> + <td>DEPLANATION</td> + <td>GENERAL LEDGER</td> + <td>GENERAL LEDGER</td> + <td>WORTHY DEPTHS</td> + </tr> + <tr> + <td>DATES</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td> + <td>ACCOUNT</td> + <td>NET CASH</td> + <td>NET CASH</td> + <td>DEBITING</td> + <td>SUB. 1 Line 3</td> + </tr> + <tr> + <td>DATES</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td> + <td>ACCOUNT</td> + <td>NET CASH</td> + <td>NET CASH</td> + <td>DEBITING</td><td>SUB. 1 Line 3</td> + </tr> + <tr> + <td>DATES</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td> + <td>ACCOUNT</td> + <td>TO BE ENTERED</td><td></td><td></td><td></td><td></td><td></td> + </tr> + <tr> + <td>DATES</td><th colspan="2">Form 603. Columnar Cash Book—Chain Stores (left-and right-hand pages)</th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th> + </tr> + <tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL DEBITING (IF ANY)</th><th>TOTAL SUB. 1 LINE 3 (IF ANY)</th></tr> + <!-- Additional rows for each line item --> +</table> + +<img>A table titled "CASH BOOK" with columns for DATES, ACCOUNT, DEPLANATION, ACCOUNT, DEPLANATION, GENERAL LEDGER, GENERAL LEDGER, WORTHY DEPTHS, and SUB. 1 Line 3. The table is divided into two sections: left-hand and right-hand pages. Form 603 is mentioned at the bottom.</img> + +<table style="width:100%; border-collapse: collapse;"> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;">AGENCIES AND BRANCHES</th></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"><page_number>385</page_number></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #f0f0f0;"> +<td style="text-align: center;"></tr> +<tr style="background-color: #e6e6e6;"> +<th colspan='12' align='center'>Form 63. Columnar Cash Book—Chain Stores (left-and right-hand pages)</th></tr></table> + +<table cellspacing='1'> +<thead><tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL DEBITING (IF ANY)</th><th>TOTAL SUB. 1 LINE 3 (IF ANY)</th></tr></thead><tbody></tbody></table> + +<table cellspacing='1'> +<thead><tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL DEBITING (IF ANY)</th><th>TOTAL SUB. 1 LINE 3 (IF ANY)</th></tr></thead><tbody></tbody></table> + +<table cellspacing='1'> +<thead><tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL DEBITING (IF ANY)</th><th>TOTAL SUB. 1 LINE 3 (IF ANY)</th></tr></thead><tbody></tbody></table> + +<table cellspacing='1'> +<thead><tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL NET CASH TO BE ENTERED (IF ANY)</th><th>TOTAL DEBITING (IF ANY)</th><th>TOTAL SUB. 1 LINE 3 (IF ANY)</th></tr></thead><tbody></tbody></table> + +<table cellspacing='1'> +<thead><tr><th>DATES</th><th>ACCOUNT NO.</th><th>EXPLANATION TO BE ENTERED</th><th>ACCOUNT NO.</th><thal colspan='9' align='center'>Form 63. Columnar Cash Book—Chain Stores (left-and right-hand pages)</thal></tr></thead><tbody></tbody></table> + +<table cellspacing='1'> +<thead><tr><<th>DATES</thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align='center'></thal colspan='9' align 'cental'></tfoot></table> + +<table cellspacing=1 cellpadding=1 border=1 width=15% height=75% bordercolor=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#cccccc bordercolordark=#ccccccborder colo +<th>DATES +<th>A +<th>B +<th>C +<th>D +<th>E +<th>F +<th>G +<th>H +<th>I +<th>J +<th>K +<th>L +<th>M +<th>N +<th>O +<th>P +<th>Q +<th>R +<th>S +<th>T +<th>U +<th>V +<th<W +<th>X +<th>Z + +<table cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding=1 width=15% height=75% cellspacing=1 cellpadding= + +386 + +ILLUSTRATIVE SYSTEMS + +PETTY CASH BOOK + +| DATE | EXPLANATION | AMOUNT | CAR FADE | POSTAGE | RECEIPT | CANNING | SUNDRIES | +|---|---|---|---|---|---|---|---| +| | | | | | | | | + +Form 94. Petty Cash Book—Chain Stores + +CASH SALES AND CASH REMITTANCES + +MONTH + +<table> +<thead> +<tr> +<th>DATES</th> +<th>TOTAL AMOUNT</th> +<th>STORE #1</th> +<th>STORE #2</th> +<th>STORE #3</th> +<th>STORE #4</th> +<th>STORE #5</th> +<th>STORE #6</th> +<th>STORE #7</th> +<th>STORE #8</th> +<th>STORE #9</th> +<th>STORE #10</th> +<th>STORE #11</th> +<th>STORE #12</th> +<th>STORE #13</th> +<th>STORE #14</th> +<th>STORE #15</th> +<th>STORE #16</th> +<th>STORE #17</th> +<th>STORE #18</th> +<th>STORE #19</th> +<th>STORE #20</th> +<th>STORE #21</th> +<th>STORE #22</th> +<th>STORE #23</th> +<th>STORE #24</th> +<th>STORE #25</th> +<th>STORE #26</th> +<th>STORE #27</th> +<th>STORE #28</th> +<th>STORE #29</th> +<th>STORE #30</th> +<th>STORE #31</th><br/> +<tr><td></td><td></td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue</td><td>Sales Revenue<br/></tr></table> + +Form 95. Cash Sales Journal—Chain Stores + +| DATE | TOTAL AMOUNT | +|---|---| +| 1 | | +| 2 | | +| 3 | | +| 4 | | +| 5 | | +| 6 | | +| 7 | | +| 8 | | +| 9 | | +| 10 | | +| 11 | | +| 12 | | +| TOTAL | | + +<img>A graph showing the fluctuation of sales revenue across different stores over time.</img> + +<img>A line graph depicting the total amount of cash sales for each month.</img> + +<img>A bar chart showing the total amount of cash sales for each store.</img> + +<img>A pie chart showing the distribution of sales revenue across different stores.</img> + +<img>A line graph showing the total amount of cash remittances for each month.</img> + +<img>A bar chart showing the total amount of cash remittances for each store.</img> + +<img>A pie chart showing the distribution of cash remittances across different stores.</img> + +<img>A line graph showing the total amount of cash sales and cash remittances for each month.</img> + +<img>A pie chart showing the distribution of cash sales and cash remittances across different months.</img> + +<img>A line graph showing the total amount of cash sales and cash remittances for each store.</img> + +<img>A pie chart showing the distribution of cash sales and cash remittances across different stores.</img> + +<img>A line graph showing the total amount of cash sales and cash remittances for each month and store combination.</img> + +<img>A pie chart showing the distribution of cash sales and cash remittances across different months and stores.</img> + +<img>A line graph showing the total amount of cash sales and cash remittances for each month, store, and type of transaction (sales or remittance).</img> + +<img>A pie chart showing the distribution of cash sales and cash remittances across different types of transactions (sales or remittance) and months and stores.</img> + +<img>A line graph showing the total amount of cash sales and cash remittances for each month, store, type of transaction, and month type (e.g., January, February, etc.). The x-axis shows the month type, while the y-axis shows the total amount of cash sales and cash remittances. The legend indicates whether the data represents sales or remittance. The graph shows that the total amount of cash sales and cash remittances varies depending on the month type and store combination. For example, in January, the total amount of cash sales is higher than in February, and in Store #1, the total amount of cash sales is higher than in Store #2. Similarly, in March, the total amount of cash remittances is higher than in April, and in Store #3, the total amount of cash remittances is higher than in Store #4. + +AGENCIES AND BRANCHES +<page_number>387</page_number> + +PAY-ROLL BOOK + +<table> + <thead> + <tr> + <th>NAME</th> + <th>POSITION</th> + <th>MATE</th> + <th>WAGE</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + <th>WAGE (DOP)</th> + </tr> + </thead> + <tbody> + <!-- Empty rows --> + </tbody> +</table> + +Form 66: Pay-Toll Record—Chain Stores + +388 +ILLUSTRATIVE SYSTEMS + +<table> + <tr> + <td rowspan="2">REMARKS</td> + <td colspan="5">STORAGE REGISTER</td> + <td rowspan="2">ITEM</td> + </tr> + <tr> + <td>JANUARY</td> + <td>FEBRUARY</td> + <td>MARCH</td> + <td>APRIL</td> + <td>MAY</td> + <td>JUNE</td> + </tr> + <tr> + <td></td> + <td>Sale Dues Goods</td> + <td>Sale Dues Goods</td> + <td>Sale Dues Goods</td> + <td>Sale Dues Goods</td> + <td>Sale Dues Goods</td> + <td>Sale Dues Goods</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td>1</td> + <td>2</td> + <td>3</td> + <td>4</td> + <td>5</td> + <td>6</td> + </tr> + <tr> + <td></td> + <td>7</td> + <td>8</td> + <td>9</td> + <td>10</td> + <td>11</td> + <td>12</td> + </tr> + <tr> + <td></td> + <td>13</td> + <td>14</td> + <td>15</td> + <td>16</td> + <td>17</td> + <td>18</td> + </tr> + <tr> + <td></td> + <td>19</td> + <td>20</td> + <td>21</td> + <td>22</td> + <td>23</td> + <td>24</td> + </tr> + <tr> + <td></td> + <td>25</td> + <td>26</td> + <td>27</td> + <td>28</td> + <td>29</td> + <td>30</td> + </tr> + <tr> + <th colspan="7"><strong>FORM ST. STORAGE REGISTER-CHAIN STORES</strong></th> + </tr> +</table> + +<img>A blank storage register form with columns for months (JANUARY to JUNE) and rows for days (1 to 30), plus a column for "ITEM". The top right corner has "ILLUSTRATIVE SYSTEMS" written.</img> + +<page_number>388</page_number> + +<watermark>Form ST. Storage Register-Chain Stores</watermark> + +CHAPTER XXXII + +MAIL-ORDER ACCOUNTING + +**1. The Mail-Order Business** + +The accounting records for a mail-order business need not be complicated. Whether the business be small or large, the records used should be simple and practical. In the usual mail-order business, cash accompanies orders or else shipments are sent C. O. D. + +The suggestions which follow point out the special features of the records for a mail-order business, one of medium size being taken as an illustration. + +**2. Records Required** + +The scope of the business determines the books and records to be used—generally the following: + +1. General journal +2. General ledger +3. Cash receipts register +4. Cash disbursements register +5. Creditors ledger +6. Purchase order +7. Purchase register +8. C. O. D. register +9. Agent's order blank +10. Agents' record +11. Advertising record + *Publications* + *Circularizing prospects* + +<page_number>389</page_number> + +<page_number>390</page_number> + +ILLUSTRATIVE SYSTEMS + +12. Stock record +Goods in stock +Goods dealt in + +3. Stock Record +The chances are that goods dealt in are either kept on hand or are such as can be secured from some easily accessible source of supply. The purchase department, therefore, need not have an elaborate system of records. It will be advisable, however, to keep a complete record of the goods in stock, so as to control purchasing. + +Form 98. Index Card for Stock—Mail-Order House + +In addition, a record (Form 98) should be kept preferably on a card index, of all goods handled. Each article should be given a number and be handled and referred to by that number at all times. The number should appear on all orders; it should be employed somewhere in each advertisement concerning the article, regardless of the medium used. In this way the number becomes the symbol of the article in question, the distinctive mark by which it is always known. + +<table> + <tr> + <td>Name of Article.</td> + <td></td> + <td>No.</td> + </tr> + <tr> + <td>Manufactured By</td> + <td>Stock Limit</td> + <td>Price</td> + <td>Advertising Medium</td> + </tr> + <tr> + <td></td> + <td></td> + <td>Cost.</td> + <td>Selling Price</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +MAIL-ORDER ACCOUNTING <page_number>391</page_number> + +**4. Agent's Order Blank** + +If the business is conducted partly through agents, as in the case of some concerns of moderate size, each of the agents employed will be supplied with order blanks on which to send in from time to time a list of the articles he needs. As mentioned above, cash should accompany the order or else the shipment should be sent C. O. D. If these order blanks are made in duplicate, the agent will be able to keep one for his file, sending the other to the main office. It is unnecessary to present a form of order blank here. In appearance it will not differ from order blanks in general use, unless it is columnarized so that each column can be headed with the name of the article required. + +**5. C. O. D. Register** + +When an agent or a customer does not pay cash, the goods are sent to him C. O. D. Every C. O. D. sale should be entered in a C. O. D. register (Form 99). + +<table> +<thead> +<tr> + <td colspan="6">C. O. D. REGISTER</td> +</tr> +<tr> + <td>Date</td> + <td>Name and Address</td> + <td>Amount</td> + <td>Date Received</td> + <td>Remarks</td> +</tr> +</thead> +<tbody> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></th><th>C.O.D.</th><th>Received</th><th>REMARKS</th><th>Form No.</th><th>C.O.D.Register-Mail-Order House</th><th>The register is columnarized to show date of sale, name and address of person sending in order, amount of the order, amount received from C.O.D. orders, and date</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><th>Page No.</th><th>391</th><br/></table> + +<img>A table titled "C.O.D. REGISTER" with columns for Date, Name and Address, Amount, Date Received, and Remarks. +The first row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The second row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The third row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The fourth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The fifth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The sixth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The seventh row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The eighth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The ninth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The tenth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The eleventh row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. The twelfth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. +The thirteenth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. +The fourteenth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____, Remarks - ____. +The fifteenth row shows sample data: Date - ____, Name and Address - ____, Amount - ____, Date Received - ____ + +392 +ILLUSTRATIVE SYSTEMS + +payment was received. At the end of a selected period, week or month, the register is examined and the balance outstanding is determined. This outstanding balance, plus the cash received during the period, gives the total of C. O. D. sales. + +6. Purchase Register +The purchase register here, as in any other business, is used to keep account of goods purchased. It is columnarized in the regular way to give full information concerning purchases made. If creditors ledger accounts are not kept, a column may be added to the register to show the date when payment is due on the order, and another to show the date paid. The open "Paid" columns will then show creditors' balances due, and these balances may be checked against the unpaid bills file. + +7. Creditors' Accounts +A card ledger may be used for creditors' accounts. There will probably not be a large number of houses furnishing goods unless the business is of large size. The entries to creditors' accounts come from the purchase register—or directly from invoices—and from the cash disbursements register. It is possible, where only a half-dozen or so houses furnish goods, to subdivide the amount column on both the purchase register and cash disbursements book so that each column total represents a charge, or a credit, to a creditor's account. In this way individual posting would be eliminated, and even the creditors ledger could be dispensed with, as has already been suggested. + +MAIL-ORDER ACCOUNTING <page_number>398</page_number> + +**8. Cash Receipts and Disbursements** + +It may be unnecessary to have the cash book divided into a receipts register and a disbursements register. But the receipts are apt to be numerous, whereas the disbursements will undoubtedly be relatively few in number and in that case separate registers are advisable. The receipts master may be ruled to show the total sales of each article through each of the various sales agencies, if the articles dealt in are relatively few in number. Otherwise, the total of all articles through the various sales channels should be entered in the record by channel grouping only (Form 100), as for example: + +Agents' sales +General advertising sales +Miscellaneous sales + +A recapitulation sheet could be kept for each day, showing cash receipts by articles, grouped as suggested above. From this recapitulation sheet, the three major groupings can be secured for entry on the cash receipts register. + +The cash disbursements register (Form 101) may be ruled to provide charge columns for the various expenses incurred, such as: + +Postage +Express +C. O. D. expense +Stationery and printing +Advertising +Magazine and newspaper +Other +Miscellaneous + +<page_number>394</page_number> + +ILLUSTRATIVE SYSTEMS + +Form 104. Cash Receipts Register - Mail-Order House + +<table> + <thead> + <tr> + <th>DATE</th> + <th>EXPLANATION</th> + <th>CASH RECEIPTS REGISTER</th> + <th>DISCOUNT</th> + <th>AGREEMENTS SALES</th> + <th>SALES DISCOUNTS</th> + <th>MISCELLANEOUS SALES</th> + <th>SALES DISCOUNTS</th> + <th>SALES DISCOUNTS</th> + <th>SALES DISCOUNTS</th> + </tr> + </thead> + <tbody> + <!-- Empty table body --> + </tbody> +</table> + +Form 104. Cash Disbursements Register + +<table> + <thead> + <tr> + <th>DATE</th> + <th>EXPLANATION</th> + <th>CASH DISBURSEMENTS REGISTER</th> + <th>DISCOUNTS</th> + <th>AGREEMENTS DISCOUNTS</th> + <th>DISCOUNTS DISCOUNTS</th> + <th>MISC. DISCOUNTS</th> + <th>MISC. DISCOUNTS</th> + <th>MISC. DISCOUNTS</th> + </tr> + </thead> + <tbody> + <!-- Empty table body --> + </tbody> +</table> + +<img>A diagram showing two forms labeled "Form 104. Cash Receipts Register - Mail-Order House" and "Form 104. Cash Disbursements Register". The forms have columns for DATE, EXPLANATION, CASH RECEIPTS REGISTER, DISCOUNT, AGREEMENTS SALES, SALES DISCOUNTS, MISCELLANEOUS SALES, SALES DISCOUNTS, and MISC. DISCOUNTS.</img> + +MAIL-ORDER ACCOUNTING <page_number>395</page_number> + +**9. Advertising** + +An advertising schedule should be made use of, so that definite results from various mediums may be noted. This schedule would show the medium used, its cost, and the returns. Each advertisement used should be keyed, so that when inquirers write in, the medium in which the advertisement was seen will be given credit for the business it secures. When possible advertising costs should be charged against the article advertised. + +<img>A page from a book about mail-order accounting.</img> + +CHAPTER XXXIII + +PROFESSIONAL ACCOUNTS + +1. Introductory + +One of the simplest cases to which the principles of constructive accounting may be applied is the office accounts of a professional man: an attorney, physician, accountant, etc. Each undertaking in which a professional man engages needs to be recorded, but simplicity must be the dominating feature. If the professional man keeps the books himself, little more in the way of records is required than the office blotter, to be described presently, and a ledger in which to keep an account with each client. If a bookkeeper is employed, the records should be more complete. The discussion in this chapter is concerned with the records for an attorney's office which are kept by a bookkeeper. Many of the ideas expressed may, however, be adopted for use by other professional men. + +2. The Office Blotter + +A successful and widely used system centers about the office blotter. An attorney's time each day must be accounted for and each client must be charged for any time employed on his case. The office blotter or day-book is useful in this connection (Form 102). The entire office force should have access to it and the entries therein should be made immediately after the call, visit, attendance at court, or other service is completed. It + +<page_number>396</page_number> + +PROFESSIONAL ACCOUNTS <page_number>397</page_number> + +should be printed in diary form, each day being given a page. + +OFFICE BLOTTER +Monday, January 6, 1919 + +<table> +<thead> +<tr> +<td>CALLER</td> +<td>NATURE OF BUSINESS</td> +<td>INTERVIEWED BY</td> +<td>REMARKS</td> +<td>TIME</td> +</tr> +</thead> +<tbody> +<tr> +<td></td> +<td></td> +<td></td> +<td></td> +<td></td> +</tr> +<tr> +<td></td> +<td></td> +<td></td> +<td></td> +<td></td> +</tr> +</tbody> +</table> + +Form 102. Attorney's Office Blotter + +All services of whatever nature are entered on the office blotter. The purpose of each interview is entered in the "Nature of Business" column. Any further explanation is entered in the "Remarks" column. As each item on this blotter is entered in the accounts, it is checked off in the "Time" column by the bookkeeper. The use of the blotter can conveniently be extended to cover all events of the day, including even calls and telephone messages which may at the time seem to have no business or professional significance. When so extended, the blotter becomes evidence of the best kind whenever it is necessary to show the transactions of any day. + +3. Card System for Laying Out Daily Work + +A card system is used in some of the better organized law offices for laying out the daily work and noting office requirements. The material recorded is taken from the office blotter and from memoranda furnished by the office employees. In some cases original account- + +398 +ILLUSTRATIVE SYSTEMS + +ing entries may be made on these cards, the blotter being dispensed with. The cards may be plain, about 3 by 5 inches in size. They are arranged by days and can be filed ahead in a card index cabinet under any day or month. If the card index serves the purpose of both tickler and blotter, entries are made from the cards to the cash book, journal, and the ledger. At the close of each day a careful examination of each card is made to ascertain any requirements for future work or consultations, and the necessary information is entered upon another card. This is placed in the calendar card index, to come up on the day set. All used cards are preserved in chronological order. + +4. The Time Card + +If the card system as outlined is not used for original entries of charges, but only for laying out the daily work, the original charges may be taken care of by a perforated time card. As soon as any work for which a client is to be charged is finished, the time spent should be recorded on the card. Form 108 will answer the purpose. + +When work is to be charged, the attorney writes in the first column the name of the client against whom + +<table> +<thead> +<tr> + <td colspan="5">TIME CARD</td> +</tr> +</thead> +<tbody> +<tr> + <td>ACCOUNT CHARGED</td> + <td>DATE</td> + <td>EXPLANATION</td> + <td>TIME</td> + <td>CHARGE</td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <th colspan="5">Form 103. Attorney's Time Card</th> +</tr> +</tbody> +</table> + +PROFESSIONAL ACCOUNTS <page_number>399</page_number> + +the charge is made; the date follows, and then in the explanation column just what has been done and, if necessary, the name of the case. The time column shows time spent on this particular work, and the amount receivable is entered in the charge column. This time sheet should be made in triplicate; the original kept as a complete record of work from day to day and the two other copies given to the bookkeeper. The first duplicate is the copy from which entries are made to the other office records; the second, which is perforated horizontally, is torn off along the perforated lines. These copies are filed according to clients, by name, or by number, if it is the custom to give each client a number. All charges and the record of time spent for each client are thus assembled in one place. When a case is completed, or before if desired, a comparison of the ledger account and the time slip of each client will determine the accuracy of the total charges. + +5. The Cash Journal + +The cash journal (Form 104) may be used to record all receipts and payments, including money advanced for a client. The debit side shows date, client's name, total, payments received from client to cover advances made for him, fees received divided into classes, and deposits. The totals of fees received and repayments of advances are credited to the client's account upon the ledger. The credit side shows date, client's name, total, cost symbol, costs paid, various office expenses paid, check number, withdrawals from bank. One feature, it will be noticed, is the disbursement symbol column. Some attorneys believe that time is saved + +400 + +ILLUSTRATIVE SYSTEMS + +<table> + <tr> + <td rowspan="2">DL</td> + <td rowspan="2">Client's Name</td> + <td colspan="3">TOTAL # of Pages</td> + <td colspan="3">Total # of Pages Used</td> + <td colspan="3">Total # of Pages Remaining</td> + <td colspan="3">Total # of Pages Used (Left)</td> + <td colspan="3">Total # of Pages Used (Right)</td> + </tr> + <tr> + <td>Client's Date</td> + <td>Client's Time</td> + <td>Client's Room</td> + <td>Client's Page</td> + <td>Client's Date</td> + <td>Client's Time</td> + <td>Client's Room</td> + <td>Client's Page</td> + <td>Client's Date</td> + <td>Client's Time</td> + <td>Client's Room</td> + <td>Client's Page</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th rowspan="2">REPT.</th> + <th rowspan="2">CLIENT'S NAME</th> + <th rowspan="2">CLIENT'S DATE</th> + <th rowspan="2">CLIENT'S TIME</th> + <th rowspan="2">CLIENT'S ROOM</th> + <th rowspan="2">CLIENT'S PAGE</th> + <th rowspan="2">CLIENT'S DATE</th> + <th rowspan="2">CLIENT'S TIME</th> + <th rowspan="2">CLIENT'S ROOM</th> + <th rowspan="2">CLIENT'S PAGE</th> + <th rowspan="2">CLIENT'S DATE</th> + <th rowspan="2">CLIENT'S TIME</th> + <th rowspan="2">CLIENT'S ROOM</th> + <th rowspan="2">CLIENT'S PAGE</th> + </tr> + <tr><th>Left Side</th><th>Right Side</th><th>Total Pages Used (Left)</th><th>Total Pages Used (Right)</th><th>Total Pages Remaining (Left)</th><th>Total Pages Remaining (Right)</th></tr> + <!-- Additional rows for each page --> + <!-- Example row --> + <!-- Client's Name --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> + <!-- Client's Date --> + <!-- Client's Time --> + <!-- Client's Room --> + <!-- Client's Page --> +</table> + +Form IDA, Attorney's Club Journal (left- and right-hand pages) + +PROFESSIONAL ACCOUNTS <page_number>401</page_number> + +in writing explanations by making a list of all usual disbursements which are made in connection with a client and assigning to each a symbol which may be entered in the appropriate column of this form. However, it seems questionable as to whether time is really saved by such a procedure. Disbursements are varied and a symbol chart may become a formidable looking document difficult to apply automatically. A simple explanation entered after the client's name should prove more satisfactory. + +**6. Cash Payments** + +No cash should be paid out except upon proper voucher or receipt. Office employees receiving money with which to make payments on behalf of clients should give to the office a receipt, which is given back to them when they turn in the regular receipts from the person to whom the money is paid. + +A petty cash system is used for such items as fare, etc., paid in cash. Petty cash payments may be recorded in a memorandum book and the amounts adjusted and repaid monthly. + +**7. The Ledger** + +A two- or three-column ledger may be used; if a three-column ledger, the third column contains the balance. In the ledger each case should be given a separate page. At the top of each account all necessary data covering the case should be entered, so that there will be no need to refer elsewhere. Accounts are opened from information given on the blotter, or card index, if used. + +<page_number>402</page_number> +ILLUSTRATIVE SYSTEMS + +**8. The Fee Book** + +A fee book (Form 105) is sometimes used for charging fees. Entries are posted from it at the end of each month in total. Sheets should be in duplicate. The original, which is narrower than the duplicate, is given to the client as his bill. The duplicate, in addition to the material contained on the original, has columns for classification of fees. + +**9. Estate Records** + +An attorney should keep accounts with estates in course of settlement. Whatever record is used for this purpose should take up all income and expenditure without the use of any other books, and without running the transactions through the attorney's own records. There are several ways of doing this. One method is that described in the following chapter. + +**10. Collection Accounts** + +Every attorney does a considerable collection business, especially in the beginning of his practice. Care should be observed in handling accounts placed with + +<table> + <tr> + <td>H. M. Meyer, Attorney.</td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>January 2, 1919.</td> + <td>Consul</td> + <td>Retainer</td> + <td>Trial</td> + </tr> + <tr> + <td>H. S. Brown,</td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>Consulting fee, case of Jones vs. Brown</td> + <td>$200.00</td> + <td>$200.00</td> + <td></td> + </tr> +</table> + +Form 105. Attorney's Fee Book + +PROFESSIONAL ACCOUNTS <page_number>403</page_number> + +him for collection. Money received from debtors should be carefully accounted for, and in no case should such money be merged with the regular office cash. + +A simple card system may be maintained for collection accounts. The debtor's name is written at the top, with the terms under which he has agreed to pay, and the name and address of the client for whom collections are to be made. The body of the card should contain spaces in which are entered the amounts collected, the deductions for commissions, and the amounts remitted to the client. + +CHAPTER XXXIV + +ESTATE ACCOUNTING + +**1. Distinctions in Estate Accounting** + +The work of an executor, an administrator, or a trustee, involves great responsibility. The executor and the administrator are court officers. They wind up the estate of a decedent by collecting his property, paying all debts due therefrom, and distributing the remainder in accordance with the terms of the will, or the provisions of the law if no will exists. + +When a person is named in a will by the testator to carry out the provisions of the will, and is approved by the court, he is called an executor. If the will names no one to distribute the estate, or if the person therein named cannot qualify, the court then appoints some one for this office. Such an appointee is called an adminis- trator. + +A trustee holds legal title to certain property for the benefit of another. The title is held subject to an obligation to hold, use, or dispose of the property in accordance with the terms of the trust. + +Since the duties of all these officials are essentially the same, the brief discussion of estate accounting here presented will meet the requirements of any of them. + +**2. Authority to Act** + +A will must be admitted to probate—approved by the court—before it is of effect; this usually involves: + +<page_number>403</page_number> + +ESTATE ACCOUNTING <page_number>405</page_number> + +1. Filing a petition to admit the will to probate. +2. Notifying all persons interested to appear on a certain day. +3. A hearing upon this specified day to determine the legality of the will. +4. Formal decision by the court that the will is admitted to probate as a valid will. + +The executor named in the will must be approved as to age, residence, and character, and then has issued to him letters testamentary, which give authority to act. Usually it is necessary for the executor to file a bond. The will may state, however, that no bond shall be required. The authority of the executor comes through the will by way of the letters testamentary. Where there is no will an administrator is appointed to whom letters of administration are issued as his authority to act. His authority thus comes direct from the court. The trustee usually has no letters issued him. His authority to act comes through the will or deed of trust, and he acts without formal appointment as a court officer. + +The executor is a sort of trustee for the beneficiaries, and his duty is usually confined to collecting the assets and the income of the estate, paying the claims existing against the estate, and the necessary expenses, and distributing the remainder to the beneficiaries. + +**3. Executor's Duty as to Assets** + +The first duty of the executor is to make an inventory of the personal property of the estate over which he is to have control. This inventory is the foundation of his accounts. All assets that come into his possession + +<page_number>406</page_number> +ILLUSTRATIVE SYSTEMS + +when he enters upon his duties should be mentioned in detail, their character and appraised value being set out. +Assets considered worthless should be included in the inventory as well as those of value, but the fact that they are considered worthless should be stated. The inventory is filed in the probate court, or whatever court corresponds to the probate court. The filing of the inventory establishes prima facie the property values for which the executor is responsible, and places the burden of contradiction upon those who claim any incorrect valuation or any omissions. Creditors usually have a year in which to file their claims against the estate. + +Assets discovered after the filing of the inventory are included in the report of the executor in a separate schedule of "New Assets." Their treatment subsequent to discovery is the same as if they were part of the original inventory. If assets happen to be in possession of persons who refuse to give them up, legal proceedings must be started to secure them. Reasonable care must be exercised by the executor over the assets in his possession, care such as an ordinarily prudent man would exercise in regard to his own property. + +Cash belonging to the estate should be deposited in the name of the estate, as "Estate of ............. by X, Executor." If the bank in which the funds are placed is of recognized standing, this procedure will protect the executor in case of loss. If cash is deposited in the executor's name without any indication that it belongs to the estate, the executor is personally liable for any resulting loss, regardless of the care he has exercised in the selection of a depository. Usually an executor may only collect and distribute cash; he may not invest it. + +ESTATE ACCOUNTING <page_number>407</page_number> + +The assets of the estate should be realized with diligence. If more money is secured in the realization of an asset than the inventory amount, the excess should be placed in the proper schedule of the final account. On the same plan, decreases on realization must be shown in a separate schedule, with the explanation for the decrease attached. In case there is likely to be any material loss on a sale, the authority of the court should be secured for the transaction. In this way the executor may protect himself from any personal liability which otherwise might be asserted against him. + +4. Executor's Duty as to Debts and Expenses + +The administration and funeral expenses are preferred over all other claims. After these are paid, assets of the estate must be applied to payment of debts existing at the time of the decedent's death. Such debts include taxes, judgments, and ordinary claims. Since the decedent's accounts may not disclose all debts owed by him, the executor is allowed plenty of time to bring them to light, and is usually permitted, although not legally obliged, to advertise for all creditors to present their claims. Assets should be distributed to legatees for their share according to the will only after the proper legal time has elapsed. If this should be done before the expiration of this time, and a creditor should present a valid claim before the expiration of the time limit, the executor would be personally liable. Legacies are payable from the personal estate unless the will provides that real estate may be sold to satisfy them. Specific legacies are paid first, and general legacies second; if the assets are not sufficient in amount for a complete + +<img>A page from an estate accounting book.</img> + +<page_number>408</page_number> +ILLUSTRATIVE SYSTEMS + +payment of the general legacies, each general legacy is cut down pro rata. + +5. Principal vs. Income + +The two essential elements involved in the accounting of an executor are principal and income. The principal is represented by the original inventory of the estate, and its subsequent increase, according to court rulings as to what is principal. The income is that which has been produced by the estate, so that it can in no way be considered as part of the capital or principal. + +The one serious difficulty confronting the executor is in deciding what is principal and what is income. Court decisions are much at variance on this point, and also the courts sometimes disagree with accountants in their interpretation. The distinction between principal and income is most important when there is a remainderman to whom the estate eventually goes. (If the income of a property goes to one person for a term of years or for life, and then the property itself goes to another person, this final owner is called the “remainderman.”) If this situation exists, any doubt as to whether an item be principal or income is good ground for referring the matter to the court for a ruling. When no life interest exists, the question is not so important, since eventually everything goes to the same person or persons. + +If the distinction commonly made between the asset accounts and the revenue accounts of a commercial concern be borne in mind, the difficulty will be eliminated in many cases, since this distinction corresponds closely to that between principal and income. + +ESTATE ACCOUNTING <page_number>409</page_number> + +**6. Records** + +No system of accounting for the executor is pre- +scribed by law. Usually he may keep accounts as he +sees fit. Since his duty is to realize certain assets and +pay certain liabilities, his record-keeping may be very +simple, so long as from the records kept he is able to +produce all the information required by the court. The +simplest form possible is usually the best, and although +any correct form suffices, records kept on the double- +entry basis will be of greater convenience than those +kept by single entry; they are more scientific, and may +more readily be audited. + +The books required are a journal, cash book, check +book, and ledger. Such accounts are opened in the +ledger as will facilitate the preparation of the sched- +ules which the executor must present to the court when +he makes his accounting. All accounts should contain +full and complete details, so that the executor will be +able to make his final accounting from the ledger itself +without delay and without referring elsewhere. The +journal contains that which cannot be entered in the +cash book, and memorandum entries concerning impor- +tant facts which it is desirable to record. A journal +entry opening an account with each inventory item is +made, and the total of the inventory is credited to the +estate. + +As the assets are converted into cash, the respective +asset accounts are credited and Cash is debited. If an +asset does not realize its inventory value when converted +into cash, the decrease is debited to an account entitled +"Decrease of Principal." This latter account forms the +basis of a separate schedule when an accounting is ren- + +<img>A page from a book about estate accounting.</img> + +<page_number>410</page_number> +ILLUSTRATIVE SYSTEMS + +dered to the court. On the other hand, if an asset realizes more than its inventory value when converted into cash, the increase is credited to an account called “Increase of Principal,” which also forms the basis of a separate schedule when an accounting is rendered to the court. + +Administration expenses and debts of the testator are kept separate one from the other. Furthermore, administration expenses are separated into those pertaining to principal and those pertaining to income. As income is collected, it is credited to a separate income account. + +**7. Final Accounting** + +The executor must render to the court a statement of his transactions in the form of a final accounting. This accounting shows the amount of cash and property received by him, what he has done with it, and the remaining balance, if any. The forms vary in the different states, but since that of New York is complete and comprehensive, it is used below for the purpose of illustration. + +The account of an executor as required by the Surrogate’s Court of the County of New York, State of New York, is about as shown in Form 106. + +Each schedule is signed by the executor, as “Executor of the Estate of ____________.” + +**8. Duties Subsequent to Final Accounting** + +When the accounting has been affirmed, the ledger is closed. All accounts, except those representing cash and other assets left on hand, are closed into the Estate + +ESTATE ACCOUNTING <page_number>411</page_number> + +1. Preamble. (This states that the executor hereby renders the following account of his proceedings as the executor of the estate of ____________; that an inventory of the value of $____________ was filed on ____________; that certain schedules are submitted below.) + +2. Summary of the account: +I CHARGE MYSELF AS FOLLOWS: +With amount of inventory.............. $____________ +" increase, as shown by Exhibit A.......... +Total.................. $____________ + +I CREDIT MYSELF AS FOLLOWS: +With amount of loss on sales, as per Schedule B........... $____________ +" debts not collected, as per Schedule B........... +" expenses, as per Schedule C........... +" debts of testator per Schedule D........... +" payments to legatees per Schedule E........... +Total.................. $____________ + +Leaving a balance of............ $____________ + +to be distributed to those entitled thereto, subject to the deductions of the amount of commissions, and the expenses of this accounting. The said schedules, which are signed by me, form part of this account. + +Form 106. (a) Form of Executor's Account—New York + +<page_number>412</page_number> + +**ILLUSTRATIVE SYSTEMS** + +**SCHEDULE A** + +<table> + <tr> + <td rowspan="2">DATE</td> + <td>CASH</td> + <td>Sales of Property and Debts Due</td> + <td>RENTS</td> + <td>INTEREST</td> + <td>DIVIDENDS</td> + <td>TOTAL</td> + </tr> + <tr> + <td>From Whom Received and All Necessary Information</td> + <td>and Debts Due Deceased</td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +**SCHEDULE B** Part 1 + +Property Mentioned in Inventory, Lost by Accident Without Any Willful Default or Negligence; the Cause of Ha Loss and Appraised Value + +<table> + <tr> + <th>DATE</th> + <th>DESCRIPTION</th> + <th>PARTICULARS</th> + <th>APPRaised VALUE</th> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +**SCHEDULE B** Part 2 + +Decrease of the Value of Any Assets of Deceased Mentioned in Inventory + +<table> + <tr> + <th>DATE</th> + <th>DESCRIPTION</th> + <th>INVENTORY VALUE</th> + <th>PROCEEDS OF SALE</th> + <th>DECREASE</th> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +**SCHEDULE B** Part 3 + +Debts Mentioned in Inventory Not Collected or Collectible, With Reasons Why They Have Not Been Collected and Are Not Collectible, and Their Appraised Value + +<table> + <tr> + <th>PARTICULARS</th> + <th>APPRaised VALUE</th> + </tr> + <tr> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + </tr> +</table> + +Form 106. (b) Form of Executor's Account-New York (Continued) + +ESTATE ACCOUNTING <page_number>413</page_number> + +SCHEDULE B Part 4 +Personal Property Mentioned in Inventory Unsold; and the Reasons of the Same Being Unsold, and Its Appraised Value + +<table> +<thead> +<tr> + <td>PARTICULARS</td> + <td>AFFEISED VALUE</td> +</tr> +</thead> +<tbody> +<tr> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> +</tr> +</tbody> +</table> + +SCHEDULES C, D, AND E + +<table> +<thead> +<tr> + <td rowspan="2">Date</td> + <td colspan="2">Names</td> + <td>SCHEDULE C</td> + <td>SCHEDULE D</td> + <td>SCHEDULE E</td> +</tr> +<tr> + <td>Cause To Which It Was Subject, with Reasons and Object of Expenditure</td> + <td>Expenses</td> + <td>Debts Owed To Widower, Widow, or Kin of Deceased</td> + <td>Void to Widower, Widow, or Kin of Deceased</td> + <td>Total</td> +</tr> +</thead> +<tbody> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> +</tr> +<tr> + <th colspan="6">SCHEDULE F Part I</th> +</tr> + +<table border="1"> +<thead><tr><th>Persons Entitled as Widow, Legatee, or Next of Kin to the Deceased to a Share of the Estate</th><th>Residence</th><th>Degree of Relationship</th></tr></thead><tbody><tr><th>NAMES OF MISTRESSES OR NAME OF GUARDIAN</th><th>NAME OF GUARDIAN</th><th>RESIDENCE OF GUARDIAN</th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3"></th></tr><tr><th colspan="3" style=""></table> + +Form 106. (c) Form of Executor's Account-New York (Continued) + +<page_number>414</page_number> +ILLUSTRATIVE SYSTEMS + +**SCHEDULE G** +Statement of All Other Facts Affecting the Estate Not Included in Any Other Schedule + +Form 106. (d) Form of Executor's Account—New York (Continued) + +account. The balance of this account is a credit and should exactly offset in amount the total balance found in the asset accounts still open. + +Finally, before paying the legacies to the legatees, the executor should be careful to see that he has provided for the payment of the income tax and all inheritance taxes. + +CHAPTER XXXV + +STOCK BROKERAGE + +**1. Accounting Status** + +The relation of broker and client is that of principal and agent. The broker is a special agent authorized by his client to buy or sell securities. The relationship is governed by the customs and usages of the business. So far as the records of the broker himself are concerned, the recording of purchases and sales of securities involves but few principles. The records are similar to those of a factor who is commissioned to sell consigned goods except for the fact that in the brokerage business a speculative element enters into consideration, as when a client advances only a part of the capital necessary to finance a trade. + +**2. Securities Handled on the Exchange** + +Only securities of corporations which have complied with the stock exchange regulations are listed and handled on the exchange. These regulations, the object of which is to safeguard the investor as much as possible, require the filing of a balance sheet and an income statement of recent date when an application is made to list the securities of the corporation on the exchange. All active stocks must be registered with some acceptable registering agency and the certificates must be engraved so as to prevent counterfeiting. No guarantee is made that any particular stock has a certain value. + +<page_number>415</page_number> + +<page_number>416</page_number> +ILLUSTRATIVE SYSTEMS + +3. Trading on the Stock Exchange + +Trading on the stock exchange begins at 10 A.M. and stops at 8 P.M. Only those houses having membership are allowed to have representatives on the floor of the exchange. Authority to sell and buy is transmitted by telephone from the office of the broker. Transactions of 100 shares or over are given publicity by the ticker which shows on a strip of paper, called the "tape," a short description of each transaction, the number of shares, and the price paid. + +The record of a trade is a memorandum called a clearing house ticket, made by both buyer and seller, and then exchanged between them. It contains a description of the subject matter, number of shares, price, and the name of the other broker concerned. The writer signs the sheet with his initials. As soon as the record is prepared, a report is telephoned to the offices of the brokers who are parties to the agreement, and later the seller compares with the buyer the transaction as he has recorded it. This is done at the buyer's office not later than one hour after business has closed. Usually, delivery of securities and payment must be made before 2:15 P.M., on the day after the sale, except that when securities are sold for cash the transaction must be completed the same day. Again, sales are at times made "at three days" or "at buyer's or seller's option." When made at buyer's or seller's option, the sale is for not less than four days nor more than sixty days. + +4. The Stock Exchange Clearing House + +Business on the stock exchange is so heavy that it is impossible to make an immediate delivery for every + +STOCK BROKERAGE <page_number>417</page_number> + +trade. To meet this condition the stock exchange clearing-house has been established. + +The principle of the stock exchange clearing house is the same as that of the bank clearing-house. However, the situation is more complicated because securities are cleared which have been sold at different prices, and the payments offset the receipts. Shares of active stocks in multiples of one hundred shares are handled. +In all other transactions actual delivery must take place. A price is set by the clearing house in a round number of dollars, the price being as close to the day's closing price as possible, and settlements are made at this price. Each broker is notified to whom he must deliver and from whom he is to receive a net balance of securities. Since a broker many times buys and sells the same security for clients, the shares he is to receive on account of purchases are offset against those he is to deliver on account of sales. A net amount is therefore arrived at which he is to receive from or deliver to other brokers through the clearing house. + +5. The Clearance Sheet + +The transactions as indicated above are entered on a clearance sheet. This sheet, with clearing house tickets from other brokers, "Balance to Receive" and "Balance to Deliver" tickets, and either a draft on the clearing house or a check in its favor, must be delivered within four hours of the close of business on the day the sales and purchase contracts are made. Friday and Saturday are treated as a single day, the sheet being filed on Saturday. + +A clearance sheet is shown in Form 107, which will + +<page_number>418</page_number> +ILLUSTRATIVE SYSTEMS + +CLEARING HOUSE OF THE NEW YORK STOCK EXCHANGE +Clearing Sheet of A. Curran & Co. + +<table> + <tr> + <td>New York</td> + <td>Office Address</td> + <td>Balance to Deliver</td> + <td>Balance to Receive</td> + <td>Balance to Balance</td> + <td>Balance to Office Address</td> + <td>Balance to Clearing House</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td>Executive Table</td> + <td>Hamson</td> + <td>1,000</td> + <td>1,000</td> + <td>1,000</td> + <td>1,000</td> + <td>1,000</td> + </tr> + <tr> + <td></td> + <td>Dow & Co.</td> + <td>400</td> + <td>400</td> + <td>400</td> + <td>400</td> + <td>400</td> + </tr> + <tr> + <td></td> + <td>Bowles & Co.</td> + <td>357</td> + <td>357</td> + <td>357</td> + <td>357</td> + <td>357</td> + </tr> + <tr> + <td></td> + <td>L. Kinter & Co.</td> + <td>290</td> + <td>290</td> + <td>290</td> + <td>290</td> + <td>290</td> + </tr> + <tr> + <td></td> + <td>Pennell & Co.</td> + <td>290</td> + <td>290</td> + <td>290</td> + <td>290</td> + <td>290</td> + </tr> + <tr> + <td></td> + <td>Vonahm</td> + <table border="1"> + <tbody><tr><th colspan="6">Form No.: Stock-Brokers' Clearance Sheet</th></tr><tr><th colspan="6">Clearing Sheet of A. Curran & Co.</th></tr><tr><th>Equity Type</th><th>Hamson</th><th>Purchase Price (Dollars)</th><th>Sale Price (Dollars)</th><th>Penalty to Balance to Office Address (Dollars)</th><th>Penalty to Balance to Clearing House (Dollars)</th></tr><tr><th>Dow & Co.</th><th>400</th><th>$4,500.00</th><th>$4,500.00</th><th>- $2,250.00</th><th>$2,250.00</th></tr><tr><th>Bowles & Co.</th><th>357</th><th>$5,250.00</th><th>$5,250.00</th><th>- $2,625.00</th><th>$2,625.00</th></tr><tr><th>L. Kinter & Co.</th><table border="1"><tbody><tr><th colspan="6">Balance to Office Address (Dollars)</th></tr><tr><th colspan="6">Northwestern States Bank & Trust Co., Salt Lake City, Utah.</th></tr><tr><th colspan="6">Northwestern States Bank & Trust Co., Salt Lake City, Utah.</th></tr><tr><th colspan="6">Northwestern States Bank & Trust Co., Salt Lake City, Utah.</th></tr><tr><th colspan="6">Northwestern States Bank & Trust Co., Salt Lake City, Utah.</th></tr></tbody></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table></table> + +<table border="1"> + <thead> + <tr style="background-color: #f2f2f2;"> + <th>Equity Type</th> + <th>Hamson</th> + <th>Purchase Price (Dollars)</th> + <th>Sale Price (Dollars)</th> + <th>Penalty to Balance to Office Address (Dollars)</th> + <th>Penalty to Balance to Clearing House (Dollars)</th> + <!-- Penalties --> + <!-- Northwester --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + <!-- Northwestern States Bank & Trust Co., Salt Lake City, Utah. --> + +STOCK BROKERAGE <page_number>419</page_number> + +serve to illustrate the manner in which the sales and the purchases of a firm are balanced off each day. The amount columns show purchases by the firm in question to be $140,800, and sales to be $104,150. The difference, $36,650, is owed by the firm and is paid in this manner: Payments are made to the brokers from whom shares are received; the total of these is $42,800. Payment of $8,000 is received from the broker to whom shares are delivered. At this point $34,200 of the balance owed by Carson & Company has been paid. The remaining $2,450 is paid by check to the clearing house. + +**6. Accounting Records** + +Brokerage accounts, in general, are uniform in the different brokerage houses, and the method of keeping them is essentially the same everywhere. The problems encountered by one house are practically the same as those met by all others and their solution is uniformly well established. + +The records usually found in a concern buying and selling securities are as follows: + +1. Purchases and sales records +2. Blotters +3. Ledgers + - General + - Customers + - Securities or stock record + - Private +4. Borrowed and loaned books + - Stocks + - Money +5. Margin record + +<page_number>420</page_number> + +**ILLUSTRATIVE SYSTEMS** + +6. Stock transfer register +7. Vault list +8. Revenue tax register + +**7. Purchases and Sales Records** + +The purchases and sales book (Form 108) is the first to be used in recording a transaction. Because stocks + +<img> +A line graph showing two series of data over time. +The x-axis represents dates, starting with "PURCHASES January 3, 1913" and ending with "SALES January 3, 1913". +The y-axis represents values, ranging from 0 to 500. +The first series (PURCHASES) starts at around 200 on the left side and decreases slightly over time. +The second series (SALES) starts at around 400 on the left side and decreases slightly over time. +</img> + +Form 108. Stock-Broker's Purchases and Sales Record + +are classified into two groups, two separate records are used: (1) for clearing house issues; (2) for issues not handled by the clearing house. (See § 4.) Each day's transactions are grouped chronologically. + +**8. The Blotter** + +The blotter (Form 109) is a book of original entry found in nearly all brokers' offices. In appearance, it resembles a columnar journal, yet differs from the regular journal in that one page is given over to debits (the left) and one page to credits (the right). Interior + +STOCK BROKERAGE +<page_number>421</page_number> + +Form 106, Stockholder's Blotter (left- and right-hand pages) + +LEFT PAGE + +| LEFT PAGE | TO BE FILLED IN BY THE BUYER | RIGHT PAGE | TO BE FILLED IN BY THE SELLER | +|---|---|---|---| +| DATE | ORDERED | DATE | SOLD TO | +| ORDERED | NO. OF SHARES | SOLD TO | NO. OF SHARES | +| PRICE PER SHARE | PRICE PER SHARE | PRICE PER SHARE | PRICE PER SHARE | +| QUANTITY | QUANTITY | QUANTITY | QUANTITY | +| CASH | CASH | CASH | CASH | +| FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | + +RIGHT PAGE + +| RIGHT PAGE | TO BE FILLED IN BY THE SELLER | LEFT PAGE | TO BE FILLED IN BY THE BUYER | +|---|---|---|---| +| DATE | ORDERED | DATE | SOLD TO | +| ORDERED | NO. OF SHARES | SOLD TO | NO. OF SHARES | +| PRICE PER SHARE | PRICE PER SHARE | PRICE PER SHARE | PRICE PER SHARE | +| QUANTITY | QUANTITY | QUANTITY | QUANTITY | +| CASH | CASH | CASH | CASH | +| FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | FIRM ACCOUNT OF SECURITY DEPARTMENT | + +<img>A form 106, Stockholder's Blotter, showing left and right-hand pages.</img> + +<page_number>422</page_number> +ILLUSTRATIVE SYSTEMS + +columns are added to meet the requirements of the office in question. + +Since it is the rule of the stock exchange that security transactions shall be settled upon the next following business day, as was mentioned before in this chapter, two days' transactions are worked on at the same time in a broker's office. Purchase and sales orders are entered in a purchase and sales book the day received. The explanatory columns on the blotter are filled in the day the purchase or sale contract is made. The amount columns are filled in when delivery is made, because then the trade is completed. Some brokerage houses make the first two entries at one time. + +Since the blotter is in use so much, it is either a loose-leaf record, or separate books are used on alternate days of the week. Every trade not completed on the day set is marked "failed" on the blotter and carried forward to the next day. This procedure goes on until the transaction is closed entirely. + +Cash items are entered on the blotter in columns which are really memorandum columns only, since the bank accounts give the cash amounts used for statement purposes. Postings are made from the total amount and "For Account of" columns. Ledger debits of all kinds are entered on the left page of the blotter. Ledger credits are entered on the right page. The cash balance as shown by the bank accounts at the beginning of the day is entered in the amount received column on the right page, and the balance at end of the day in the amount paid column on the left page. This procedure balances the columns and has the same effect as if cash was entered on the record in detail debits and cred- + +<img>A diagram showing a ledger with various columns for different types of transactions.</img> + +STOCK BROKERAGE +<page_number>#25</page_number> + +its. Finally, the amounts of commissions, interest, stamps, as shown in the inside columns, are carried into the total amount columns. + +A fee of $7.50 to $20 per hundred shares is charged every time stock is purchased or sold, unless the broker is acting for a member of the exchange. Then the fee is lower. In New York, a state tax of 3 cents a share is charged the seller. Stamps representing the payment of this tax must be attached to every transferred stock certificate. Interest is charged the client on the debit balance of his account. Any dividends received are credited to his account. + +9. “Longs” and “Shorts” + +Customers who buy expecting an increase in market price which will enable them to sell again at a profit, are “long,” and those who sell expecting a decrease in market price which will enable them to repurchase at a profit, are “short” of the securities involved. These are the two kinds of speculative accounts. When a broker opens a speculative account for a client, he usually requires the deposit of a “margin.” This margin may be more than 10% if the broker is doubtful of his client’s ability to keep his margin up to the proper point should the market go against the customer. Since exchange sales are never made on credit, the broker must get the cash necessary to complete the purchase. The client has furnished, say, 10%. The broker takes his client’s security, and under the law of bailments and the usages and customs of the business, he pledges this security on a call loan for 80% of its market value. He has now 90%; the other 10% he supplies himself. + +<page_number>424</page_number> +ILLUSTRATIVE SYSTEMS + +**10. The "Long" Account** + +Each month customers' accounts are balanced, and a statement of account is sent each one. After closing, a "long" account would look somewhat like the one given below (the figures are fictitious). The broker has purchased for John Smith the various stocks shown on the debit side of the account, charging him the usual commission. Interest for the month on the account balance is charged at 6%. Cash margins have been put up during the month to the amount of $6,010. The account has been credited with a sale of 200 shares Northwestern with the commission and tax deducted. The account balance shows that John Smith owes his brokers $108,010.90. When this amount is paid there will be delivered to him the various stocks held for his account. + +**John Smith—Long Account** + +<table> + <tr> + <td>1919</td> + <td>1919</td> + </tr> + <tr> + <td>Jan. 4 200 Bklyn R.</td> + <td>Jan. 4 Cash</td> + <td>$300.00</td> + </tr> + <tr> + <td>T.—26% & Com.</td> + <td>9 Cash</td> + <td>$480.00</td> + </tr> + <tr> + <td>Com.—$5,300.00</td> + <td>22 Com. & Tax.</td> + <td></td> + </tr> + <tr> + <td>400 N. Western</td> + <td></td> + <td>-138 less</td> + </tr> + <tr> + <td>-137 U. Comm.</td> + <td>54,880.00</td> + <td></td> + </tr> + <tr> + <td>500 U. Pacific</td> + <td>31 Balance</td> + <td>$186,910.90</td> + </tr> + <tr> + <td>125 & Com.</td> + <td>62,600.00</td> + <td></td> + </tr> + <tr> + <td>290 L. N.—4</td> + <td></td> + <td></td> + </tr> + <tr> + <td>& Com.</td> + <td>18,235.00</td> + <td></td> + </tr> + <tr> + <td>31 Interest %—</td> + <td>$36.90</td> + <td></td> + </tr> + <tr> + <td></td><td><strong>$141,576.90</strong></td><td><strong>$141,275.80</strong></td> + </tr> +</table> + +Feb. 1 Balance $188,010.90 +200 Bklyn R. T. +200 N. Western +500 U. Pacific +250 L. N.— + +<img>A table showing John Smith's Long Account balance.</img> + +STOCK BROKERAGE <page_number>425</page_number> + +Of course, the true condition of this account may not be as represented. The value of the undelivered stocks as at January 31 must be determined, since they represent what the broker is holding as guaranty for the balance due him. The actual value of these stocks subtracted from the account balance will show the amount really owed the broker by John Smith. + +11. "Short" Transactions + +One who sells 'short' for future delivery does not own that which he is selling. If he does not intend to deliver, but merely to pay or receive any difference in market price at the time of delivery, it is a mere gambling transaction, and the sale is held illegal. Therefore, either actual or constructive delivery must be shown. An intent to deliver must be implied. Such an intent is considered to be present in the clearing house procedure. + +One who sells short must borrow from someone else that which he himself does not possess in order to make his sale legal. The broker does this for his client. He goes out in the open market and borrows the stocks required, promising to return them upon demand at the price originally paid, regardless of the market value on the date the return is made. These transactions are handled and reported like regular sales. The broker who borrows the stock charges Borrowed Stocks and credits Cash, while the one from whom he borrows charges Cash and credits Loaned Stocks. + +Interest is paid to the borrower of stocks on his balance in the possession of the broker who lends the stocks. This interest is at a rate agreed upon and de- + +<img>A page from a book about stock brokerage.</img> + +<page_number>426</page_number> +ILLUSTRATIVE SYSTEMS + +pends upon the existing call loan rate and the supply of the particular security which may be borrowed. The person who sells short must be sure that he can find someone who will lend him the required securities when time for delivery arrives. Otherwise, his return on money advanced will be low, and he may even be required to pay a premium. But one who lends secures 100% of market value of the security loaned, instead of the 80% ordinarily received. + +**12. The “Short” Account** + +After closing at the end of the month, a “short” account would look somewhat like that given below. +Henry Barber sold 200 shares of Northwestern short at 138, that is, through his broker he agreed to sell this stock to one person, and then borrowed it of another person in order to meet his engagement. Five days later, when he was compelled to return the stock to the lender, the market had risen and Barber had to pay 139, buying through his broker. The broker settled the account by paying Barber $2,476, which it will be noticed is $284 less than the sum he had advanced as margin. Of this loss, $200 was, of course, due to the increased price of the stock; the remainder represented two commissions and one tax. At a later date, Barber put up a margin of $1,820 to sell L. & N. shares short. The proceeds of this sale are credited to him, together with his margin. Against this credit balance stands the item of 200 shares borrowed of one person and sold to another, which constitutes Barber’s liability. When he goes into the market for these shares in order to repay the lender, Barber may be able to buy at less than 91, + +<img>A page from an old financial report.</img> + +STOCK BROKERAGE <page_number>427</page_number> + +and so gain; or he may buy at 91, and so lose only the interest on his margin and the commission he has to pay; or at more than 91, and so suffer an even greater loss. + +HENRY BARBER—SHORT ACCOUNT + +<table> + <thead> + <tr> + <th>1919</th> + <th>1919</th> + </tr> + </thead> + <tbody> + <tr> + <td colspan="2">Jan. 4 N. Western</td> + </tr> + <tr> + <td colspan="2">—108 & Com. $27,840.00</td> + </tr> + <tr> + <td>8 Cash</td> + <td>2,476.00</td> + </tr> + <tr> + <td>31 Balance</td> + <td>19,986.00</td> + </tr> + <tr> + <td colspan="2">Feb. 1 Balance</td> + </tr> + <tr> + <td colspan="2">$50,302.00</td> + </tr> + </tbody> +</table> + +Jan. 4 Cash ………… $2,760.00 +4 200 N. Western +—138 & Com. ………… 27,556.00 +Cash ………… 1,820.00 +22 Cash ………… 1,820.00 +31 L. & N— +—138 & Com. +— Tax ………… 18,166.00 + +The amount of the commission is not considered at this point. Interest is not usually allowed on a short account. Dividends would be charged against it. + +13. Inventories + +The inventory of a broker would include the stocks and bonds in his possession. Some of these securities will be on hand in his "box," which is placed in the vault every night. Others will be pledged with banks for loans, each loan represented by a loan card showing what securities have been given the bank. Still other securities will be in the hands of other brokers. Lastly, some securities may be in transit, or in the hands of the issuing company for transfer to a new owner. Although all the securities may not actually be on hand, a complete list of them should be kept in the office. + +<page_number>428</page_number> +ILLUSTRATIVE SYSTEMS + +**14. The Balance Sheet** + +The balance sheet of a stock brokerage firm is prepared in accordance with the same principles which apply to a balance sheet for any other business. The assets are listed usually in the order of their availability in realization and the liabilities in the order in which they must be liquidated. The only difficulty comes in connection with the speculative accounts. + +In closing the books of a brokerage firm at the end of a fiscal period, it is necessary to calculate the interest charged against customers up to the time of closing, in order that the complete income from this source may be known. All items payable must be accrued, such as commissions due brokers out of town, interest, probable loss on bad accounts, etc. + +Below is presented a pro forma balance sheet of a brokerage firm; some of the items may require explanation. The first item of the assets, "Cash on hand and in Bank," is self-explanatory. The next item, "Due from Brokers for Stocks and Bonds Borrowed," indicates that money has been delivered to other brokers for securities borrowed from them; when these securities are returned to the other brokers they in turn will send back the amount of money which the books show is due from them. "Due from Brokers for Stocks and Bonds Not Delivered" represents practically the same state of affairs as was just mentioned except that the item represents securities which have been sold to other brokers, but not yet delivered. The records show a charge to the accounts of these brokers for the value of the securities, which is offset by credits to customers for whose accounts the securities were sold. + +STOCK BROKERAGE <page_number>429</page_number> + +The next item, "Commissions Due from Brokers," needs no explanation. "Due from Out-of-Town Brok-ers—Our Account with Them" indicates that a certain amount is due from other brokers for cash deposited with them, or for short transactions with these brokers. + +"Due from Customers" represents the excess of the purchase price of securities bought for customers' long accounts over the cash that has been deposited as margins. "Stocks and Bonds—Firm Account" is similar to that just mentioned, except that the securities are not for customers, but for the firm. + +"Exchange Membership" represents either the cost, or the current price if value has declined, of the firm membership in the stock exchange. Stock exchange membership is limited and the seats are very valuable. A retiring member may sell to the highest bidder the privilege of applying for membership. Therefore, such membership may be included in the balance sheet as a proper asset. + +The first item of the liabilities, "Money Borrowed," represents money borrowed from various banks chiefly for the purpose of carrying the accounts of customers. The loans here are secured by collateral, the collateral being, as has been indicated previously in this chapter, stocks and bonds purchased for the accounts of customers. The next two items need no explanation since they are opposite in character to the items shown among the assets "Due from Brokers." "Due to Out-of-Town Brokers—Our Account With Them" represents transactions with out-of-town brokers with whom accounts are kept. "Due to Customers for Cash Balances" indicates that customers have amounts owed to them on ac- + +<page_number>430</page_number> +ILLUSTRATIVE SYSTEMS + +count of cash deposited by them, or for profits due them from the purchase and sale of securities, when their accounts are neither long nor short of securities. "Due to Customers—Account Short Sales" shows the amount received from the sale of securities for which the customers have not yet made actual delivery. Delivery to the purchasers of the securities, however, has been made by the firm. When the customers instruct the firm to purchase the securities short, for their account, this amount due to them for short sales will be reduced by the amount paid for the securities thus purchased. + +"Stocks and Bonds Short—Firm Account" indicates that short transactions have been carried on for the firm. "Unclaimed Dividends and Interest" represents dividends and interest received on securities, the ownership of which cannot be determined. + +JOHN HARMON & CO. +STATEMENT OF ASSETS AND LIABILITIES +December 31, 1918 + +<table> + <tr> + <td>Assets</td> + <td>$</td> + </tr> + <tr> + <td>Cash on Hand and in Bank</td> + <td>8</td> + </tr> + <tr> + <td>Due from Brokers:</td> + <td></td> + </tr> + <tr> + <td>Stocks and Bonds Borrowed</td> + <td>8</td> + </tr> + <tr> + <td>Stocks and Bonds Not Delivered</td> + <td></td> + </tr> + <tr> + <td>Commissions Due from Brokers</td> + <td></td> + </tr> + <tr> + <td>Due from Out-of-Town Brokers—Our Account With Them</td> + <td></td> + </tr> + <tr> + <td>Due from Customers</td> + <td></td> + </tr> + <tr> + <td>Stocks and Bonds—Firm Account</td> + <td></td> + </tr> + <tr> + <td>Exchange Membership</td> + <td></td> + </tr> +</table> + +$ + +STOCK BROKERAGE <page_number>431</page_number> + +**Liabilities** + +Money Borrowed $.......... +Due to Brokers: +Stocks and Bonds Loaned 8.......... +Stocks and Bonds Not Delivered.......... +Due to Out-of-Town Brokers—Our Account With Them.......... +Due to Customers for Cash Balances.......... +Due to Customers—Account Short Sales.......... +Stocks and Bonds Short—Firm Account.......... +Unclaimed Dividends and Interest.......... +Reserve for Accounts Receivable.......... +Capital and Personal Accounts—Firm Members.......... +$.......... + +15. The Profit and Loss Account + +It is unnecessary to explain the profit and loss account, since it is handled according to the same rules that govern the preparation of the profit and loss account for any other business. Nominal accounts are closed out in the regular way, the balance of profit and loss being transferred to the partners' drawing accounts and from there to the partners' capital accounts, according to the terms of the partnership agreement. + +CHAPTER XXXVI + +HOTELS AND RESTAURANTS + +**1. The American Plan** + +A hotel managed on the American plan is one in which the guest receives the use of a room and three meals a day at a certain fixed rate for the entire service. The charges for food and room are combined. The meals are table d'hôte, with a regular price for each one. + +The accounting system for such a hotel need not be elaborate. If it is known when a guest arrives and when he leaves, it is an easy matter to calculate his bill for board and room. Should he arrive or leave at a time when the dining room is open, he is chargeable with that meal whether he eats it or not unless the office is notified that he does not wish to eat that meal. To the charge for room and board are added the charges for any extra items. It is not difficult to keep an accurate record for such charges. + +**2. The European Plan** + +Under the European plan a complete separation is made between room service and meal service. The guest secures his room at a certain rate and may or may not take his meals at the same place. If he does, he pays the usual price for whatever he orders. This amount is paid either at the time the meal is served, or a charge slip may be made out and signed by the guest, and the amount charged to his account. + +<page_number>432</page_number> + +HOTELS AND RESTAURANTS <page_number>433</page_number> + +The charges under either the American or the European plan are about the same in kind, but under the European plan a more elaborate system of accounts is necessary to secure the proper checks and balances for the dining room à la carte service. + +**3. The Table D'Hôte Dining Room** + +A proper check on the dining room is secured by knowing how many persons were present or should have been present at each meal. This gives a basis for knowing approximately what the cash and charge returns should be. It may be satisfactory to rely on the clerk to recognize guests who should pay and those who should be charged, or it may be necessary to give each person a ticket to be punched by someone who has that duty in charge. This latter provision would be made use of in large dining rooms. + +If the waiters themselves collect from the transient guests, each waiter should be given a certain number of checks, for which number he is accountable. Some time during the serving of the meal, each check used should be stamped or punched so that it cannot be used a second time without detection. A checker should do this when the first part of the order is served, or as each course is served. + +**4. The A La Carte Dining Room** + +Where guests pay the waiters only for what they order, some checking system must be used to keep track of the food taken from the kitchen; otherwise it will be impossible to know whether or not the waiters have accounted properly for all moneys received. A checker + +<page_number>434</page_number> +ILLUSTRATIVE SYSTEMS + +should be stationed where each waiter will pass him on the way to the dining room with his loaded tray. The waiter's check is stamped by the checker for the amount represented by the contents of the tray, and the same amounts are entered on a sheet which contains the waiter's number. This sheet is turned into the auditing department and the totals appearing against each waiter are checked against the cash and charge tickets turned in by the cashier. + +5. Prevention of Fraud + +Collusion between the checker and the waiters may be prevented by numbering all checks and then without warning changing the order of numbers so that at all times it will be impossible for the checker and waiters to know what set of numbered checks will be used. + +Merely numbering the checks would not be sufficient. A waiter could easily have two sets of checks. One of these properly filled out could be given to the customer. When handed back by the customer with the amount called for, the waiter could substitute another with the same number but carrying a smaller amount, and turn in this latter to the cashier. The difference between the correct amount and that shown on the substituted check could be pocketed by the waiter. + +Fraud may be detected also by comparing the purchases with the sales. A certain amount of purchases should always produce a certain amount of sales, and when this ratio has been established, a sudden change in proportion should be carefully investigated. + +A restaurant not connected with a hotel should be handled in the same way. In such a case probably + +HOTELS AND RESTAURANTS <page_number>435</page_number> + +all business would be done for cash, in which event there would be no charges to be accounted for. +If the American and European plans are combined, the table d'hôte service should be in a room separate from the à la carte service; if they are in the same room, both services should be handled on the plan outlined for the à la carte service. + +**6. The Organization Plan** + +In planning a system of accounts for a hotel, particular attention should be given to the accurate recording of all service rendered and all expenditures directly chargeable to the guests of the house. Many dollars and many customers as well as lost each year in certain hotels because the proper facts are not available when a guest "checks out." + +The front office should be arranged so that there will be no lost motion. The clerk's desk should be located in a direct line with the main entrance. Next in order comes the cashier's cage. Beyond the cashier is the bookkeeper (and the entry clerk if one be employed). Beyond the bookkeeper's location is that of the porter. These divisions would perhaps be separated by wire partitions, the first three being connected by doors, so that a full view of the whole office is secured, and so that easy passage may be had between the offices. This plan assumes a hotel large enough to have these four offices or desks. + +The men work in three shifts, each averaging eight hours a day. Let us assume the following plan. Shift No. 1 begins at 7 A.M. and works until 12 M. Shift No. 2 begins at 12 M. and works until 6 P.M. Shift No. 1 + +<page_number>436</page_number> + +**ILLUSTRATIVE SYSTEMS** + +returns and works from 6 P.M. until 11 P.M. Shift No. 3 begins at 11 P.M. and works until 7 A.M. At 7 A.M., shift No. 2 will relieve shift No. 3 and at 12 M. shift No. 1 relieves shift No. 2. By this means, shifts Nos. 1 and 2 work alternately one long day of ten hours and one short day of six hours, thus averaging eight hours, while shift No. 3 always has the same hours. + +**7. Records Required** + +The following records are needed in any hotel: + +1. Guest register +2. Room ticket +3. Guest ledger +4. Charge ticket +5. Charge journal +6. Accumulation envelope +7. Cash receipts register +8. Check register +9. Voucher record +10. Stores record +11. General journal +12. General ledger + +**8. Guest Register** + +The first record required is the guest register (Form 110). The information desired here is the guest's name, address, room number, and rate. Each day a new page is started, the page being dated at the top. + +**9. Room Ticket** + +As soon as the guest is registered and has been assigned a room, the clerk fills out a room ticket (Form + +HOTELS AND RESTAURANTS <page_number>487</page_number> + +GUEST REGISTER +February 1, 1919 + +<table> + <tr> + <td>Name</td> + <td>Address</td> + <td>Room No.</td> + <td>RATE</td> + </tr> + <tr> + <td>____________</td> + <td>____________</td> + <td>____________</td> + <td>____________</td> + </tr> +</table> + +Form 110. Hotel Guest Register + +111). These room tickets should be made of light-weight cardboard, a card of a different color being used for each day of the week. The color will show at a glance when a weekly bill is due. If the front office is arranged as indicated in § 6, the clerk fills out the ticket and hands it to the cashier. + +ROOM TICKET + +<table> + <tr> + <td>Room No.</td> + <td>Name</td> + <td>Bill Due</td> + </tr> + <tr> + <td>____________</td> + <td>____________</td> + <td>____________</td> + </tr> + <tr> + <td>Address</td> + <td>Sunday</td> + </tr> + <tr> + <td>____________</td> + <td>____________</td> + </tr> +</table> + +<table> + <thead> + <tr> + <th>Month</th> + <th>Day</th> + <th>Time</th> + <th>Month</th> + <th>Day</th> + <th>Time</th> + </tr> + </thead> + <tbody> + <tr><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td></tr> + </tbody> +</table> + +Rate ____________ No. Days ____________ Amount Due ____________ + +Form 111. Hotel Room Ticket + +10. Guest Ledger + +As soon as the cashier receives a room ticket, he immediately opens an account for the guest on a num- + +438 + +ILLUSTRATIVE SYSTEMS + +bered loose-leaf ledger sheet or card (Form 112). He fills in the name of guest, room number, rate, and date occupied. If the cashier is required to do this, he becomes acquainted quickly with the names of guests and is able to render better service to the hotel and to the guest. + +<table> + <tr> + <td>Room No.</td> + <td>Name</td> + <td>GUEST LEDGER</td> + <td>No.</td> + </tr> + <tr> + <td></td> + <td>Address</td> + <td></td> + <td></td> + </tr> +</table> + +<table> + <thead> + <tr> + <th>DATE</th> + <th>ROOM</th> + <th>MEALS</th> + <th>TELEPHONE</th> + <th>LAUndery</th> + <th>MISC.</th> + <th>TAXE</th> + </tr> + </thead> + <tbody> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + </tbody> +</table> + +Form 112. Hotel Guest Ledger + +Once the ledger sheet for the incoming guest is prepared, it is turned over to the bookkeeper, who will make the entries in the guest's account. The use of the guest ledger in the regular routine of recording charges against the customer is explained in § 12. + +11. Charge Ticket + +The following slip or ticket (Form 113) is used for sending from the various departments charges which are to be entered against the accounts of guests. Cash payments at the time of making purchases are taken care of by a cash register. So far as possible, each charge slip should be signed by the guest, although of course this cannot in every case be done; for example, laundry bills paid by the cashier for a guest would be an adequate voucher for the charge against the guest. + +HOTELS AND RESTAURANTS <page_number>439</page_number> + +Charge sales must be reported to the office as soon as made by sending the checks for the charges to the bookkeeper. Otherwise the guest may leave the hotel before the charge comes through and the house will be the loser. If a cigar or news-stand is run by an outsider, whether on a rental or a commission basis, the same care must be exercised to report all charge accounts promptly to the cashier. + +<table> + <tr> + <td>Charge:</td> + <td>Date:</td> + <td>Room:</td> + </tr> + <tr> + <td>Signature:</td> + <td>Credit (Name of dept. to receive credit):</td> + </tr> +</table> + +Form 113. Hotel Guest Charge Slip + +12. Charge Journal + +The bookkeeper receives the charge slips as soon as they reach the office. He enters them in a journal from which he posts them to the guest ledger. By means of the journal, the charge sales for any day or longer period are recorded, and by means of the ledger the charges are distributed to the accounts of the various guests. + +13. Accumulation Envelope + +In addition to the slip presented, an envelope (Form 114) should be used in which are placed the slips and other bills as they accumulate against a guest. In one large hotel this envelope is kept in a file in charge of a special clerk who enters each item on it after the book- + +<img>A form titled "CHARGE SLIP" with fields for Charge, Date, Room, Signature, Credit (Name of dept. to receive credit).</img> + +<page_number>440</page_number> +ILLUSTRATIVE SYSTEMS + +keeper has entered it in the charge journal and the guest's ledger account. + +When the guest is ready to pay, this clerk locates his envelope, adds the items, hands the total to the book-keeper on a slip of paper and the bookkeeper checks this total against his account. If the bookkeeper and the special clerk are informed simultaneously of the guest's intention to depart, the bookkeeper looks up the account and calls off the room charge to the clerk who adds this charge to the total he has secured from the envelope. + +<table> + <tr> + <td colspan="3">ACCUMULATION ENVELOPE</td> + </tr> + <tr> + <td>DATE</td> + <td>ITEM</td> + <td>AMOUNT</td> + <td>DATE</td> + <td>ITEM</td> + <td>AMOUNT</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td>Brought Fwd</td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form H1. Hotel Accumulation Envelope (face) + +The final total should agree with that which the book-keeper secures from the account. By this means the two persons check each other and are often able to catch an error before it reaches the guest. + +14. Cash Receipts Register + +The cashier keeps a register of cash receipts in which to record payments as guests settle their accounts. When a guest is ready to leave, the bookkeeper totals the account, as just described, and hands the ledger sheet and the slip with the total to the cashier. When the guest has paid, the cashier enters the total in the proper column of the register, and makes a distribution + +HOTELS AND RESTAURANTS <page_number>441</page_number> + +in the succeeding columns, the headings of which correspond with those of the ledger columns. + +CASH RECEIPTS REGISTER + +<table> + <tr> + <td>Date</td> + <td>Name</td> + <td>Total</td> + <td>Room</td> + <td>Meal</td> + <td>Taxi</td> + <td>LAUNDRY</td> + <td>Taxi</td> + <td>Misc.</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> +</table> + +Form 115. Hotel Cash Receipts Register + +The ledger sheets are then used by the auditing department in checking the cash receipts register. In order that the auditing department may conveniently work on the cashier's records, the cashier should have a separate book for alternate days, or use a loose-leaf form. + +15. Expenditures + +All payments should be evidenced by vouchers. For this purpose a voucher register (Form 116) and cash + +VOUCHER REGISTER + +<table> + <tr> + <td>Date</td> + <td>In favor of</td> + <td>For</td> + <td>Inc.</td> + <td>Date</td> + <td>Paid</td> + <td>Total</td> + <td>Drain</td> + <td>Room</td> + <td>Bag</td> + <td>Clear</td> + <td>Drawn</td> + <td>Grass</td> + <td>Bug</td> + <td>Dew</td> + <td>Drain</td> + <td>Bag</td> + <td>Clear</td> + <td>Drawn</td> + <br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/><hr/> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <th colspan="3">WELLSFORD</th> + </tr> + <tr> + <th>Date</th> + <th>In favor of</th> + <th>For</th> + <th>Inc.</th> + <th>Date Paid</th> + <th>Paid</th> + <th>Total</th> + <th>Drain</th> + <th>Room</th> + <th>Bag</th> + <th>Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clear Drawn Grass Bug Dew Drain Bag Clea + </tr> + <!-- Additional rows for data --> + <!-- Example row --> + <!-- Date: ____________ --> + <!-- In favor of: ____________ --> + <!-- For: ____________ --> + <!-- Inc.: ____________ --> + <!-- Date Paid: ____________ --> + <!-- Paid: ____________ --> + <!-- Total: ____________ --> + <!-- Drains: ____________ --> + <!-- Room: ____________ --> + <!-- Bags: ____________ --> + <!-- CLEARS: ____________ --> + <!-- DRAWNS: ____________ --> + <!-- GRASS: ____________ --> + <!-- BUGS: ____________ --> + <!-- DEWS: ____________ --> + <!-- DRAINS: ____________ --> + <!-- BAGS: ____________ --> + <!-- CLEAR DRAWNS: ____________ --> + <!-- GRASS BAGS: ____________ --> + <!-- BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGS CLEAR DRAWNS GRASS BUGS DEWS DRAINS BAGs + +<page_number>442</page_number> +ILLUSTRATIVE SYSTEMS + +disbursements record (Form 117) should be used. The cash disbursements record may be a check register, since + +<table> + <tr> + <td colspan="5" style="text-align: center;">CASH DISBURSEMENTS</td> + </tr> + <tr> + <td>DATE</td> + <td>VOUCHER No.</td> + <td>IN FAVOR OF</td> + <td>AMOUNT</td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></th<td><th>Form 117. Hotel Cash Disbursements Record</th><th>no reason exists why a hotel should violate the principles of a proper cash system as set forth in the former consideration of cash.</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</th><th>____________</than td colspan="5" style="text-align: center;"></table> + +16. Stores +In a hotel or restaurant all stores must be properly accounted for. A perpetual inventory should be kept, which from time to time should be checked against the general ledger account with Stores and with the actual goods. Some hotels take a physical inventory of stores once a week. + +Stores should be delivered only on written order. A report of goods delivered is made daily and sent to the auditing department so that the proper departments will be charged and Stores credited. + +17. Dish Breakage +The breakage of dishes is an important item of expense in every hotel. Based on a yearly estimate, a + +HOTELS AND RESTAURANTS <page_number>448</page_number> + +monthly charge should be made to Dining Room Ex- +pense account and credited to a proper reserve account. +Dishes replaced are charged against this reserve. + +18. Rooms Occupied + +One difficulty presenting itself in hotel accounting +is the verification of receipts from occupied rooms. + +Complimentary guests, who may be entertained +without charge, should be required to register in the +regular manner, and an account should be opened for +each one, earmarked either by the conventional double +tick mark (V V) used in most hotels for this purpose, +or by some other means so that the account shows clearly +that no charge is to be made. If the ordinary service +charges are carried to this account in the regular way, +the extent of the gratuity is shown. + +Sometimes persons connected with the management +attempt to give service without charge, keeping no rec- +ord whatsoever, for the purpose of defrauding the own- +ers. Unless a separate record be kept of the rooms +occupied, such fraud is difficult to detect. If the house- +keeper be required to render a daily report of rooms +occupied, a fairly satisfactory basis will be secured for +determining whether or not every person occupying +rooms in the hotel is being charged properly in the ac- +counts. In this connection, also, the departure record +mentioned above is useful. + +19. Departure Record + +In some hotels a departure book is kept in which is +entered the name of each guest and the time when he +leaves, or better, the time of arrival and departure of + +<page_number>444</page_number> +ILLUSTRATIVE SYSTEMS + +each guest. This record should be kept by someone not on the regular office force so that the facts recorded may be used as a check upon the guest charges shown on the regular books of account. + +20. Monthly Earnings + +When a guest has settled his account, the amount paid is entered in the cash receipts register (Form 115) and distributed among the proper departments. At the end of the month, the column totals are credited to the proper income accounts on the general ledger, and Cash is debited. At the end of the month all unpaid balances, even though not yet due, are ascertained and journalized, so that each month will show its full earnings. At the beginning of the next month, these entries are reversed so that the income accounts will not receive credit twice. Full credit will be taken up when balances are settled. + +21. Pro Forma Statement of Profit and Loss + +A monthly statement of profit and loss for a hotel is presented below. + +STATEMENT OF PROFIT AND LOSS + +Month of 19 + +<table> + <tr> + <td>Room Revenue</td> + <td>$........</td> + </tr> + <tr> + <td>Less:</td> + <td></td> + </tr> + <tr> + <td>Wages, etc.</td> + <td>$........</td> + </tr> + <tr> + <td>Depreciation of Furniture and Fixtures.</td> + <td>............</td> + </tr> + <tr> + <td>Net Income from Rooms</td> + <td>$........</td> + </tr> +</table> + +HOTELS AND RESTAURANTS +<page_number>445</page_number> + +Dining Room Revenue ........................................ 8 +Less: +Wages, etc. .................................................. 8 +Depreciation of Furniture and Fixtures ................. . +Breakage .................................................... . +Kitchen Expenses 8 ......................................... +Depreciation of Kitchen Equipment ...................... . +Supplies ..................................................... . + +Net Income from Dining Room .......................................... +Cigar Stand Revenue ........................................... 8 +Less: +Wages, etc. .................................................. 8 +Depreciation of Furniture and Fixtures ................. . +Supplies ..................................................... . + +Net Income from Cigar Stand .......................................... +Miscellaneous Revenue—Telephone, etc. .................... . +Total Income from Operation ........................................ 8 + +Deductions from Income: +Taxes (Mo. Charge plus License) ............................... 8 +Insurance (Mo. Charge) .......................................... +Management Expense ........................................... +General Expense ............................................... + +Net Profit for Month ........................................... 8 + +CHAPTER XXXVII + +CLUBS + +1. Character of Club Accounting + +A club is operated not for profit but for congeniality, social intercourse, or to advance a certain cause. If its expenses do not exceed its income, the result is satisfactory. If income exceeds expenses, the surplus is used to further the interests of the club. Because a club is not a business venture, it sometimes is conducted in an unbusinesslike way. Yet it resembles a trading enterprise, because it sells meals, drinks, cigars, etc., to members and their friends. Its accounts ought to be systematic and accurate, the same principles being applied that govern the keeping of accounts for any ordinary business enterprise. + +2. Classification of Accounts + +The following general outline shows the principal ledger accounts that are necessary in a well-managed club system. More may be added if desired. + +<table> + <tr> + <td colspan="2">BALANCE SHEET ACCOUNTS</td> + </tr> + <tr> + <td>Assets</td> + <td></td> + </tr> + <tr> + <td>Fixed:</td> + <td></td> + </tr> + <tr> + <td>Land</td> + <td></td> + </tr> + <tr> + <td>Buildings</td> + <td></td> + </tr> + <tr> + <td>Furniture and Fixtures</td> + <td></td> + </tr> + <tr> + <td>Tools and Outside Equipment</td> + <td></td> + </tr> + <tr> + <td>Bond Sinking Fund</td> + <td></td> + </tr> +</table> + +<page_number>446</page_number> + +CLUBS <page_number>447</page_number> + +Current: +Cash +On Hand +In Bank +House Accounts +Unpaid Dues +Inventory of Supplies + +Fixed: +Mortgage Payable +Bonds +Current: +Accounts Payable +Notes Payable +Bond Interest +Mortgage Interest +Notes Payable Interest +Taxes + +Reserves +Surplus + +Proprietorship + +Profit and Loss Accounts +(Generally called Income and Expense) + +Income + +General +Yearly Dues +Initiation Fees +Miscellaneous +Restaurant Salaries +Cigars + +Expenses + +General +Management Salaries + +<page_number>448</page_number> +ILLUSTRATIVE SYSTEMS + +Office Supplies +Stationery and Printing +Telephone and Telegrams +Heat and Light +Repairs and Maintenance +Taxes +Insurance +Depreciation +Buildings +Furniture and Fixtures +Miscellaneous +Restaurant +Meals +Cigars +Wages +Supplies +Depreciation +Furniture and Fixtures +Equipment +Breakage +Miscellaneous + +3. Records Required + +The following bookkeeping records cover the requirements of a club and establish an effective accounting system. + +1. General journal +2. General ledger +3. Charge ticket +4. Cash book +5. House ledger +6. Voucher record +7. Stores record +8. Membership register + +CLUBS <page_number>449</page_number> + +**4. Dues and Fees** + +In a club the dues of members are the most important source of income. They may be of different kinds, as set forth in the by-laws. No costs offset the receipt of dues; they are all profit. They are incident to membership and must be paid whether the club privileges are made use of or not. Usually, however, because of the easy-going methods referred to, a considerable proportion of the dues is lost by failure to cash collection. + +Every member pays an initiation fee of some sort at the time of joining a club; until this fee is paid no one can be considered a member. In a prosperous club the initiation fees also are considered as capital receipts and are used for the same purposes as life membership dues. + +**5. Life Memberships** + +A life membership is paid for but once. It is usually not considered an operating profit if the club is at all prosperous. Such dues are considered capital receipts and as such are used for bond redemption, additions to the clubhouse or other capital investments. A life membership may at times be transferred, by the payment of a transfer fee and upon consent of the membership committee; or, in some instances, perpetual memberships are issued that may be considered personal property and part of the member's estate, to be transferred by his executor upon his death. + +**6. Unprofitable Activities** + +Because of the very nature of a club's function, it frequently is necessary to conduct some of its activities + +<page_number>450</page_number> +ILLUSTRATIVE SYSTEMS + +at an actual loss. The club restaurant is a common example of this. Members demand the best of everything, but most of them make only an infrequent use of the club's facilities. Therefore a large number of employees must be kept so that service will be rapid and satisfactory when the demand comes, notwithstanding the fact that many of these employees can be kept busy only part of the time. As a result the club restaurant generally shows a loss, but the maintenance of it, although unprofitable, cannot be eliminated. + +7. House Accounts + +The accounts of the members with the various operating departments are known as "house accounts." They are handled in various ways, but the basis of the house account is some sort of ticket made out by the member or an employee. + +In a large club this ticket is signed by the member and sent to the office. If the amount designated is paid before the member leaves, it is handled as a cash sale. The ticket carries a number and is entered, whether cash sale or charge sale, in a daily record in its numerical order. This record contains columns for number, for departments which are to receive credit, and two debit columns, one for cash sales and one for charge sales. Next to the charge sales column is a column in which is entered the member's name so that the proper charge may later be made in his ledger account. The totals of the credit columns are posted to the credit of the proper departments, the total of the charge column is debited to the general ledger account which controls the house account ledger. The total of the cash sales... + +CLUBS +<page_number>451</page_number> + +COUNTRY CLUB +MEMBERS LEGER + +<table> + <tr> + <td rowspan="2">Name</td> + <td rowspan="2">Amount</td> + <td>Payment by</td> + <td>Approved</td> + </tr> + <tr> + <td></td> + <td></td> + </tr> +</table> + +Form 118. Club Members Only Ledger (left and right-hand pages) + +OF YEAR + +<table> + <thead> + <tr> + <th colspan="3">FOR YEAR</th> + <th colspan="3">FOR YEAR</th> + </tr> + <tr> + <th>Fiscal Period</th> + <th>Amount Paid</th> + <th>Terms Quoted</th> + <th>Finer Quoted</th> + <th>Second Quoted</th> + <th>Terms Quoted</th> + <th>Finer Quoted</th> + <th>Second Quoted</th> + <th>Terms Quoted</th> + <th>Finer Quoted</th> + <th>Second Quoted</th> + </tr> + </thead> + <tbody> + <!-- Example rows --> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr> + <!-- More rows... --> + </tbody> +</table> + +Form 118. Club Members Only Ledger (left and right-hand pages) + +<page_number>452</page_number> +ILLUSTRATIVE SYSTEMS + +column is compared with the cash book, and from the latter record the charge to cash is secured. Other methods are used but the one indicated is representative. + +8. Membership Ledger + +A membership ledger should be arranged to cover several years in order to avoid rewriting members' names. To this end, the space on each page may be divided up so that only five or six names are set up per page. If each name takes up six lines, a record for six years is secured. Form 118 covers two pages of an open book. It is one type of "Boston ledger." + +9. Special Subscriptions + +A subscription for any purpose connected with the operation of the club should be considered as part of the income for the year. If for a purpose not connected with operation, it is not income, and should be credited to a special account showing the purpose of the subscription. When the money secured has been paid out for the special purpose, the special account is closed. + +10. Closing the Books + +Club accounts should be kept in a businesslike manner so that it will be possible to show all income and expense applicable to each month or fiscal period. + +The accounts with each department should be kept separately so that the operative result of each department can be ascertained. + +The direct expenses should be separated from the indirect. The various committees should be charged with their expenses and credited with returns secured. + +CHAPTER XXXVIII + +BUILDING CONTRACTORS + +1. The Building Contractor + +The building contractor is often confronted with the need for system. He has a number of small jobs on his hands, and also, perhaps, a few larger ones. Some of this work he has given out to subcontractors, wholly or in part. So far as the owner is concerned, the building contractor alone is responsible for the work, the subcontractors not entering into any direct relationship with the owner. + +2. Records Required + +The scope of the business controls the books and records that will be used. At least, however, there should be: + +1. General journal +2. General ledger +3. Cash book +4. Voucher register +5. Contract register +6. Subcontract register +7. Contract cost sheet +8. Subcontract payment sheet +9. Pay-roll sheet +10. Material requisitions +11. Stores record + +<page_number>453</page_number> + +<page_number>454</page_number> +ILLUSTRATIVE SYSTEMS + +3. Numbering Contracts + +Every contract should be given a number to facilitate identifying the contract at any time and to eliminate chances of confusion. When a contract is secured, a number is given to it at once, and it is known by this number until finally closed out. The contract numbers should of course run serially. When a subcontract is given out, this also is given a serial number. The subcontract number is generally combined with the main contract number. If, for example, a general contract is numbered 10X1, the first subcontract under it may be numbered 10X1, the letter X separating the two numbers. Numbering in this way identifies each general and each subcontract, and ties up the subcontract to the main agreement. + +Contracts are filed by numbers. All papers relating to them are filed together, each carrying the proper number for purposes of identification. + +4. The Contract and Subcontract Register + +General contracts and subcontracts should be entered in registers. Such registers help in keeping available for ready reference the essential facts concerning each general and subcontract. + +5. Contract Cost Sheet + +After a contract is entered on the contract register, a contract cost sheet (Form 119) is started. As each subcontract is entered, a subcontract payment sheet (Form 120) is made up and filed with the contract cost sheet, of which it is really a subsidiary record. The charges for this contract cost sheet are gathered from + +BUILDING CONTRACTORS 455 + +CONTRACT COST SHEET +No. ____________ +Name ____________ +Address ____________ + +<table> + <thead> + <tr> + <th>Date</th> + <th>EXPLANATORY DETAIL</th> + <th>Vo. No.</th> + <th>TOTAL</th> + <th>Labor</th> + <th>MATERIAL</th> + <th>EXPENSE No.</th> + <th>AMOUNT</th> + </tr> + </thead> + <tbody> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <!-- Additional rows can be added here --> + </tbody> +</table> + +Form 119. Contract Cost Sheet + +SUBCONTRACT PAYMENT SHEET +No. ____________ +Subcontractor ____________ +Address ____________ + +<table> + <thead> + <tr> + <th>Date</th> + <th>EXPLANATORY DETAIL</th> + <th>Vo. No.</th> + <th>FAD No.</th> + <th>TOTAL ON ACCOUNT</th> + <th>DUE</th> + <th>REMARKS</th> + </tr> + </thead> + <tbody> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <!-- Additional rows can be added here --> + </tbody> +</table> + +Form 120. Subcontract Payment Sheet + +the pay-roll record, material requisitions, and audited vouchers. These various contract cost sheets form the detail ledger which on the general ledger is controlled by the account with Construction. + +6. Voucher Register +The ruling given in Form 121 for the voucher register may be considered standard, although the size of the register depends upon the business in question. The distribution columns need explanation. The most important item to be provided for is that of the cost of + +456 +ILLUSTRATIVE SYSTEMS + +Form 131. Contractor's Voucher Register (left and right-hand pages) + +<table> + <tr> + <td colspan="10">VOUCHER</td> + </tr> + <tr> + <td>DATE</td> + <td>CALCULATOR</td> + <td>YD.</td> + <td>ELEVATION</td> + <td>AIRMENT</td> + <td>PROMPTED</td> + <td>ACT.</td> + <td>ACT.</td> + <td>ACT.</td> + <td>ACT.</td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + <td></td> + </tr> + <tr> + <th>REGISTER</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + <th>ACCT.</th> + </tr> + <!-- Additional rows for register --> +</table> + +<img>Description: A form titled "Illustrative Systems" with two columns. The left column is labeled "VOUCHER" and contains headers for date, calculator, yd., elevation, airment, prompted, act. acct. The right column is labeled "REGISTER" and contains headers for acct. acct. acct. acct. acct. acct. acct. acct. acct..</img> + +BUILDING CONTRACTORS <page_number>457</page_number> + +contracts. On the general ledger an account with Cost of Contracts is opened. It is a controlling account covering what might be called the contract cost ledger; it is charged with total costs and credited with amounts that have been charged to owners. Its balance shows the value of contracts for work in the course of construction. The various expense accounts are next provided for. If there are many of them, and if provision for them upon the register will make that record cumbersome, the detail distribution may be carried in a subsidiary record, and only a controlling column carried on the register. + +**7. Materials** + +A proper accounting for materials is necessary for any contractor. Certain materials will be kept in stock and certain ones will not. Every withdrawal of material should be based upon a properly executed requisition. If these requisitions are not too many, they may be posted individually to the proper accounts on the general ledger and the cost ledger. The general ledger accounts here would be Construction account, which is debited, and Materials account, which is credited. These two are controlling accounts, controlling the various jobs in progress as shown by the contract cost ledger and the various materials accounts shown by the stores ledger. If the requisitions are numerous, it may be necessary to sort them by jobs and post each job total. + +**8. Labor** + +The proper preparation of the pay-roll demands that a fixed date of payment be set. Inasmuch as work + +<page_number>458</page_number> +ILLUSTRATIVE SYSTEMS + +in progress may be at a great distance from the office, a sufficient number of days must be allowed for time reports to come in and then for making up the pay-roll. + +When the pay-roll voucher is drawn, the distribution is made to the proper contracts and the proper entries are then made on the general ledger. When the pay-roll check is drawn, the Pay-Roll account is charged. When each contract is charged, the Pay-Roll account is credited and the controlling account with Construction is charged. + +9. Subcontract Payments + +As each partial payment to subcontractors becomes due, it should be charged at once to the contract cost. If other methods are followed, such as charging the total amount of the subcontract at the time it is let, or waiting until the subcontract is completed before making any charge, the contractor's records during the progress of the job will fail to show the true conditions of affairs. The cost sheet is charged from the voucher for the amount of each payment, and this same amount is then entered on the subcontract payment register. The payments, as displayed in the subcontract payment sheets for all subcontracts concerned with a general contract, equal in amount the total of the contracts column on the contract cost sheet. + +10. Periodical Charges to Owners + +Even though the contract existing between the owner and the contractor may contain special terms of payment, charges are usually billed periodically. At + +BUILDING CONTRACTORS <page_number>459</page_number> + +least three copies of the bill are necessary. The original, accompanied by or referring to the architect's certificate, is sent to the owner. One copy is filed in numerical order and from this copy postings are made to the account with the owner and to the controlling account for construction. The other copy is filed with the original contract. + +**11. Profit and Loss** + +The costs of the work billed during a certain period are secured from the cost records. These total costs are credited to the controlling account with Contract Costs and charged to the Contracts Charged account. Profit and loss is then easily secured. + +If the various contract accounts representing uncompleted work have been charged with any part of the estimated profit to be realized when the contract is finished, the amount so estimated should be carefully investigated. Although it is regarded as a cautious practice, in view of possible contingencies, to leave out of account all profit on uncompleted contracts, such practice is unnecessary; in fact, in the case of large contracts it would not be proper. + +A portion of the anticipated profit on a whole contract, based on the proportion that has been finished, and estimated conservatively, must be regarded as actual income. The amount of such an estimate should be charged, however, to a special account and not direct to the contract accounts. + +Contracts in progress may be shown on the balance sheet as indicated below. In a similar way, a loss on any contract in progress may be shown. + +<table> + <tr> + <td><page_number>460</page_number></td> + <td>ILLUSTRATIVE SYSTEMS</td> + </tr> + <tr> + <td colspan="2">Contracts in Progress, cost to date............ $........</td> + </tr> + <tr> + <td colspan="2">Estimated Profits already earned thereon........ $........</td> + </tr> + <tr> + <td colspan="2">Less Receipts on Account......................... $........</td> + </tr> + <tr> + <td colspan="2">Net Equity in Contracts in Progress............... $........</td> + </tr> +</table> + +CHAPTER XXXIX + +COST ACCOUNTS OF A MANUFACTURING ENTERPRISE + +**1. Double-Entry Method and Cost Records** + +The double-entry method of accounting permits costs to be recorded in any desired manner. In fact, whenever a profit and loss statement is produced from a set of double-entry records, an analysis of costs is presented in more or less detailed form. + +Cost accounting is thus by no means peculiar to manufacturing concerns. With any enterprise double-entry principles may be made use of in such a way that production and operation costs are worked out on the basis of an established unit or units. In the case of a manufacturing enterprise this unit would be some unit of product manufactured. + +**2. The Problem** + +Every manufacturing concern produces and sells some kind of product. Its system must provide for determining the cost of each unit of production turned out, and the profit secured on that unit. The cost of making sales may be a considerable item of cost. Sales are for either cash or credit. The following points must be considered by every manufacturing enterprise in reference to the problem of costs: + +1. **Cost of doing business** + (a) **Production** + +<page_number>461</page_number> + +<page_number>462</page_number> +ILLUSTRATIVE SYSTEMS + +(b) Selling +(c) Administration +(d) Capital expense +Charges for rent, interest, etc. +Plant expense + +2. Amount of business done +3. Profits and losses + +The accounting system in use must provide an in- +telligible record of these factors in the same manner +as required for a retail or wholesale establishment. +The accounts used should be planned according to +the layout just shown. They should not be too many in +number and should provide for recording all charges +and for the easy preparation of the business statements. + +3. Materials + +The amount of raw material purchases has, usually, +no direct relation to production cost, because of the ma- +terial carried in stock. The amount of the inventory +on hand should depend upon the current price and the +quantity needed for immediate consumption. There- +fore, materials when purchased should not, as a general +rule, be charged directly to production. They are +charged to a Stores account, credited out from it, and +charged to production as used. To take materials from +stores for use in production, a requisition is filled out +and approved. + +4. Labor + +As labor is expended in one way or another, time +slips are made out either by the workman himself or by +a timekeeper. These time slips show against what ac- + +COST ACCOUNTS—MANUFACTURING <page_number>463</page_number> + +counts the labor has accumulated, and their amounts are distributed to the appropriate accounts. + +5. Overhead + +Accounting for overhead expense causes considerable difficulty. Its proper distribution must be secured. Such distribution may be made directly against the accounts affected as soon as the expense is incurred, or the charges may be accumulated in certain "gathering up" accounts from which distribution is made later. Improper distribution of overhead charges will impair the accuracy of the cost of production as displayed in the accounts kept. + +The other costs as shown in § 2 need no comment. + +6. The Records + +The records required will depend entirely upon the kind of product manufactured. For the sake of completeness, the list of records presented below is not confined to cost accounts but includes those of the whole business. It represents the books likely to be found in any establishment of considerable size + +1. Journal (miscellaneous entries) +2. Voucher register (purchases of all kinds) +3. Sales book +4. Cash book +5. Pay-roll record +6. General ledger +7. Customers ledger +8. Creditors ledger +9. Expense ledger + (a) Production + +<page_number>464</page_number> +ILLUSTRATIVE SYSTEMS + +Form 125. Chart of Controlling Accounts-Manufacturing Concern + +<img>A diagram showing a chart of accounts for a manufacturing concern.</img> + +<table> + <tr> + <td rowspan="3">GENERAL JOURNAL</td> + <td rowspan="3">SALES CASH BOOK</td> + <td rowspan="3">JOURNAL</td> + <td rowspan="3">BOOK</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + <td rowspan="3">ACCOUNTS</td> + </tr> + <tr> + <td colspan="2" style="text-align:center;">Miscellaneous</td> + <td colspan="2" style="text-align:center;">Miscellaneous</td> + <td colspan="2" style="text-align:center;">Miscellaneous</td> + <td colspan="2" style="text-align:center;">Miscellaneous</td> + <td colspan="2" style="text-align:center;">Miscellaneous</td> + </tr> + <tr> + <td colspan="2" style="text-align:center;">Accounts Receivable</td> + <td colspan="2" style="text-align:center;">Accounts Receivable</td> + <td colspan="2" style="text-align:center;">Accounts Receivable</td> + <td colspan="2" style="text-align:center;">Accounts Receivable</td> + <td colspan="2" style="text-align:center;">Accounts Receivable</td> + </tr> + <tr> + <td>Facility LEADER Accountant</td> + <td>Cashier Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + <td>Factory LEADER Accountant</td> + </tr> + <tr> + <td>Custodians General Manager Company Controller Factory LEADER Accountant Cashier Accountant Factory LEADER Accountant Factory LEADER Accountant Factory LEADER Accountant Factory LEADER Accountant Factory LEADER Accountant Factory LEADER Accountant Factory LEADER Accountant Factory 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<page_number>465</page_number> + +(b) Selling +(c) Administration +(d) Capital + +10. Factory ledger +11. Cost ledger +12. Stores ledger + +The rulings of these records should follow the requirements as set out in the classification of accounts in use, and provide for the proper controlling accounts. + +Certain of these records are familiar. A few may not be. The cost ledger records the material, labor, and overheads of all orders in progress through the factory, each order being shown by number. + +The factory ledger contains the cost ledger controlling account, the stores ledger controlling account, and miscellaneous factory accounts. It is represented on the general ledger by a controlling account. The diagram indicated in Form 122 may clarify the controlling accounting principle as applied to manufacturing. + +The factory journal is used in regular form. Monthly totals of the stores ledger and the cost ledger are posted from this book to the factory ledger. The various labor and overhead accounts are passed through this record. + +These sections on manufacturing cost accounts very briefly suggest the scope of the subject. It is covered in a thorough and detailed manner in Volume III. + +CHAPTER XL + +COST ACCOUNTS OF A TRADING ENTERPRISE + +1. Costs Ascertaind by Departments + +The effective control that an accurate record of costs affords over the expense of doing business has during the last decade attracted the attention of many large retail and wholesale trading enterprises. In consequence, accountants are frequently asked to introduce a cost system into a business of this class. The primary object in such a case is to ascertain the profit or loss on the different kinds of goods sold and thus indicate the relative efficiency of departments. The cost problem involved presents no difficulties—except the common one of the distribution of overhead expense—and resolves itself into a computation and comparative analysis of trading results by departments. + +2. Direct Charges + +A trading enterprise buys goods only for resale; its merchandise naturally classifies itself by departments. Therefore the charges that are analogous to material and labor in a factory are represented by purchases made and wages paid in the various departments. By slotting a column in the purchase journal to each department and by means of a similar classification of the pay-roll, the total of direct charges to be debited to each department is readily ascertained. + +<page_number>466</page_number> + +COST ACCOUNTS—TRADING <page_number>467</page_number> + +3. General Features of Expense Distribution + +Such difficulties as arise are connected with the proper distribution of overhead represented by light, heat and power, indirect wages, building maintenance, deliveries, and other indirect charges. + +Space does not permit a detailed discussion of cost accounting. This in treated in Volume III. But it will be worth while-taking a department store as the most obvious example of a trading concern which is departmentalized—to summarize the salient features of a system for distributing expense. + +1. Departmentalization of expense. The best modern practice is to ascertain the amount of each item of expense chargeable to the various departments. This means that the expense of operation and maintenance, supervision and clerk hire, accounting and statistical work, as well as a score or more of other items, all have to be carefully departmentalized. + +2. Apportionment on basis of floor space. There are many items of expense which are most equitably distributed on the basis of the productive floor space occupied by departments. This means the value of the space actually occupied by selling departments. Among the items which are most equitably distributed on this basis are: rent, when the store is rented; light, heat, and ventilation expense; janitor service; repairs and maintenance of sprinkler system; if a floor walker covers more than one department when making his rounds, his time is best apportioned to the departments under his charge on the basis of the floor area covered by the departments. + +3. Cash system expense. In stores where the sys- + +<page_number>468</page_number> +ILLUSTRATIVE SYSTEMS + +tem of cash carriers is rented on a basis of a certain charge per station, it is obvious that the rental charge should be distributed over departments in proportion to the number of stations in each department. Similarly in case the carrier system is owned by the store, the expense of maintenance, equipment, supplies, and power should be allocated to departments on the basis of stations. The fact should be noted, however, that the wages of cashiers at the central station are not proportional to the number of stations but rather to the number of sales slips received from each department. The number of departmental sales slips is therefore the best basis for distributing the wages of cashiers at the central station. + +4. Accounting department expense. The work of the accounting department consists mainly in handling purchases, sales, credits, and monthly statements. Ordinarily the expense of purchasing is added to the invoice price in order to arrive at the C.L.D. (Cost Laid Down) price. The salaries of those clerks handling sales and credits should be apportioned to departments on the basis of the number of sales slips handled for each, and the expense of the billing clerks is best distributed on the basis of the number of bills entered. + +5. Delivery expense. This item should be distributed on the basis of the number of packages delivered for each department. + +6. Telephone expense. The best basis for distributing telephone expense is the average number of calls directly chargeable to each department. + +7. Advertising expense. Advertising in newspapers is best charged against the departments directly + +COST ACCOUNTS—TRADING <page_number>469</page_number> + +advertised, if that is possible. However, charges for newspaper advertising of a general character, through which all departments get some benefit, should be spread over departments in the same ratio as direct charges. + +8. Window dressing expense. The natural course of procedure is to distribute the expense of window dressing in proportion to the space allotted to each department. + +9. Elevator expense. It is obvious that no part of the expense of operating the elevators should be charged to the departments occupying space on the street floor. The most approved plan is to distribute the expense of all passenger elevators on the basis of the number of sales by departments in the basement and upper floors. + +10. Special service expense. When a store maintains special departments such as an information bureau, post office, theater ticket stand, railroad ticket office, and so on, it is the best practice to make a distribution on the basis of the number of persons making purchases in the various departments, as shown by the number of sales tickets in each department. + +11. Educational department expense. If a store operates an educational department for the purpose of increasing the efficiency of its employees it would seem the best practice to distribute the expense on the basis of the sales slips. + +12. Supplies department expense. It is quite usual for a store to operate a supplies stockroom and where this is done the most equitable method of procedure usually is to distribute the expense on the basis of the value of supplies issued to the various departments. + +<page_number>470</page_number> +ILLUSTRATIVE SYSTEMS + +13. Insurance on stock. The best plan is to spread the insurance on stock over the different departments on the basis of the average inventory value of stock. + +14. Employment bureau and liability insurance. The best practice seems to be in favor of distributing the expense of the employment bureau and liability insurance on the basis of the departmental pay-rolls. + +15. General expense. There are of course many expenses of a general character which cannot be distributed on any logical basis. Such expenses are those incurred for general advertising and publicity not in newspapers or on bill-boards, etc.; general transportation; charity; legal protection; and so on. In the absence of any real reason for using any of the different methods above referred to, it seems to be admissible to give each department an equal share of the so-called general expenses. + +**4. Specific Problem Considered** + +Cost calculations are simplified when items of a like character are grouped together and arranged in schedule form for final assembly on a summary cost sheet. The accounts in a trading enterprise naturally group themselves under the following heads: + +1. Opening Inventory +2. Rental Expense +3. Light, Heat, and Power +4. Fixed Charges +5. Pay-Roll +6. Purchases +7. Cost of Sales (Net) +8. Sales (Net) + +COST ACCOUNTS—TRADING <page_number>471</page_number> + +The compilation of each of these schedules will now be discussed in detail. + +**5. Schedule 1—Opening Inventory** + +The cost accounts of a trading concern are opened with an inventory of the merchandise classified by departments. + +**6. Schedule 2—Rental Expense** + +The most convenient and accurate method of distributing rental expense is to apportion it over departments in proportion to the estimated rental value of the space they occupy. If the building is rented the amount of the rent is fixed and each department's share can be charged directly to the department affected; but if the merchant is his own landlord he has to keep an account for rental expense in order to ascertain the cost of floor space upon which other indirect charges can be distributed. + +"Rental Expense" comprises usually the following charges to which supposititious figures are fixed in order to follow their distribution over departments: + +<table> + <tr> + <td>Rental Expense</td> + <td>$</td> + <td>50,000.00</td> + </tr> + <tr> + <td>Depreciation</td> + <td></td> + <td></td> + </tr> + <tr> + <td>Insurance</td> + <td></td> + <td>5,000.00</td> + </tr> + <tr> + <td>Taxes</td> + <td></td> + <td>1,000.00</td> + </tr> + <tr> + <td>Interest</td> + <td></td> + <td>20,000.00</td> + </tr> + <tr> + <td>Repairs</td> + <td></td> + <td>10,000.00</td> + </tr> + <tr> + <td>Labor, Cleaning</td> + <td></td> + <td>20,000.00</td> + </tr> + <tr> + <td>Supplies</td> + <td></td> + <td>5,000.00</td> + </tr> + <tr> + <td>Sundrys</td> + <td></td> + <td>1,000.00</td> + </tr> + <tr> + <td></td> + <td></td> + <td>$110,000.00</td> + </tr> +</table> + +<page_number>472</page_number> +ILLUSTRATIVE SYSTEMS + +The next subject for consideration is how to apportion the total rental expense to the different floors and departments. Suppose, for example, that the store occupied by the owner of a furnishing and clothing business has a basement and six floors. Then the relative rental values of the various floors can be estimated with sufficient accuracy, as shown below, presuming the rental value of the building to be $110,000. + +<table> + <tr> + <td>Basement</td> + <td>5%</td> + </tr> + <tr> + <td>1st floor</td> + <td>45%</td> + </tr> + <tr> + <td>2nd floor</td> + <td>15%</td> + </tr> + <tr> + <td>3rd floor</td> + <td>10%</td> + </tr> + <tr> + <td>4th floor</td> + <td>10%</td> + </tr> + <tr> + <td>5th floor</td> + <td>10%</td> + </tr> + <tr> + <td>6th floor</td> + <td>5%</td> + </tr> +</table> + +100% + +**Space Occupied by Departments.** It may be assumed that the area of a floor is found to be 80,000 square feet or 560,000 square feet for the whole building. In addition to the foregoing information it is necessary to know how many square feet each department occupies on a floor, before the rental expense can be finally apportioned. The space so occupied may be considered to be as follows: + +<table> + <tr> + <td>Basement:</td> + <td>Square Feet</td> + </tr> + <tr> + <td>Light, Heat, and Power Plant</td> + <td>40,000</td> + </tr> + <tr> + <td>Storehouse, Packing, and Shipping Supplies</td> + <td>40,000</td> + </tr> + <tr> + <td></td> + <td><strong>80,000</strong></td> + </tr> + <tr> + <td>First Floor:</td> + <td></td> + </tr> + <tr> + <td>Hats and Caps</td> + <td><strong>30,000</strong></td> + </tr> + <tr> + <td>Gloves and Leather Goods</td> + <td><strong>10,000</strong></td> + </tr> +</table> + +**COST ACCOUNTS—TRADING** + +<table> + <tr> + <td>Umbrellas and Canes</td> + <td>10,000</td> + </tr> + <tr> + <td>Hosiery and Underwear</td> + <td>20,000</td> + </tr> + <tr> + <td>Neckties and Novelty Goods</td> + <td>10,000</td> + </tr> + <tr> + <td>Ready-Made Shirts</td> + <td>10,000</td> + </tr> + <tr> + <td></td> + <td><strong>80,000</strong></td> + </tr> +</table> + +The calculation of the departmental cost of rental expense can now be made. The basement, equally divided between two departments as shown above, is figured at 5% of the annual rental expense of $110,000, making $2,750 chargeable to each department. The same procedure gives the rental expense to be charged to the other departments. The calculation follows: + +**RENTAL EXPENSE** + +<table> + <tr> + <td>Basement, 5% of $110,000.</td> + <td>$ 8,500.00</td> + </tr> + <tr> + <td>Light, Heat, and Power Plant (½).</td> + <td>$ 2,750.00</td> + </tr> + <tr> + <td>Storehouse, Packing, and Shipping Supplies (½).</td> + <td>2,750.00</td> + </tr> + <tr> + <td>First Floor 45% of $110,000.</td> + <td>49,500.00</td> + </tr> + <tr> + <td>Hats and Caps (¼).</td> + <td>$12,375.00</td> + </tr> + <tr> + <td>Gloves and Leather Goods (½).</td> + <td>6,187.50</td> + </tr> + <tr> + <td>Umbrellas and Canes (¼).</td> + <td>6,187.50</td> + </tr> + <tr> + <td>Hosiery and Underwear (¼).</td> + <td>12,375.00</td> + </tr> + <tr> + <td>Neckties and Novelty Goods (¼).</td> + <td>6,187.50</td> + </tr> + <tr> + <td>Ready-Made Shirts (¼).</td> + <td>6,187.50</td> + </tr> +</table> + +**7. Schedule—Light, Heat, and Power** + +The distribution of light, heat, and power to the various departments is made on the same basis as that of rental expense. Presuming that the merchant owns his own power plant, the annual expense of operating the plant may be expressed by the following figures: + +<table> + <tr> + <td><strong>474</strong></td> + <td colspan="3"><strong>ILLUSTRATIVE SYSTEMS</strong></td> + </tr> + <tr> + <td>Depreciation</td> + <td>$</td> + <td>1,750.00</td> + </tr> + <tr> + <td>Insurance</td> + <td></td> + <td>500.00</td> + </tr> + <tr> + <td>Taxes</td> + <td></td> + <td>100.00</td> + </tr> + <tr> + <td>Interest</td> + <td></td> + <td>2,000.00</td> + </tr> + <tr> + <td>Repairs</td> + <td></td> + <td>600.00</td> + </tr> + <tr> + <td>Labor—Engineer and Firemen</td> + <td></td> + <td>4,800.00</td> + </tr> + <tr> + <td>Coal and Wood</td> + <td></td> + <td>11,000.00</td> + </tr> + <tr> + <td>Supplies, Including Oils and Waste</td> + <td></td> + <td>1,500.00</td> + </tr> + <tr> + <td>Sundrys</td> + <td></td> + <td>600.00</td> + </tr> + <tr style="border-top: 1px solid black;"> + <td colspan="2">Amount Transferred from Rental Expense.</td> + <td>$28,250.00<br>2,750.00<br>$26,500.00</td> + </tr> +</table> + +Here again the various departments are charged for light, heat, and power expense in proportion to the area occupied as shown by Schedule 2. + +After deducting the space occupied by the light, heat, and power plant, $29,000 square feet remain, which divided into the $26,500 gives a charge of $0.5 per square foot used in arriving at the foregoing light, heat, and power costs. + +The distribution for each floor would be: + +<table> + <thead> + <tr> + <th></th> + <th>Square Feet</th> + <th>Amount</th> + </tr> + </thead> + <tbody> + <tr style="background-color: #f2f2f2;"> + <th>Basement:</th> + <th></th> + <th></th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Light, Heat, and Power Plant (No Charge)</th> + <th></th> + <th></th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Storehouse, Packing, and Shipping Sup- ples</th> + <th>40,000</th> + <th>$2,000.00</th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>First Floor:</th> + <th></th> + <th></th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Hats and Caps...</th> + <th>20,000</th> + <th>1,000.00</th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Gloves and Leather Goods...</th> + <th>10,000</th> + <th>500.00</th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Umbrellas and Canes...</th> + <th>10,000</th> + <th>500.00</th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Hosiery and Underwear...</th> + <th>20,000</th> + <th>1,500.00</th> + </tr> + <tr style="background-color: #f2f2f2;"> + <th>Nekkets and Novelty Goods...</th> + <th>16,558.33</th> + <th>837.91</th> + </tr> + <!-- Additional floors can be added here --> + </tbody> +</table> + +Ready-Made Shirts +<page_number>14</page_number> + +COST ACCOUNTS—TRADING <page_number>475</page_number> + +8. Schedule 4—Fixed Charges on Furniture and Fixtures + +A distribution must be made of the depreciation and insurance charges on furniture and fixtures in the various departments, based on the valuation of the furniture and fixtures in each department. + +9. Schedule 5—Pay-Roll for Office and Sales Force + +In order to make a complete departmentalization of the expense of doing business it is necessary to analyze the pay-roll for the office and sales force as a basis for its distribution. + +10. Schedule 6—Purchases + +Purchases are distributed according to general ledger account classifications. An analysis of purchases is made currently in the voucher record, one column being given to each account classification. Thus at the end of an accounting period all vendors' invoices are found classified according to departments. + +11. Schedule 7—Cost of Sales (Net) + +A schedule of the cost of sales is prepared by pricing the sales slips of each department at cost. + +12. Schedule 8—Sales (Net) + +It is necessary also to recapitulate the individual sales at their selling prices in order to ascertain the amount of business done by each department. Then the excess of the sales over the cost of sales for any particular department gives the gross profit on the department's sales for the period. + +476 + +ILLUSTRATIVE SYSTEMS + +<table> + <tr> + <td colspan="8">ANALYSIS OF PROFIT ON SALES</td> + </tr> + <tr> + <td>Department</td> + <td>Sales</td> + <td>Cost of Excess</td> + <td>Selling Price</td> + <td>Total</td> + <td>Poorer</td> + <td>Lower</td> + </tr> + <tr> + <td>Hats and Caps:</td> + <td>8 $0,000.00</td> + <td>$0,000.00</td> + <td>$4,650.00</td> + <td>$4,650.00</td> + <td>$3,900.00</td> + <td>$1,850.00</td> + </tr> + <tr> + <td>Gloves and Leather Goods:</td> + <td>6 $0,000.00</td> + <td>$0,000.00</td> + <td>$1,826.50</td> + <td>$1,826.50</td> + <td>$1,435.50</td> + <td>$391.50</td> + </tr> + <tr> + <td>Shoes and Custom Shoes:</td> + <td>28 $0,000.00</td> + <td>$2,972.50</td> + <td>$2,972.50</td> + <td>$2,972.50</td> + <td>$2,972.50</td> + <td>$2,972.50</td> + </tr> + <tr> + <td>Necessities and Variety Goods:</td> + <td>35 $0,000.00</td> + <td>13,175.50</td> + <td>13,175.50</td> + <td>13,175.50</td> + <td>13,175.50</td> + <td>13,175.50</td> + </tr> + <tr> + <td>Boy's Clothing:</td> + <td>24 $4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + </tr> + <tr> + <td>Girl's Clothing:</td> + <td>13 $4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + <td>4,727.50</td> + </tr> + <tr> + <td>Baby-Babies and Pajamas:</td> + <td>18 $4,689.50</td> + <td>4,689.50</td> + <td>4,689.50</td> + <table><tbody><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th></th><th></th><th></th><th></th><th></th><th></th><th></th></tr><tr><th>Trousers:</th><table><tbody><tr><thead><tr><th>Description of Profit on Sales - Trading Concerns.</thead></tr></tbody></table></tr></tbody></table> + +COST ACCOUNTS—TRADING <page_number>477</page_number> + +**13. Analysis of Profit on Sales** + +An analysis can now be made of the profit on sales for the period according to departments. The cost of sales plus the selling expense deducted from gross sales gives the gross profit or loss on sales. The selling expense is ascertained by summarizing each kind of expense chargeable to each department and prorating any general expenses item on the same basis as indirect charges. The cost of sales and the amount of sales are obtained from Schedules 7 and 8 respectively. The form of statement is illustrated in Form 123. + +It will be noticed from the foregoing statement that eight departments have made a profit and four departments show a loss, resulting in a total profit on trading of $69,730. + +<table> + <tr> + <td>Cost of Sales</td> + <td>Selling Expense</td> + <td>Gross Profit</td> + </tr> + <tr> + <td>$50,000</td> + <td>$12,000</td> + <td>$38,000</td> + </tr> +</table> + +[API_EMPTY_RESPONSE] + +INDEX + +A + +Abstract of stores ledger, 143, 144 +Account, books of (See "Books of account") +Account, (See also "Account," Ac- +counting", "Ledger") cost of plant and +account with plant, example, 265, 266 +Accountancy defined, 3 +Accounting. (See also "Account," +"Accounts") +analytical, 6 +business, 5-8 +constructive, function of, 7 +corporation (See "Corporation") +cost (See "Cost accounting") +dealing with persons, 25 +progression or regression, common to, +property, 25 +defined, 3 +disbursement, 40 +expense distribution, 468 +functions of, 12 +estate (See "Estate accounting") +joint stock company, 270 +operative, 6 +partnership (See "Partnership") +place in organisation system, 265 +records (See "Records") system, +elaborate, not desirable, 53 +establishing, 266 +installation, time for, 48, 49 + +mechanical, 173, 175 necessity for proper, 5 officials and employees, co-oper- +ation with storekeepers and +organisation plan, 43 planning, 30-31 (See also "Busi- +ness", survey of,) "Business", +planning and accounting system for" +savings by Matthew's George, +quoted, 80 theory and practice, 3 Accounts (See also "Account," "Ac- +counts", "Ledger") +agency, 373, 374 attorneys' (See "Professional ac- +counting") +auditing, 6 books of (See "Books of ac- +counts") +branches and chain stores, 378-380 chart of, 48 classification of, 264-266 chromology, 289 grouping to facilitate statement preparation, 284-285 groups, variation in size of, 269 less than one hundred, 270 branches and chain stores, +379, 380 manufacturing or trading com- +pany, 272-284 methods of, 267-269 name and purpose of account both considered, 289, 270 numbering, 271a-271b + +<page_number>479</page_number> + +<page_number>480</page_number> +INDEX + +Accounts—Continued +classification of—Continued +personal accounts, 267 +numeric system, 358 +rental business, 358 +store (See "Clubway") +controlling (See "Controlling account") +creditors', mail-order business, 395 +details to be recorded, 266 +working papers, 266 +numbering, 271, 277-283 +decimal system, 271, 290-293 +universal system, 271, 277-279 +personal, 271 +professional (See "Professional account") +Accounting envelope, hotel guest charges, 430, 440 +Form, 440 +Adding machine, 350 +Adjustments, stores ledger, 143 +Administration, office, department, 122 +Administrative expense, 298 +Administration, 404 (See also "Estate accounting") +Advertising, +department, 154 +sales department, relation to, +154 +bonuses, distribution of, 468 +mail-order business, 355 +Agencies, 373 +accounts of, 373, 374 +home office with, 374 +Agent's order blank, 301 +Agreement, partnership, 17 +Aids, mechanical, 36-39 +automatic billing machine, 357 +billing machine, 169-171, 352 +calculating machine, 350-352 +cash register, 358 +essentially important of, 349 +importance of, 340, 350 +numbering machine, 358 + +photographing machine, 357 +slide rule, 355 +stamp alferer, 357 +tabulating machine, 353-356 +time recorder, 358 (See also "Time clock system") +typewriter, 356 +A room checking system, systems. +system. +Allowable deductions record, 348 +Allowance journal, 336 +Form. Form. +Allowances (See "Returns and allowances") +Alternate sales system for a small concern. Form. Form. +American plan. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. Form. +American plan. hotel. Form. + +Balance of stores ledger, +145, 143 + +Balance sheet, +289 + +accounts, +264 + +bookkeeping, +428-431 + +Bank deposit ledger, +253 + +Form, +252 + +Billing machine, +169-171; DTE invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, +169; FDI invoices making, + +Blotter, + +attorney's office, + +Form, + +stock-broker's, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form, + +Form. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter. + +attorney's office. + +stock-broker's. + +Blotter + +Attorney’s Office + +Stock-Brokers + +Blotter + +Attorney’s Office + +Stock-Brokers + +Blotter + +Attorney’s Office + +Stock-Brokers + +Blotter + +Attorney’s Office + +Stock-Brokers + +Blotter + +Attorney’s Office + +Stock-Brokers + +Blotter + +Attorney’s Office + +Stock-Brokers + +INDEX + +<page_number>481</page_number> + +Items, 305 +Bookkeeping, +double-entry, in coat accounting, 461 +machine (See "Billing machine") +Books of account, columns. +entering items in, 58 +figures in, arrangement of, 57 +use and number of, 57, 58 +grouping of, 57 +list of, 58, 36 +original entry, 7, 27-29, 46, 47, +291, 292, 247 +Forma, 301 +development of, 27-29 +form of, 47 +functional use of, 46, 47 +purposes of, 222 +subsequent entry, 7 +Borrowing stock (See Stock borrowing) +Branch accounts, 374-388 +accounting system for, 377-388 +accounts of, methods of keeping, 378 +books and records, 380-388 +Forma, 392-393 +officials of accounts, 379, 379 +home office accounts with, 376 +ledger accounts, arrangement of, +379, 380 +spelling between, 377 +Budgets, 316-383 +approval of, 322 +defined, 316 +estates of, +costs, 321 +expenditures, 321, 322 +needs of business as a whole, +320, 321 +revenue, 320, 321 +importance of, +general, 317 + +to organization officials in lesser capacities, 318 to the executive, 517, 318 institutionally structured, 325-327 lump sum, 316, 318 modifications, 322 plan, basis of, 323 preparation of, (518-520) points to be considered, 319 schedule, 325-326 Forms segregated, 316 trading businesses, illustrated, 327- +938 Business control types of, 12, 13 (See also "Organizational structure") +corporate type, 15-18 (See also "Corporation") +partnership, 15-17 (See also "Partnership") +proprietary type, 18 cost of doing business (See "Mail-order business") +object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project"), object of project (See "Project") Accounting financing., I., II fundamental divisions of., I., II office administration., I., II producing., I., II selling., II organization., I-29. See also ("Organization") planning accounting system for., +(50-51), See also subhead ("survey" or below) installation time for., I., II less important accounts. IV. See also ("Ledger") officials and employees. co-oper- +ation. IV. See also ("Ledger") + +<table> + <tr> + <td style="text-align: right;">482</td> + <td style="text-align: left;">INDEX</td> + </tr> + <tr> + <td colspan="2" style="text-align: center;"><strong>Businesses--Continued</strong><br>planning accounting system for--<br><strong>Continued</strong><br>organization plan, 43<br>outlining phase, 49<br>records of original entry, 46,<br>47 (See also "Books of ac-<br>cound, entries")<br>subsidary and auxiliary rec-<br>ords, 47, 48<br>supervision, provision for, 50<br>retail (See "Retail organization")<br>rules for office routine, 48, 50<br>survey of, 32-41<br>accounts receivable, 38<br>books in use, 35, 36<br>character of business, 33<br>object of, 32<br>preliminary considerations, 32<br>records, grouping, 36-38<br>specific cases, 37<br>trading and manufacturing rec-<br>ords, comparing, 36, 37<br>writing papers, 49, 51<br>wholesale trade, 38<br>classification methods, 268<br>combined with retail, 152-154<br>cost accounting for (See "Cost accounting for trading enter-prise")<br>sales book, 171</td> + <td style="text-align: left;"> + <table> + <tr> + <td style="vertical-align: top; padding-right: 1em;">Carols,</td> + <td style="vertical-align: top;">66, 67</td> + </tr> + <tr> + <td style="vertical-align: top;"></td> + <td style="vertical-align: top;">index, 67</td> + </tr> + <tr> + <td style="vertical-align: top;"></td> + <td style="vertical-align: top;">job, 307, 309</td> + </tr> + <tr> + <td style="vertical-align: top;"></td> + <td style="vertical-align: top;">time (See "Time card")</td> + </tr> + </table> + + Cash, + accountability, retail organization, + 368-369 + books (See "Cash book" below) + carrier system, distribution of ex- pense of, 467, 468 + defects from accounting view-point, 190 + disbursements, + attorney's fee, 401 + petty cash, 192 + record, hotel, 441 + + Forms, + 442 + register, order-order house, 393 + Forma, + 394 + discount sheet, + recording, 197-200 + Forms, + 199 + distribution sheet, 256-257 + Forms, + journal (See "Journal", cash) + memorandum for goods returned, + Forma, + 226 + petty, + book, 215-220 + Forma, + 219 + fixed funds and account, 217, 218 + impost system, 192, 217 + items of similar kind handling, + Forma, + 221 + vouchers, + Forma, + 220 + purchase orders, + receiptal records, + Forma, + 211 + receipts, + deposit of daily, 192 + deposit register, 206-209 + Forma, + 208 + </td> + <td style="text-align: left;"> + C + Calculating, + machine, 350-352 + listing, + Forma, + listing, + Forma, + non-listing, + Forma, + purchasing points to observe in, + Forma, + capital stock transfer record, + Forma, + Cord system. + law offices laying out daily work, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + Forma, + + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + </td> + <td style="text-align: left;"> + +INDEX + +<page_number>483</page_number> + +Cash—Continued +receipts register—Continued +hotels, 440 +Form, 441 +mail-order houses, 393 +Form, 394 +reasons for use of, 207 +use of two or more at same time, 208 +records, 186-230 +development of, 191 +general, 192 +Form, 193, 199, 202, 205, 208, +211, 213, 214 +miscellaneous, 222-230 +Form, 225, 230 +petty cash, 217-221 +Forma, 219, 220 +separate reasons for, 188-191 +refund tickets, 235 +Form, 236 +register, 177, 215, 338 +report, 377, 378 +Form, 239 +sales (See "Sales"), 406-408 +taxes, 409-410 +Cash book, 26, 27, 199-200 +accepted as evidence in courts, 27 +charitable institution, 204-206 +Forma, 205 +columnar, chain stores, 381 +Forma, 385 +columnarization of, 196-197 +controllers' accounts in, 200 +Forma, 199 +development of, 28, 29 +discount columns, 198-200 +Forma, 199 +entries, 185, 196 +function of, 190 +goals for mercantile concern, +201-203 +Forma, 202 +not a ledger account, 194 + + petty cash, 248-250 +Forma, 249 +chain stores, 381 +Forma, 386 +posting from bank, 218, 250 +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private cash registers, +private现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私人现金注册表， +私 + +<page_number>484</page_number> +INDEX + +Clubs - Continued +dues, 449 +fees, initiation, 449 +life membership, 449 +members' ledger, 452 +Forms, 451 +records required, 233, 448 +subscriptions, special, 452 +unprofitable activities, 449, 450 + +C. D. +register, 361, 362 +sales, 181-183 +route ledger, 183 +Form, 182 +route sheet, 181 +Form, 182 +Collection accounts, attorneys, 402, 439 +Columns, rulings and, 56-58 +Commission, +merchant's consignment register, 345, 346 +nomenclature, 340, 341 +Comparative statements, 294 +Consignee sales book for, 180 +Form, 176 +Consignment, +register, 345, 348 +sales on, 177-179 +sales book for consignee, 180 +Form, 176 +Construction, +work, 314 +employment record, 313 +local conditions to be observed, 313 +recording worker's time, +methods of, 313 + +Containers, 183-185 +accounting procedure for, 183-185 +column in sales book, 183 +Form, 184 + +Contract (See also "Contractors", building") +cost sheets, 454 +Form, 455 +filing, 455 +numbering, 456 +profit and loss, 459 +estimated profits, 459 +register, 455 +accounts, +payment sheet, 456 +Form, 456 +payments, 456 +register, 456 +Contractors (See also "Contract") +contracts to owners, periodical, 458, 459 +labor accounting for, 457, 458 +accounting procedure for, 457 +requirements, 457 +pay-roll, +preparation of., 457 +vouchers, +records required, 457 +controlling accounts, +voucher register, 457-459 +Form, 456 + +Controlling accounts, +inventory of., 30 +manufacturing enterprise., 465 + +Form, +posting., 200 +with debtors and creditors., 200 + +Form, +Corporate control., 18, 19 (See also "Corporation") +Form, +Corporation, +accounting., 20 +opening entries., 233, 234 + +board of directors., 18 + +committee(s), 18, 19 + +INDEX + +<page_number>485</page_number> + +Corporation--Continued +general manager, 18 +law governing, 20 +organization and management, 18 +Form, 19 +stock, +book, 386 +Form, 387 +certificates, engraved, 415 +ledger, 301, 302 +registration, 415 +stock exchange regulations, 415 +stockholders, 18 +Cost, +accounting (See "Cost account- +ing" below) +inventory at 145 +inventory of sales, 144 +distribution of, 475 +percentage based on, compared with selling price basis, 293 +production, ratio of selling ex- +pense to, 300, 301 +costs, control, 454 +Form, 455 +Cost accounting for manufacturing enterprises, 465 +controlling accounts, 465 +Form, 466 +ledger, 465 +double-entry bookkeeping, cost records, 461 +journal, factory, 463 +buying and selling, 462 +ledger, factory, 465 +materials, +ledger, 462 +requisition, 462 +overhead, distribution of, 463 +planning a system, 461, 462 +records of purchases, 462 +Cost accounting for trading enter- +prise, 466-477 +cost of sales schedule, 475 + +direct charges, 466 +inventory, opening, 471 +overhead, distribution of, 467-470 +accounting department, 468 +certificate of title delivery expense, 468 +departmentalization method, 467 +depreciation, 475 +education department, 469 +elevator, 469 +employment bureau, 470 fixed charges, 473 floor space basis of tax liability, +heat, +heating expense, 470 heat, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense, +heating expense， +insurance on stock, 470 liability insurance, 470 loss and damage policy, 471 power, 473-474 rental expenses, 471 service charge expenses, 479 supplies and equipment inventory telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number telephone number phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill phone bill. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. +phone bills. + +<table> + <tr> + <td><page_number>486</page_number></td> + <td>INDEX</td> + </tr> + <tr> + <td>Customers'</td> + <td>Diamond register, 342</td> + </tr> + <tr> + <td>accounts,</td> + <td>Forma, 343</td> + </tr> + <tr> + <td>arrangement of, 208</td> + <td>Differential price rate, 305</td> + </tr> + <tr> + <td>loose-leaf ledger, 340</td> + <td>Directors, corporation, 18</td> + </tr> + <tr> + <td>order register, 340, 341</td> + <td>Distributions, cash (See "Cash disbursement")</td> + </tr> + <tr> + <td>Form, 355</td> + <td>Discount</td> + </tr> + <tr> + <td>bill, 338</td> + <td>cash, 98</td> + </tr> + <tr> + <td>Form, 339</td> + <td>Credit recording, 197, 188</td> + </tr> + <tr> + <td>Cut sheet journal, 245</td> + <td>Forma, 199</td> + </tr> + <tr> + <td>Form, 234</td> + <td>Dish breakage, hotels and restau- rants, 449</td> + </tr> + <tr> + <td>D</td> + <td>Distribution short, cash, 295, 227</td> + </tr> + <tr> + <td>Day-book, 26, 27 accepted as evidence in courts, 27 development of, 27 Debit memorandum, 127 Forma, 350 Delta, estate accounting for, 407 Decimal system of numbering ac- counts, 271 Departments accounting, 12, 468 advertising, 154 credit, 157 educational expense, distribution of, 468 financial, 12 production of purchase (See "Purchase depart- ment") sales (See "Sales department") shipping, checking goods in stock stores, I31, I92 subsidiary, I1, II supplies expense distribution of, I68 traffic, I34, I55 Departmentalization of expense, 467 Departure board, hotel guests, I43 Depreciation, distribution of charge in trading concern, I75 Designing forms, I6, I7 Diagrams value $I, V25</td> + <td>Double-entry bookkeeping in cost accounting, 461 Driver's license forma, 336 Forma, 338 sales tax biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller biller billerbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbillersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersbil- llersees "Journal" (See "Journal") operating expenses corporation partnership original arrangement of., I0. III fraudulent avoiding. , B0. III + +INDEX + +<page_number>487</page_number> + +Estate accounting, 404-414 +Form, 411-413 +administrator, 405 +assets, 406 +authority to act, 404, 405 +debts and expenses, 407 +expenditures, 408 +final accounting, 410 +final accounting duties subse- +quent to, 410, 414 +income tax, 415 +principal, 408 +records, 402, 405, 410 +trusts, 412 +European plan, hotel, 492 +Executive importance of a budget +plan, 297-302 +Executor, 404 (See also "Estate ac- +counting") +Exhibits, schedules and statements, +of accounts, 297-302 +Expenditures, estimate of, 321, 322 +Expense, 297-302 +columnar administrative journal, 119- +113 +Form, 111, 113 +general, 470 +manufacturing enterprise, 463 +purchasing department, 287, 298 +distribution of cost, 297, 298 +selling, 299, 477 +as rate per pound or per ton of product shipped, 301 +Supplemental items included in, 299 +ratio of to production cost, 303-305 +ratio of to sales, 299, 300 +trading concern, 467-470 +Expenses, estate accounting for, 407 + +F + +Factory, +journal, 465 + +Indexer, 465 + +Fee, +book, attorney's fee, +Form., 405 + +initiation club, +stock-broker's fee, +Films, +catalogue, +quotations, +order record, +source, +Filing, +data, +informer, +invoices, +purchase orders, +Financial department functions of, +Floor space basis of expense ap- +partementment, +Fellows inserting, +Fees for travel and devices, +Forms, +four-column journal. +Form., +G + +Graphs value of cost. +Goods prepaid. $18. $55. $77. +Guests hotel (See "Hotels and res- +taurants") +H + +Habers system payment of wages, +386 + +Heat expense distribution of, +475, + +Home income accounts, +with agencies, +with branches, + +Hotels and restaurants, +hotel room income statement. +check system. +fraud detection. +American plan. + +breakage of dishes, + +I + +<page_number>488</page_number> +INDEX + +Hotels and restaurants—Costained +cash receipts register, 440 +Form, 441 +charge, 439 +earnings, monthly, 444 +European plan, 432 +expenditures, 441, 442 +cash disbursements record, 441 +Form, 442 +check register, 442 +voucher register, 441 +Form, 441 +guests, +accumulation envelope, 440 +Form, 440 +charge slip, 438, 439 +Form, 439 +compliance, 445 +departure record, 445 +ledger, 437, 438 +Form, 438 +recording receipts and expendi- +tures chargeable to, 435 +register, 436 +Form, 437 +office, arrangement of, 435 +profit and loss statement, form, +of, 436 +Form, 436 +record required, 436 +room ticket, 436 +Form, 437 +storey, 437 +inventory of, 442 +report of goods delivered, 442 +table of dining room, 433 +working hours of staff, shifts, +835, 836 +House accounts, duits, 450, 452 + +I + +Impression book, 166, 167 +Imprint fund, 192, 193 +Income, +estate accounting for, 608 + +recorded, 348 +Form, 346 +Income tax records, 348 +allowances and deductions record, 348 +Form, 387 +income record, 388 +Form, 366 +securities register, 368 +Form, 366 +Index cards, +for stock, 390 +Form, 390 +List of dues., 76 +Initiation fees club., 459 +Inspecting material, +Inspective accounting., 67 +Inspection of accounting system, +time for,, 181 Instalment sales on,, 185-187 Instalment budget illustrated, +295-297 Insurance: +costume and fixtures., 475 liability distribution of expense of, +of,, 470 policyholders insurance of uniform wording of,, 349, 365 register,, 362 Form,, 365 stock distribution of expense of, +of,, 470 Interest paid borrowers of stocks, +Inventory, +at cost,, 145 at selling price,, 155 operating trading enterprise., 471 Investment ledger,, 202 Invoice, +creditors', procedure in handling., +83 handling., Tt numbering., Tg, + +<img>A page from an index card with various fields filled out.</img> + +INDEX + +<page_number>489</page_number> + +Invoice—Continued +purchases, 324 +accuracy in handling, necessity of, 97 +allowances, checking, 101 +book, 109, 109 +cash disount, 58 +checking and approving, 98-101, 369 +extensions, checking, 101 +filing, 370 +freight charges, checking, 101 +handling without record of creditors, 121-122 +Forms, 370 +numbering, 102 +procedure in handling, 96-103 +recovils, 101-103 +register, 97 +Form, 97 +retail organisation, 369 +rubber stamp for checking and approving, 98 +Form, 98 +separate sheet for checking and approving, 99 +stamping, 102 +vouchers, 118 +sales, 159-161 +binding in book form, 167, 168 duplicate house biller, 168 retail organisation, 371 simplicity of form advantageous to customers, 47 unpaid list of cost of obtaining, 112 issuing material, 75 + +J +Job card, 307, 309 Jobbing organization, 150, 151 retail organisation combined with jobbing organization, 152-154 Journal, 231-246 allowance, 836 Form, 337 + +cash, 222-225 Form, 324 attorney's', 389-401 Form, 400 dissimilarities of cash posting to general ledger, 233, 235 cash sales chain stores, 381 Form, 386 columnar system posting facilitated by cut sheet, 245-246 Form, 246 entries, 232-234 closing Form opening Form petty-cash summary Form factory Form four-column Form transactions in two kinds of money Form $280 hotel and restaurant Form "left and right" Form purchase analysis of expense columns Form voucher register distinction between Form lines Form charging of expenses of Form columnar Form $115 columnar system undesirable Form expenses included in Form $105-115 Forms $115 $115 $115 $117 retail organisation simple ruling when private ledger is used Form simple developed from day-book + +six-column Form $24 posting to ledger Form $24 + +<page_number>490</page_number> +INDEX + +Journal—Continued +three-column, 195, 237-339 +Forms, 196, 238 +with safe column, 164, 165 +Form, 164 +two-column, 251, 237 +Form, 251 +vouchers, 251, 235 +Form, 251 +Journal—rulled ledger, 230 +Form, 251 + +L +Labor, 305, 513 +accounting for, building contrac- +tors, 457, 458 +charging, manufacturing enter- +prise, 462, 463 +records, +construction work, 313, 314 +importance of, 303, 304 +Job cards, 307, 309 +originals, 306 +time cards, 306-309 +time clock system, 307-309 +salaries and, separate record, 309, +314 + +Law offices, accounting for (see +"Professional accounts") +Ledger, 96, 27; 247-293 +accounting arrangement, 270 +numbering, 271 +planning attorney's', 401 +balance column in center, 256 +Form, 256 +bank depositors, 253 +Form, 252 +branch and chain stores, 279, 380 +credit, etc. +cash account in, 194 +cash hook not a ledger account, +194 + +club membership, 442 +Form, 451 +columnar, 259, 260 +cost of labor control, 262 +corporation stock, 261, 262 +costs, 465-468 +dealers, 380 +Form, 383 +debits and credits in center, 250 +Form, 250 +development of., 29, 30 explanation column wide., 253 factory cost function of., 29; 247 hotel guest, 437; 438 Form, +introduction., 362 journal-rulled., 250 Form, +not accepted as evidence in courts., 37 posting advantages of columnar rec- +ords., 28; 108; 109; 164 control of accounts., 300 defined., 27 + +from cash journal., 251; 255 from pay-roll journal., 288; 290 from six-column journal., 291 "posting ticket," 159; 161 private's., 460; 291; 297 cash hook not a ledger account., 261 controlling account., 261 Journal general ruling., 261 retail organization., 371; 372 ruling., 378 development of., $48; $250 sales, +depositors column in,, $185 Form, +special form,, $25; $257 Form, +size of,, $0 + +<img>A page from an old ledger book.</img> + +INDEX 491 + +M + +Ledger—Continued +standard form, 248 +Form, 248 +balance column at right, 256 +Form, 255 +double columns, 257, 259 +Form, 258 +stores, 308-310 +Form, 140 +abstract of, 143, 144 +adjustments, 143 +balance sheet, 142, 143 +controlling account, 143 +entries, 139, 141 +installing, 139 +bookleaf, 308 +bookleaf, card form, 138 +Form, 140 +purchasing division, 130 +reconciliation with general ledger, 143 +sold division, 131, 142 +tables, 257 +"Left and right" journal, 243 +Form, 244 +Lapse expense, distribution of cf., 473, +475 +"Long" account (See "Stock Insurance") +Loss-of-record, records, 60, 61, 64-66 +advantages of, 65-67 +hindrances to use of, 67-68 +disadvantages of, 65 +installing precautions taken in, +66 +marking sheets, 66 +spoiled sheets, 66 +unused sheets used for use of increase in stores ledger, 138 (See also "Ledger, store") +Form, 140 +Lump sum budget, 316, 317 + +Mail. +checking envelopes, 214, 215 opening, 214, 215 reading, 214 receipt of memorandum, 215 Form, 214 Mail-order accounting, 380-385 agent's order blank, 301 C. O. D. Register, 391 Form, 391 creditors' accounts, 392 purchase register, 392 receipts and disbursements cash, 393 Formularies records required, 389 stock record, 390 Formularies business, 151, 389 advertising handling of jobbing organization combined retail business retail business retail business manufacturing enterprise accounting system for cf., 365-461 (See also Cost accounting) +"Margin deposits," stock brokerage, +423 Material charging manufacturing enterprisepurchase price agreement contractor's building accounting procedure for cf., 457 inspection issuing cf., 77 purchasing cf., 87 (See also "Order purchase") "Requisition" received delivering to departments direct cf., 136-137 + +<page_number>492</page_number> +INDEX + +Material—Continued +receiving, 386 +receiving, 387 +recording, 100 +report, 135, 136 +Form, 387, 388 +receiving, 74, 134-137 +storing, 74 + +Materials ordered register, 86 +Matthews, George, quoted on supervision, 50 +Maximum stores, 133 +Merchandise (See "Aids mechanically") +Membership ledger, club, 452 +Form, 451 + +Merchants'atalentuary, store ac- +countability in, 141,142 +Merchandise returned memorandum, +125, 126 +Form, 124 +Minimum stores, 132, 138 + +N + +Notes: +payable register, 394 +Form, 385 +receivable register, 394 +Form, 385 +Numbering: +contracts, 454 +machine, 338 +Numeric system of account classi- +fication, 305 + +O + +Office, +administration department, 12 +arrangement, hotels, 435 +blotter, attorney's', 396, 397 +Form, 389 +routine, 45, 50 +Operative accounting, 6 +Order, +follow-up systems and devices, 94 + +purchase, 88-83 +Forming, 88 +handling, 95 +copies, number of, 90 +filing, 95 +handling of forms, 74 +in duplicate, 91 in quadruplicate, 92 in triplicate, 91 numbering of forms and invoices to correspond with, 89 papers accompanying numbering, +placings, 87 procedure in handling, 90-93 punching of forms, +printing clerk's copy, 92 registers, +registers, +used as material received form, +use record kept in quotation file, T7 register, +status, +sales, +sales, +accounting department routine in, +160-161 acknowledgement of, +approval of by credit depart- +ment, +157 duplicates copies, +handling of importance of careful, +interpretation by order depart- +ment, +invoice, +order blank, +order package labels, +posting ticket, +recording uniform blank, +sales register entering on, +shipping tickets, +stock requisitions, + +shipments on, +status, + +<page_number>94</page_number> + +INDEX 498 + +Organization, 4, 9-23 +business (See "Business organi- +nation") +capitalization, 4 +chart, 21-23 +form, 30 +control of, 4, 12, 13 +corporation, 18-20 +forms, 30 +jobbing, 150, 151 +retail combined with, 182-154 +lines of, general, 20, 21 +efficiency importance of a budget to, 318 +partnership, 15, 17 +Forms, 30-31 +place of accounting in, 4 +proprietorship, 13 +purchase department, 69-75 (See also "Purchase department") +retail (See "Retail organization") +sales department, 148 (See also "Sales department") +scope of, 9 +types of, 12, 13 +wholesale (See "Business, whole- +sale") +original entries, 30, 31 +Original entry books, of $7, 46, 47 (See also "Record of origin") +Overhead (See also "Expense") +manufacturing enterprise, 463 +trading enterprise, 475-76 (See also "Cost accounting for trad- +ing enterprise") +P + +Package labels, 159 +Partnership, +accounting, 17, 18 +opening entries, 233 +agreement, 17 +essential features of, 17 + +organization, 15-17 +Forms, 18, 19, 16 +articles of, 13 +Pay period, 304 +Payment, +cash (See "Cash disbursements") +salaries and wages, 303-315 (See also "Wages") +Payroll, +accounting procedure for, 311, 312 +analysis, 475 +contractor's building, 457, 458 +depreciation distribution, 475 +paddling, guarding against,, 312 record, chain stores,, 381 +Forms, +routine,, 309-312 time sheets,, 309-312 +Percentages, +average cost compared with selling price basis,, 293 use of in statements,, 292, 293 Personal statements (See Customers', accounts') +Petty cash (See "Cash petty") +Photographing machine,, 397 Price lists, +differential,, 505 Pledge record,, 341 Forms, +Insurance,, insurance, +importance of uniform wording of,, 342-945 Form,, Form,, Form,, Posting (See "Ledger posting") +Power expense, distribution of,, 425-475 Premium basis payment of wages,, 305 Price agreement with supply house,, 88 Prices determining,, 73 Principal estate accounting for,, 408 + +<page_number>194</page_number> +INDEX + +Private, 258 +cash book, 258 +Form, 429 +ledger, 260, 261 +Production department, 10 +Professional accounts, 386-403 +civil work, 387, 398 +collection, 402, 403 +excl. receipts, 402 +fee book, 402 +Form, 402 +journal, 395-401 +Form, 401 +ledger, 401 +office blotter, 396, 397 +Form, 401 +payments, cash, 401 +time cards, 386, 389 +Form, 398 +Profit, 371 +book, 371 +cost of production and, 370 +determining, 365 +expected and realized, discrepancy between, 145 +factor on which dependent, 146 +gross, 475-477 +increasing, 70 +on sales, analysis of, 477-479 +Form, catalogue file, 76 +Profit and loss, account, statement, 290 +form of, for hotel, 444, 445 +Preprintership, 13 +Funding period, 354 +Purchase (See also "Purchases" below) +and sales records, stock-broker's, +450 +Form, 429 +book, 107, 108 +Forms, 107, 108 + +posting, 106 +departmental, +activity of, +of cost, +system of, +cost of goods sold, +to expenses, +currently correct. +importance of, +69-75 expense, +257, 298 filing data, +378 inspecting material, +material, +invoices handling, +74 issuing material, +baseless system use of, +order entry, +17 orders purchase handling, +organization, +69-75 preparation of purchasing, +price information recording, +prices determining, +78 receiving material, +74 requisitioning order handling of, +73 (See also "Requisition", "purchase") +routing of, +75-85 small vs large business, +large storing material, +stock traffic ordering. +unsatisfactory purchasing methods results of, +elements of a., +invoice ("Invoice", "purchase") journal (See "Journal", purchase) order register, 85, 94 orders ("Order", "purchase") records, 104-129 retail organization, +stocks voucher system, +118 (See also "Voucher register") +register., 369 requisition (See "Requisition", pur- +specifications, +object of, +standard advantages of, +system requirements of, + +<table> +<tr><td>Private</td><td>258</td></tr> +<tr><td>cash book</td><td>258</td></tr> +<tr><td>Form</td><td>429</td></tr> +<tr><td>ledger</td><td>260</td></tr> +<tr><td>Production department</td><td>10</td></tr> +<tr><td>Professional accounts</td><td>386-403</td></tr> +<tr><td>civil work</td><td>387</td></tr> +<tr><td>collection</td><td>402</td></tr> +<tr><td>excl. receipts</td><td>402</td></tr> +<tr><td>fee book</td><td>402</td></tr> +<tr><td>Form</td><td>402</td></tr> +<tr><td>journal</td><td>395-401</td></tr> +<tr><td>Form</td><td>401</td></tr> +<tr><td>ledger</td><td>401</td></tr> +<tr><td>office blotter</td><td>396</td></tr> +<tr><td>Form</td><td>401</td></tr> +<tr><td>payments</td><td>cash,</td></tr> +<tr><td>time cards</td><td>386,</td></tr> +<tr><td>Form</td><td>398</td></tr> +<tr><td>Profit</td><td>, profit,</td></tr> +<tr><td>book,</td><td>, book,</td></tr> +<tr><td>, cost of production and,</td><td>, cost of production and,</td></tr> +<tr><td>determining,</td><td>, determining,</td></tr> +<tr><td>, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <page_number>194</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_number>. <page_number>194.</page_number>. <page_number>INDEX.</page_numbers> + +<table> +<tr><th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th>Description<th:description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description th_description thdescription description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description description descriptio... + +INDEX 495 + +Purchased division of stores ledger, 130 +Purchase (See also "Purchase" above) +material, of, 475 +cash, 126 +departmental distribution, 475 +material (See also "Order, pur- +chase," "Requisition, pur- +chase") +placing the order, 87 +price agreement, 88 +quotation new, securing, 88 +returned (See "Terms and allowances") +summary of, monthly, 123 +Form, 394 +Purchasing agent and stores-keeper, +relation between, 82 + +Q +Quotation file, 76, 77 +Quotations, new, securing, 88 + +R +Rate card, 304 +Recoupment. +record, cash, 211 +Form, 211 +abuse, sales, 172, 173 +Forms, 174 +Receipts, cash, +deposit of, daily, 192 +register, mail-order house, 383 +Form, 394 +Receiving, +order tickets of, 92, 134 +material, 74, 134-137 +Record, +books of original (See "Books of account [original entry]") +capital stock transfer., 386 +Form, 397 +pledge., 941 +Form, 394 + +Records, 52-58 arrangement and classification of +forms. See also "Accounting" +auxiliary, 47, 48 +books and, for branches and chain stores. See -branches +forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. See -forms. +bound., 61-63 +advantages of, 61, 62 +advantages of use of., 62 +cards, 66-67 +advantages of., 67 +account (See "Cash record") +club., 446 (See also "Club") +columnar, advantages of., 28, 105. +106, 194. +contractor's building., 453 (See also "Contract," "Contractors building.") +detail, smooth of., 55 +development of., 25-31 +estate., 402, 409, 410 +form of., 52-58 +adjustable to more than one purpose., 55 +columns., 57, 58 +designing., 56, 57 +how determined., 53 +relation of to system., 52-54 +rating., 55-56 +uniformity of., 54 +grouping., 36, 37 +hotels and restaurants., 436 (See also "Hotels and restaurants") business records. +Forms, 346, 347 labor (See "Labor", record"). +list of., 356. +rate cards., E11-64-66 (See also "Loose-leaf records") +mail-order accounting., 389; 390 manufacturing enterprise,, 30; 403; 405. +Form., 465 + +<table> +<thead> +<tr> +<td>INDEX</td> +<td>495</td> +</tr> +</thead> +<tbody> +<tr> +<td>Purchased division of stores ledger.</td> +<td>130</td> +</tr> +<tr> +<td>Purchase (See also "Purchase" above)</td> +<td></td> +</tr> +<tr> +<td>Material.</td> +<td>of,</td> +<td>475</td> +</tr> +<tr> +<td>Cash.</td> +<td>,</td> +<td>126</td> +</tr> +<tr> +<td>Departmental distribution.</td> +<td>,</td> +<td>475</td> +</tr> +<tr> +<td>Material (See also "Order purchase," "Requisition purchase")</td> +<td></td> +<td></td> +</tr> +<tr> +<td>Placing the order.</td> +<td>,</td> +<td>87</td> +</tr> +<tr> +<td>Price agreement.</td> +<td>,</td> +<td>88</td> +</tr> +<tr> +<td>Quotation new securing.</td> +<td>,</td> +<td>88</td> +</tr> +<tr> +<td>Returned (See "Terms and allowances") summary of.</td> +<td>, monthly.</td> +<td>123</td> +</tr> +<tr> +<td>Form.</td> +<td>,</td> +<td>394</td> +</tr> +<tr> +<td>Purchasing agent and stores-keeper,</td> +<td>relation between.</td> +<td>82</td> +</tr> +<tr> +<td>Quotation file.</td>, +<td>,</td>, +<td>76,</td>, +<td>,,</td>, +<td>77</td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>, +<td></td>. +<tr><th colspan="2">Q</th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><th colspan="2"></th><br/></tr> + +<tr> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +<table> + +<th>Rate card.</table> + +# 496 INDEX + +<table> + <tr> + <td>10 records—Continued</td> + <td>notes,</td> + </tr> + <tr> + <td>purchase (See "Purchase records")</td> + <td>payables, 334</td> + </tr> + <tr> + <td>retail organization, 34, 35, 365-</td> + <td>Form, 335</td> + </tr> + <tr> + <td>372</td> + <td>receivable, 334</td> + </tr> + <tr> + <td>sales (See "Sales records")</td> + <td>Form, 335</td> + </tr> + <tr> + <td>special, 334-348</td> + <td>order, 340, 341</td> + </tr> + <tr> + <td>Form, 340, 337-380, 341, 345,</td> + <td>purchase order, 99, 94, 392</td> + </tr> + <tr> + <td>341, 346, 347</td> + <td>rent, 253</td> + </tr> + <tr> + <td>spoiled and returned goods, 380</td> + <td>Form, 254</td> + </tr> + <tr> + <td>Form, 384</td> + <td>return and allowance, 125</td> + </tr> + <tr> + <td>stock, general, 380</td> + <td>Form, 125</td> + </tr> + <tr> + <td>Form, 252</td> + <td>sales, 157</td> + </tr> + <tr> + <td>nondelivery,</td> + <td>scrapings, 948</td> + </tr> + <tr> + <td>dissipation of,</td> + <td>Form, 346</td> + </tr> + <tr> + <td>form of, 47</td> + <td>storage, chain stores, 381</td> + </tr> + <tr> + <td>use of receipts, 45</td> + <td>Form, 206;</td> + </tr> + <tr> + <td>summarization,</td> + <td>subcontract, 454</td> + </tr> + <tr> + <td>217; 248</td><br/> + I refund tickets, cash, 225<br/> + Form, 206<br/> + Registering stock, 415<br/> + Regulation stock exchange, 415<br/> + Registering stock exchange.</table> + +<table cellspacing="0"> +<tr><th colspan="2">Registering stock exchange.</th></tr><tr><th colspan="2"></th></tr><tr><th colspan="2">Registries.</th></tr><tr><th colspan="2">automatic, 395; 397</th></tr><tr><th colspan="2">cash, 177; 215; 308</th></tr><tr><th colspan="2">disbursements, mail-order house, 383</th></tr><tr><th colspan="2">Form,</th></tr><tr><th colspan="2">receipts (See "Cash receipts register")<br/>check,</th></tr><tr><th colspan="2">200-211<br/>Form,</th></tr><tr><th>C.O.D., 301<br/>C.O.D., Form,</th><th>contractor's building,</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><th>contractor's building;</th></tr><tr><th>Form,</th><thalink style="color:red;">click to expand this table row.</thalink></thalink></table> + +<table cellspacing="0"> +<tr id="table_header_row"><thead id="table_header_row_thead"><colgroup id="table_header_row_thead_colgroup"><col id="table_header_row_thead_col_0" /><col id="table_header_row_thead_col_1" /></colgroup><!-- table_header_row_thead --><!-- table_header_row_thead_end --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start --><!-- table_header_row_end --><!-- table_header_row_start---> + +<tr class="header_bottom_margin"><!-- header_bottom_margin --> +<td colspan="2" rowspan="1"><!-- header_bottom_margin --> +<th colspan="1" rowspan="1"><!-- header_bottom_margin --> +<p align="center"><strong>Distribution of Cash Receipts and Disbursements.</strong></p> + +<table cellspacing="0"> +<tr id="table_body_data_0_0"><tbody id="table_body_data_0_0_tbody"><!-- table_body_data_0_0_tbody --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- table_body_data_0_0_tbody_end --> +<!-- table_body_data_0_0_tbody_start --> +<!-- 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+INDEX 497 + +Requisition—Continued +stock, 159 +chain stores, daily, 380 +Form, 883 +Restaurants (See "Hotels and res- +taurants") +Rentals, estimation, 148-150, 363-372 +advertising department, 149 +branch stores, organizing, 153-154 +establishment cost, 368-369 +classification methods, 288 +cost accounting for (See "Costing +accounting for trading enter- +prises") +invoices, +purchase, 369 +sales, 370 +jobbing combined with, 152-154 +journal, 366 +ledger, 371, 372 +audit records, 149 +profit book, 371 +records, 365 +contracts, 368-369 +sales, 370, 371 +small, 150 +statements, 366 +paying accounts for, problem of, +of, 363 +Returned goods record, 380 +Form, 864 +Returns, +adjustment of, 225 +and allowances, +analysis sheet of allowances, 126 +Form, 125 +register, 125 +Form, 335 +merchandise memorandum of, +123, 124 +Form, 124 +sales, 175-177 +Form, 176 +cash memorandum for, +225 +Form, 226 + +Revenue estimate of, 320, 321 +Room ticket, hotel, 436, 437 +Form, 437 +Rooms occupied, hotel verification of receipts from, 443 + +Routine, +completeness of, essential, 54 +office rules for, 49, 50 +Roman system, payment of wages, +Rules office routine, 49, 50 +Rollings and columns, 56-58 + +S + +Salaries. Labor and. 303-315 (See also "Wages") +Sales. +book. 165. 166 +Forms. 166 +advantage of. 166 +consignment and general. 180 +Form. 176 +containers column in. 183 +Form. 184 +wholesale concern. 171 +Form. 171 + +cash receipts for duplicates. 177 recording. ledger sales books cash and credit entries in. 203 C. O. D., 181-183 record tickets. 183 Form. 182 route sheet. 184 Form. 182 commission and accounting pro- +cedure for. 340, 341 cost of. 144 overhead distribution of. of, +coupon books use of. of, +department. advertising department, +relation to. <page_number>104</page_number> +</page_number> + +<page_number>498</page_number> +INDEX + +Sales—Continued +departmental continued +functions of, 10, 147 +jobbing organisation, 150, 151 +organisation of, 148 +retail and jobbing organisation combined, 155-153 +retail organisation, 145-150 +traffic department, relation to, 184, 186 +drivers', 336, 338, 340 +Form, 338 +impression week, 166, 167 +Inclusion, 185-187 +Form, 185 +Tickler file, 185 +invoice, 200 (See also "Invoice", sale") +lcfger, +containers column in, 185 +Form, 184 +special form, 256, 257 +net, overhead distribution of, 475 +on approval, 200 +on consignment, 177-179 +sales book for consignee, 180 +Form, 180 +on credit, records of, 163, 164 +order blanks, 172 +Form, 172 +orders (See "Order", sale) +profit on, 365 +analysis of, 476-477 +Form, 476-477 +gross, 475-477 +ratio of selling expense to, 299, +300 +recruitment, 172, 173 +Forms, 174 +records, 162-168 +alternatives to system, 172 +Form, 172 +mechanical account system, 173 +175 necessity for, 162, 163 + +retail organisation, 370-371 register, +returned (See "Return" system), alternates for a small concern, 172 Register, +Salesmen's commissions, 390, 391 Schedules, exhibits and statements, 288, 289 Security, +handled on the exchange, 415 register, 348 Form, 346 Segregated budget, 316 Selling, +expense (See "Expense", selling) price how fixed, 70 Inventory at, 144 profit and loss forms in, 146 Services special distribution of expense of, 469 Shipments to branches branches on order, 84-85 Shipping, +department checking goods in, +tickets, +inventory control tickets, +"Short" account (See "Stock accounts") Slu-column journal. 241 Form. 242 Slide rules. 385 Sub-divisions of stores ledger. 141 Sorting machine. 335 Source file. 77 Specifications standard. advanced. +tages of oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +Spooled as returned goods record. +Form. ,384 Stamp files. ,357 Statement voucher. ,121 + +INDEX + +Statements, 287-296 +account form, 290 +basic, 280 +comparative, 294 +designative, 294 +importance of, 287, 288 +time of, 287 +exhibits and schedules, 288, 289 +percentages, use of, 292, 293 +preparation of, grouping accounts for financial statements, 293 +retail organisation, 366 +running form, 291 +time periods covered by, 291, 292 +monthly, 292 +weekly, 292 +yearly, 293 +units such as, 293 +Statistics, +comparison of, 293, 294 +consolidation of, 295, 294 +graphical diagrams and charts, 295 +Stock, +book, 305 +Form, 307 +brokerage (See Stock brokerage below) +exchange (See Stock brokerage below) +index card for mail-order account- +ing, 300 +Form, 300 +record, general, 380 +Form, 380 +register, 415 +requisition, 150 +Stock brokerage, 415-431 +controlling, +records to, 415 +status of, 415 +balance sheet, 428-431 +ledger, 430-432 +Forms, 431 +clearance sheet, 417 +Form, 418 + +time of delivery, 417 +clearing house ticket, 416 +exchange memberships, 439 +fee, 437 +inventories, 427 +"long", 428-430 +accounts, 425-430 +margin deposits, 431 +profit and loss account, 431 +purchase and sales records, 430 +stock certificates, +disposition of stock of, 427 +inventory on the exchange, 415 +inventory of stock of, +"short", 425, 425-437 +account, 425-437 +borrowing stocks blocks, +delivery clearing house procedure, +duree, 425 +interest paid borrower of stocks, +stocks, +stock exchange clearing house, +145s., 117 +trading on the exchange, +Stockholders', I8 Storage register chain stores, +Stores, +accounting procedure, +card, +I90 Form, +control factors in, +control centralized, +development of, +uniformity of, +hotel, +ismance of, +ledger (See Ledger store"). +maximum, +minimum, +organisation, + +<page_number>499</page_number> + +500 INDEX + +Stores—Continued +retail, organizing, 153, 154 +systems, 130-145 +planning, factors to be consid- +ered, 130 +Stores-keeper, +accountability, 137 +and purchasing agent, relations +between, 82 +duties of, 134 +Storing system, 74 +Subcontract (See "Contract") +Subcontractors, 433 (See also +"Contractors", building) +Subscriptions, special, 18th, 452 +Subsidiary, +department, 11, 12 +records, 47, 46 +Summary, +general records of, 247, 248 +Summary, +purchases, 127 +forms, 123 +Supervision, accounting system, 50 +Supplies, +department, expense, distribution +of, 469 +issuing, 141 +Systema, +accounting (See also +"Index headings") +agencies, 373-403 +brokerage, +chain stores, 374-388 +clubs, 446-452 +contracts for building, 453-460 +cities, 404-414 +hotels and restaurants, 422-445 +mail-order business, 388-395 +manufacturing industry, 461-465 +professionals, 396-403 +retail business, 363-372 +stock brokerage, 415-431 +trading enterprises cost account- +ing, 466-477 +wholesale business, + +T + +Table d'hotel dining room, 433 +Tabular ledgers, 251 +Tabulating machines, operation of, +353-355 + +Tax income records, 348 +Forma, 946, 947 +Taylor system, payment of wages, +905 + +Telephone expense distribution of, +468 + +Three-column journal, 105, 237-239 +Forma, 106, 238 + +Ticket, hotel rooms, 436, 437 + +Time, +basis, payment of wages, 305 +costs by agency's share of, +386-389 +Forma, 398 + +Tooling costs work force, 313 + +chargeable items: $0.00-$0.09, +$0.10-$0.19; $0.20-$0.29; +sheets; $0.30-$0.39; $0.40-$0.59; +$0.60-$0.79; $0.80-$0.99; +$1.00-$1.19; $1.20-$1.39; +$1.40-$1.59; $1.60-$1.79; +$1.80-$1.99; $2.00-$2.19; +$2.20-$2.39; $2.40-$2.59; +$2.60-$2.79; $2.80-$2.99; +$3.00-$3.19; $3.20-$3.39; +$3.40-$3.59; $3.60-$3.79; +$3.80-$3.99; $4.00-$4.19; +$4.20-$4.39; $4.40-$4.59; +$4.60-$4.79; $4.80-$4.99; +$5.00-$5.19; $5.20-$5.39; +$5.40-$5.59; $5.60-$5.79; +$5.80-$5.99; $6.00-$6.19; +$6.20-$6.39; $6.40-$6.59; +$6.60-$6.79; $6.80-$6.99; +$7.00-$7.19; $7.20-$7.39; +$7.40-$7.59; $7.60-$7.79; +$7.80-$7.99; $8.00-$8.19; +$8.20-$8.39; $8.40-$8.59; +$8.60-$8.79; $8.80-$8.99; +$9.00-$9.19; $9.20-$9.39; +$9.40-$9.59; $9.60-$9.79; +$9.80-$10.; $11.-$12.; +$12.-$13.; $13.-$14.; +$14.-$15.; $15.-$16.; +$16.-$17.; $17.-$18.; +$18.-$19.; $20.-$ +Thru-the-wall construction work, +313 + +Towne plan, payment of wages, 305 + +Trading, +budget for illustrated budget accounting for, +cost accounting for, +for trade enterprise) records, +stock exchange, +Stock brokerage) + +Trade department, +relation to sales department, +sales order directing, + +Trustee, +cost accounting) + +INDEX +<page_number>501</page_number> + +Two-column journal, 236, 237 +Form, 237 +Typewriter, 306 + +U +Units used in statements, 283 +Universal system of numbering accounts, 271, 277-279 + +W +Voucher, 47, 48 +check, 312, 313 +Form, 47 +form of, 213 +use of in voucher system, 212 +journal, 249, 255 + petty cash, 220, 221 +Form, 220 +register, 115 +Form, 117 +and purchase journal, distinction between, 116-117 +Forms, 117 +contractor's, 455-457 +Form, 456 +hotel, 441 +Form, 441 +items entered on, 118 +simplicity of form advantageous, +47 + +statement, 121 +system, 118-121 +advantages of, 19 +disadvantages of, 19, 120 when desirable, 119 + +Wages, +bonus plan, 305 +Enclosure system, 306 +Halsey system, 305 +pay period, 304 +payment methods of, 305, 306 +piece rate, +differential, 305 +premium basis, 305 +Rowan system, 305 +Taylor system, 306 +time basis, 305 + +Towne plan, 305 + +Wholesaler's expenses (See "Business," wholesaler") + +Window dressing expense, +distribution of, 469 + +Working hours, +hours, hotels and restaurants, 435, +436 + +organization (See "Organization") +papers, 46, 47 +analysis paper, 40 +cross section paper, 41 +legal cap., 41 + +<img>White paper with faint vertical lines on the left and right edges.</img> + +<watermark>2023-05-17 16:38:49</watermark> + +UNIVERSITY OF CALIFORNIA LIBRARY +Los Angeles + +This book is DUE on the last date stamped below. + +<img> +A circular stamp with text "UNIVERSITY OF CALIFORNIA" at the top, "Los Angeles" in the center, and "THIS BOOK IS DUE" at the bottom. +</img> + +Form L0-32w-K/54(38764)444 + +A 000 266 001 7 + +<img>A black textured background.</img> \ No newline at end of file