Chapter X: Part II

1. Into what two _general_ and what three _special classes_ are accounts divided in double entry bookkeeping?

2. Define and give examples of _personal_, _real_, _representative_, and _nominal accounts_.

3. What is a _merchandise account_? What accounts are substituted for the merchandise account in modern bookkeeping? In what particular is the use of these accounts an improvement over the older method of using a merchandise account?

4. Name and define four classes of assets, giving examples of each.

5. Give two examples of fixed assets in one business which become floating assets in another business. Give two examples of floating assets in one business which become fixed assets in another business.

6. What are revenue receipts? revenue expenditures? What accounts are designated by the term _revenue accounts_?

7. What is the broad term by which all revenue expenditure accounts are designated? Name and define five commonly used subdivisions of this account.

8. What is meant by _journalizing_? When purchase and sales books are used, what class of entries are made in the journal? Give three examples of journal entries involving transfers of value from one account to another.

9. What is a _three column journal_, and how is it used?

10. Journalize the following transactions:

April 15. Bought from Reliance Mills, on account
94 bbls. flour @ $4.75
Sold to D. H. Pointer, on account
15 bbls. flour @ 5.35
Sold to H. S. Fleming, on account
60 bu. wheat @ 1.05
April 16. Gave to Reliance Mills, my note
payable in 60 days, to balance account
Received from D. H. Pointer
note for 30 days to balance account.

11. What is meant by _posting_? Explain the operation of posting, using one of the above transactions as an example.

12. In what particular does posting from the cash book differ from posting from the journal? Explain this difference, and illustrate with two examples.

13. What is a _trial balance_, and for what purpose is it taken? What does a trial balance prove?

14. What are _cash discounts_? Are cash discounts a proper charge against capital, or against revenue? Why?

15. Name two ways of treating cash discounts in the ledger, based on your answer to the previous question.

16. Illustrate two methods of entering cash discounts allowed in the cash book; illustrate the customer's ledger account as it would appear after posting the credit, from each of these entries. Which method, in your opinion, most clearly shows how the account was settled?

17. Should cash discounts earned be credited against the cost of goods purchased, or credited to profits? Why?

18. What is a _profit and loss account_? What does the balance of this account represent? How frequently is the balance of profit and loss account transferred? To what accounts, in a proprietorship or partnership? in a corporation?

19. What is a _trading account_, and what is its purpose? With what classes of items should trading account be debited and credited? How is the trading account constructed?

20. What is meant by the _turnover_? How can the amount of the turnover be shown in the trading account?

21. What is a _manufacturing account_, and of what items is it made up? What does the balance of the manufacturing account represent?

22. What is a _merchandise inventory account_, and when and for what purpose is it used? When are the books said to be closed?

23. What is a _balance sheet_? In what order should the asset and liability accounts be listed on the balance sheet?

24. From the following trial balance prepare trading account, profit and loss account, and balance sheet.

TRIAL BALANCE
Proprietor (Investment) $7,500.00
Bill Payable 3,000.00
Accounts Payable 1,550.00
Bank $1,254.84
Accounts Receivable 2,685.11
Bills Receivable 3,860.00
Merchandise Inventory 6,277.76
Furniture and Fixtures 750.00
Purchases 7,605.78
Expense 1,416.30
Discount on Sales 112.65
Interest 44.20
Sales 11,990.70
Cash 122.46
---------- ----------
$24,084.90 $24,084.90

Inventory at end of period $6,807.09.

25. Give examples of the proper journal entries when the following transactions occur in respect to notes receivable:

When a note is received;
When a note is paid;
When a note is collected by the bank.

26. Complete the explanations of the following entries, and state under what circumstances they would be made:

Bank $199.00
Interest 1.00
Bills Discounted $200.00
Bills Discounted 200.00
Bank 200.00
Bills Receivable 5.00
Bills Discounted 1,000.00
Bank 1,005.00

27. Make the proper journal entries under the following circumstances:

When a note is past due;
When a note is renewed;
When a renewed note has been discounted.

28. We buy from Marshall Field & Company a bill of dry goods, amounting to $978.40, and give them our note @ 60 days in payment. What entry?

29. Marshall Field & Company discount our note, and it is presented for payment by the Continental National Bank. We give our check in payment of the note, with interest @ 5%. How much do we pay, and what is the entry?

30. We borrow $1,000.00 from our bank on our note @ 30 days, interest @ 6%. What is the exact entry?

31. When a draft has been accepted how should it be treated on the books?

32. What is the proper entry when a customer pays our sight draft?

33. We draw on George Johnson for $650.00 @ 60 days sight. He accepts the draft, which we discount at our bank 3 days later, the bank charging us 7% interest. What entries are necessary?

34. We accept a draft from John V. Farwell & Co. for $416.00 payable in 90 days. What is the entry on our books? What is the entry on the books of Farwell & Co.?

35. We pay a sight draft drawn by Cable Piano Co. What entry?

REVIEW QUESTIONS ON THE SUBJECT OF SINGLE PROPRIETORS' AND PARTNERS' ACCOUNTS

1. What books are generally used in a small retail business? What is a blotter, and how is it used?

2. What is the special feature of the journal ruled ledger, and of what advantage is such a ledger in a retail business?

3. In a single proprietorship, what does the proprietor's account represent?

4. Name one good reason why withdrawals of the proprietor should be charged to a personal account.

5. When the books are closed, what account absorbs the profit or loss?

6. What is meant by _taking an inventory_, and what processes are involved?

7. Should an inventory be based on _cost_ or on _selling_ prices? Why?

8. What is meant by _closing the books_?

9. In a retail business, such as is discussed in the text, what regular accounts are closed into trading account?

10. What does the balance of trading account represent? Into what account is this balance closed?

11. What does the difference between assets and liabilities, as shown by the balance sheet, represent? In a single proprietorship, with what ledger account does this balance agree?

12. George Thompson commences business to-day, with assets consisting of cash, $1,650.00; an account due from Henry Watson, $84.60. His transactions consist of purchases on account as follows:

From Henry Karl & Co. $460.00
" White & Black 320.50
Purchases for cash 129.00
Sales for cash 87.50
" on account 274.80
Paid on account to Karl & Co. 300.00
Collected on account 124.80
Paid for sundry expenses 63.70
Inventory at close of business 655.50

Open the books, enter the transactions in journal, cash book, and sales book, and make all postings to the ledger. Prepare a trial balance,

At the close of business, prepare a trading account, close into profit and loss, and close net profits into proprietor's account, Prepare a balance sheet,

13. What is a sales ticket, and for what purpose is it used?

14. What benefit is derived from keeping departmental purchase and sales records.

15. Prepare suitable forms for departmental purchase and sales records for a business divided into three departments.

16. What is a partnership?

17. What is the purpose of a partnership agreement?

18. By what names are the different classes of partners known?

19. On what basis are the profits of a partnership usually divided?

20. How are the _personal_ and _capital_ accounts of partners distinguished? What is the purpose of each of these accounts?

21. When the books of a partnership are closed, into what accounts are the _revenue_ accounts closed? Into what accounts is the _profit_ and _loss_ account closed?

22. When the business of a partnership is sold, or liquidated, how are the net assets divided?

23. If any part of the assets, other than the goods in which the firm is trading, brings a price above cost, what journal entry is necessary? What entry if the price is below cost?

24. When partners invest unequal amounts in the business, what is the usual method of adjusting the inequality?

25. White, Black, and Brown who have been conducting business under a partnership agreement, decide to liquidate the business and dissolve the partnership. In the final settlement White agrees to accept the accounts receivable, which amount to $6,432.00, in part payment of the amount due him, provided 10% is first charged off to cover doubtful accounts. What journal entry is necessary?

26. H. W. Hackett has been conducting a grocery business. His books have been kept by double entry, and were last closed December 31st, 1908. At that time, his net worth was $2,698.50. April 30th, 1909, he sold to John Ransom a half interest in the business for $1,500.00. Ransom made a cash payment of $1,000.00, and gave his note for $500.00 payable on demand, with interest at 6%. The profits for the four months ending April 30th, 1909, (estimated from the books), were $325.00. This amount was to be allowed to Mr. Hackett and placed to his credit on the books. Make journal entries for the allowed profit and for the sale of the half interest. The books are not to be closed at the beginning of the new partnership.

27. Prepare in proper form a solution of the problem given in Art. 40, Page 72.

28. Prepare a complete solution of the problem given in Art. 42, Page 74.

REVIEW QUESTIONS ON THE SUBJECT OF CORPORATION ACCOUNTS

1. Into what two general classes are corporations divided? Name and give examples of two classes of private corporations.

2. How are joint stock companies distinguished from corporations? In what ways are they like corporations?

3. How are corporations created? Name 5 common requirements of the certificate of incorporation or application for a corporate charter.

4. What is meant by a _stockholder_, and how may a person become a stockholder in a corporation? What is a _stock certificate_?

5. What is meant by the _capitalization of a corporation_? What is the difference in meaning of the terms _capital_ and _capital stock_, as these terms are usually understood?

6. Define the two principal classes of stock issued by corporations. Name and define two kinds of preferred stock. What is meant by the term _treasury stock_? _Watered stock?_

7. By whom are the affairs of a corporation managed? From whom do they receive their authority? Has a director, as such, the power individually to bind the corporation?

8. What special powers have the directors? In what way do the powers of officers and directors differ?

9. Name five of the necessary powers of a corporation, as such. Name three of the rights of an individual stockholder.

10. What is meant by a _dividend_? By whose authority are dividends declared? What is your understanding of the term _stock dividend_?

11. What class of records is implied by the term _corporation bookkeeping_? Name, and describe briefly, the books used in corporation bookkeeping.

12. Give examples of the proper entries on the books, under the following conditions:

(a) The entire capital stock ($100,000.00) is subscribed and paid for in cash.

(b) Only $60,000.00 of the stock is subscribed, but this is paid in cash. It is not desired to show on the books more capital than is paid in.

(c) Cash subscriptions are received for $49,000.00 of an authorized issue of $100,000.00, but it is desired to show the total capitalization on the books.

(d) The entire capital stock ($150,000.00) is subscribed but not paid in. It is desired to show the capital stock, without opening accounts in the general books with individual subscribers.

(e) A payment of 20% is called for on the above stock.

13. A corporation is organized with a capitalization of $50,000.00 to take over the business of Henry Thompson. He is to pay his liabilities out of his assets, and transfer the balance of the property belonging to the business to the corporation, receiving $25,000.00 full paid stock. The following discloses the condition of his affairs:

ASSETS
Cash in Bank $1164.50
Accounts Receivable 3760.00
Real Estate 10000.00
Merchandise Inventory 7642.50
Furniture and Fixtures 600.00 $23167.00
--------

LIABILITIES
Bills Payable 1000.00 1000.00
-------- --------
Balance $22167.00

What is the proper entry on the books of the corporation, the balance of the stock being unsubscribed?

14. A corporation agrees to purchase a mine, issuing $1,000,000.00 full paid stock in payment. The owner of the mine, to whom the stock is issued, agrees to donate to the company $500,000.00 of his stock to provide working capital. Subsequently, $100,000.00 of this stock is sold at 50% of its face value; $200,000.00 at 60%; $100,000.00 at 70%; and $100,000.00 at par. Working capital is maintained at the amount realized from the sale of the donated stock. Make all entries to show these transactions, it being understood that all subscriptions are paid in cash.

15. If the stock of a corporation sells at a premium, how would you enter the amount received above par? To what account would you transfer the premium when closing the books?

16. What would be the entries in the stock books to record the transactions shown in questions 12 and 14?

17. A promoter organizes a corporation to develope a mine, receiving as his fee $50,000.00 in stock. What are the entries on the books of the corporation?

18. The profits of a corporation with a paid up capital of $200,000.00, are $18,750.00. The directors declare a cash dividend of 6%, and create a special surplus fund of $5,000.00. Make all necessary entries.

19. The losses of the above corporation during the following year were $2,750.00. Make proper entries, with full explanations.

20. The accumulated surplus of a corporation capitalized at $1,000,000.00, with a paid up capital of $600,000.00, is $110,000.00; the current profits are $100,000.00. The directors declare a cash dividend of 7%, and a stock dividend of 25%. Make all entries to record these transactions on the general books of the corporation.

21. The following statistics are taken from the books of a corporation:

Capital Stock $300,000.00
Merchandise Inventory 97,600.00
Machinery 110,800.00
Undivided Profits 600.00
Profit and Loss (Credit) 31,210.00

It is desired to set aside a special surplus fund as a machinery depreciation reserve, the depreciation being figured at 10% a year, and to pay a dividend of 6%. What entries are necessary?

22. Parsons, Young, and Searles are partners and decide to form a corporation with capital stock of $40,000.00, which is to be issued as full paid stock in exchange for their present business. Each partner is to receive stock in proportion to his interest in the present business. The balance sheet of the partnership is as follows:

ASSETS
Cash $3,500.00
Bills Receivable 6,000.00
Accounts Receivable 6,500.00
Merchandise 14,000.00
----------
Total $30,000.00

LIABILITIES
Bills Payable 4,000.00
Accounts Payable 2,000.00
Parsons 10,000.00
Young 8,000.00
Searles 6,000.00
----------
Total 30,000.00

Make entries on books of the partnership.

Make entries on books of the corporation.

23. Hoadley and Stockton are partners and desire to incorporate a company. The stock is to be divided equally between Hoadley and Stockton after giving Hopper $1,000.00. The balance sheet of the partnership is as follows:

ASSETS

Cash $ 960.00
Accounts Receivable 1,570.00
Merchandise 720.00
----------
Total $3,250.00

LIABILITIES

Accounts Payable 460.00
Bills Payable 500.00
Hoadley 1,145.00
Stockton 1,145.00
----------
Total 3,250.00

Make all necessary entries on the books of the partnership.

Make open entries on the books of the new company.

24. The National Manufacturing Co. has an authorized capital of $100,000.00 of which $60,000.00 is paid up and $40,000.00, unsubscribed. It is decided to permit employes to subscribe for $10,000.00 of the stock by paying 10 per cent in cash, all dividends declared to be applied to the payment of subscriptions.

What entries are made when this stock is subscribed for?

A 10 per cent dividend being declared at the end of the first year, what entry is required?

25. The Atlas Novelty Co. has a capital stock of $50,000.00. All of the stock has been subscribed for, but only 40 per cent has been paid. A surplus of $10,000.00 has been accumulated. It is desired to reduce the stock to $25,000.00 full paid. What is the necessary proceeding, and what entries are required?

26. A company has a capital stock of $50,000.00 full paid, and a surplus of $11,172.00. A stockholder who owns $7,000.00 stock in the company wishes to dispose of his stock and, to secure cash, offers to sell it to the company at par. His offer is accepted and the stock purchased, but the company does not wish to reduce its capitalization. What is the entry?

27. What is a reserve? Give three examples showing purposes for which reserves are created.

28. What is a _reserve fund_? Why is a reserve fund treated as a liability?

29. What is a _sinking fund_, and what is its purpose?

30. What is a _bond_? Describe three classes of bonds.

31. When bonds are issued, by what account are they represented in the ledger? Does this account represent an asset, or a liability?

32. If bonds are sold at a premium, to what account is the premium credited? Would it be correct to credit this premium to profit and loss? Why?

33. To what account is the interest paid on bonds charged? When bonds are sold with accrued interest, which is paid by the purchaser, what disposition is made of the interest received? What disposition should be made of expense incurred in the sale of bonds?

34. What is the most important point to be kept in mind when devising a system of accounts for a manufacturing business?

35. From what items is the manufacturing account made up? What does the balance of manufacturing account represent?

36. Describe, briefly, a method of obtaining the necessary statistics to make up the manufacturing account for a business in which but one line of goods are manufactured? What is the object of sectionalizing the pay-roll by departments?

37. What is an _expense inventory account_; when is it used; and how is it made up? When is an expense liability considered; by what account is it represented; and how is the account made up?

38. What is meant by a _balance ledger_? Illustrate a form of balance ledger.

39. For what purpose is an invoice register used? Explain the general plan of such a book.

40. Make up a manufacturing account from the data given on Page 76. Show the journal entries used in making up this account.

REVIEW QUESTIONS ON THE SUBJECT OF THE VOUCHER SYSTEM

1. State, in your own words, the generally accepted meaning of the term _voucher_, as used in business.

2. What is the nature of a journal voucher, and for what purpose is it used?

3. Prepare a form of voucher to be accompanied by a separate check.

4. Prepare a form of voucher check.

5. For what book is the voucher register substituted? What book is dispensed with?

6. Explain the purpose of the _sundries_ and _unpaid voucher_ columns in the voucher register.

7. With what _controlling_ account must the total of unpaid vouchers as shown by the register, agree? Explain the sources of debits and credits posted to this controlling account.

8. Prepare a form of voucher register, suitable for a manufacturing business using three classes of raw material, operating five shops, and selling the product through traveling salesmen.

9. What are the necessary steps in _auditing_, _executing_, and _registering_ vouchers? How should audited vouchers be filed?

10. Describe the routine in paying vouchers, and in filing invoices and paid vouchers. How should vouchers be indexed?

11. What is the distinguishing feature of the _unit system_ of voucher accounting?

12. If a voucher pays items to be charged to three accounts, how many copies are required and how is the distribution shown?

13. Explain the method of filing and recording vouchers in the unit system. How are monthly totals recorded?

14. What routine should be followed to carry the totals to the ledger?

15. Describe, and illustrate with the necessary forms, a system in which a purchase ledger and invoice file are combined.

16. What is a private ledger and for what purposes is it used?

17. Name some of the special advantages of the private ledger.

18. Describe, briefly, the operation of the private ledger, giving an example.

19. Describe, and illustrate with journal entries, in what way a manufacturer can make use of the private ledger.

20. Transactions of the following classes are recorded on the books of Dane & Whitney:

Purchases on Account
Sales on Account
Paid for Rent
Paid Dane's Salary
Sales for Cash
Whitney advanced cash to the business.

What items, in the above, should be recorded in the private ledger?

21. In charting the accounts of a business, into what three main groups should they be divided? Give an example of the subdivision of one of these groups.

22. Prepare a chart of the accounts of a small trading business conducted by a partnership. Explain this chart.

23. Prepare a chart of the accounts of a manufacturing business making three classes of goods.

24. What are the principal characteristics of a chart of accounts of a manufacturing business?

25. Using the above manufacturing chart, explain how profits are traced from group to group until they reach the surplus account.

INDEX

A

Acceptances, 56
definition of, 11

Accommodation note, definition of, 11

Account books
classes of, 42
definition of, 11

Account current, definition of, 11

Account sales, definition of, 11

Accounting charts, 309-323
explanation of chart, 316
of manufacturing business, 313
of small trading business, 310

Accounts
classification of, 90
definition of, 11
merchandise, 71
merchandise inventory, 100
nominal, 70
personal, 69
profit and loss, 97
purchase, 71
real, 69
representative, 70
sales, 72

Accrued interest, definition of, 12

Acknowledgment, definition of, 12

Ad valorem, definition of, 12

Administrator, definition of, 12

Adventure, definition of, 12

Advice, definition of, 13

Affidavit, definition of, 13

Agent, definition of, 13

Agreement, definition of, 13

Allowance, definition of, 13

Annual statement, definition of, 13

Annuity, definition of, 13

Antedate, definition of, 13

Appraise, definition of, 14

Appreciation, definition of, 14

Approval sales, definition of, 14

Arbitrate, definition of, 14

Articles, definition of, 14

Assets
definition of, 14
fictitious, 78
fixed, 77
floating, 78
passive, 78

Assign, definition of, 14

Assignee, definition of, 14

Assignment, definition of, 14

Assignor, definition of, 14

Association, definition of, 14

Attachment, definition of, 14

Audit, definition of, 14

Auxiliary, definition of, 14

Average, definition of, 14

B

Balance, definition of, 14, 39

Balance sheet, 100, 139
definition of, 14

Balance of trade, definition of, 15

Bale, definition of, 15

Bank balance, definition of, 15

Bank deposits, 56
check books, 56
depositing cash, 57
indorsement of checks, 57
pass book, 57
signature card, 56

Bank draft, definition of, 15

Bank note, definition of, 15

Bank pass book, definition of, 15

Bankrupt, definition of, 15

Bill, definition of, 15

Bill of exchange, definition of, 16

Bill head, definition of, 16

Bill of lading, definition of, 16

Bill of sale, definition of, 16

Bills payable, definition of, 18

Bills receivable, definition of, 18

Bills receivable and bills payable, 54

Blanks, definition of, 18

Blotter, definition of, 18

Bond liability, 239

Bonded goods, definition of, 18

Bonds, 238
classes of, 239
definition of, 18
expense of issue of, 241
interest on, 241
premium on, 241

Bonus, definition of, 18

Book account, definition of, 18

Bookkeeping
for corporation, 205
definition and objects of, 37
methods of, 39

Brand, definition of, 18

Broker, definition of, 18

Brokerage, definition of, 18

Bullion, definition of, 18

C

Call loans, definition of, 18

Cancel, definition of, 18

Capital, definition of, 18

Capital of corporation, 199

Capital stock, 199
definition of, 18

Capitalization, 199
capital, 199
capital stock, 199
treasury stock, 200
watered stock, 201

Cartage, definition of, 18

Cash book, 43
posting from, 89

Cash discounts, 94
allowed, 94
earned, 95
entering in cash book, 94

Cash dividend, declaring, 224

Cash sales, definition of, 18

Center-ruled ledger, 143

Certificate of stock, definition of, 18

Certified check, definition of, 20

Charges, definition of, 20

Chart, definition of, 20

Charter, definition of, 20

Charting the accounts, 309

Check, definition of, 20

Check books, 56

Clearing house, definition of, 20

Closing an account, definition of, 20

Collateral, definition of, 20

Commercial abbreviations, 35

Commercial paper, definition of, 20

Commercial signs and characters, 37

Commercial terms, dictionary of, 11

Commission, definition of, 20

Commission merchant, definition of, 20

Common law, definition of, 20

Common stock, definition of, 200

Company, definition of, 20

Compromise, definition of, 20

Consideration, definition of, 22

Consignee, definition of, 22

Consul, definition of, 22

Contingent assets and liabilities, definition of, 22

Contingent fund, definition of, 22

Contra, definition of, 22

Contract, definition of, 22

Conveyance, definition of, 22

Copyright, definition of, 22

Corporation accounts, 195-270
bonds, 238
bookkeeping, 205
changing books from partnership to corporation, 227
closing transfer books, 204
entries on corporation books, 228
entry of stock for promotion, 222
reserves and their treatment, 235
stock donated to employes, 229
when stock subscriptions are never full paid, 232
surplus and dividends, 223
treatment of loss, 225

Corporation bookkeeping, 205
books required, 206
entries in stock books, 215
opening entries, 209

Corporations
capitalization, 199
classification of, 195
creation of, 197
definition of, 195
dividends, 203
management of, 201

Corporations
management of
powers of corporations, 203
powers of directors and officers, 202
stockholders' rights, 203
stock certificate, 199
stockholders, 197
stock issued for promotion, 221
stock subscriptions, 201

Counterfeit, definition of, 22

Coupon, definition of, 22

Coupon bond, definition of, 22

Credentials, definition of, 22

Credit, rules for, 38

Creditor, definition of, 22

Cumulative preferred stock, definition of, 200

Currency, definition of, 22

D

Day book, 43

Debenture, definition of, 22

Debit
definition of, 22
rules for, 38

Deed, definition of, 22

Defalcation, definition of, 22

Deferred bonds, definition of, 23

Delivery receipt definition of, 23

Demand note, definition of, 23

Departmental records, 148

Deposit, definition of, 24

Depositing cash, 57

Depreciation, definition of, 24

Discount, definition of, 24

Discount and exchange, 56

Discounts allowed, 94

Dishonor, definition of, 24

Dividend, 203
definition of, 24

Dividend book, 208

Dormant partners, 165

Double entry, 39
advantages of, 40
books used in, 43
principle of, 40

Doubtful, definition of, 25

Draft
definition of, 24
journalizing, 113

Drawer, definition of, 25

Drayage, definition of, 25

Due bill, definition of, 25

Dunning, definition of, 25

Duplicate, definition of, 25

Duty, definition of, 25

E

Earnest, definition of, 25

Embezzlement, definition of, 25

Exchange, definition of, 25

Expense account, 80
heat and light, 81
insurance, 81
interest, 81
labor, 82
out freight and express, 81
rent, 81
salaries, 82
taxes, 81

Exports, definition of, 25

Extend, definition of, 25

F

Face value, definition of, 25

Facsimile, definition of, 25

Fictitious assets, example of, 78
advertising, 78

Financial statement, definition of, 25

Fiscal, definition of, 25

Fixed assets
definition of, 25
examples of, 77
furniture and fixtures, 77
horses and wagons, 77
real estate, 77

Fixed charges, definition of, 26

Fixtures, definition of, 26

Floating assets, examples of, 78
accounts, 78
cash, 78
merchandise, 78
notes or bills receivable, 78

Folio, definition of, 26

Footing, definition of, 26

Foreign exchange, definition of, 26
Forms
account sales, 12
acknowledgment, 13
adjustment journal and departmental purchase book, 154
balance sheet, 101
bill, 15
bill of exchange, 17
bill of lading, 16
bill of sale, 19
bills payable, 55
bills receivable, 55
cash book, 44, 131
cash book including bank account, 156
cash book with center column for particulars, 177
cash book with column for private ledger accounts, 306
cash disbursement book, 296
center-ruled ledger, 143, 157-161
certificate of stock, 21
chart of profit and loss accounts, 311, 312
check register, 260
classified ledger accounts, 180-188
closing entries, trading and profit and loss account, 140
combined purchase ledger and voucher system, 303
daily report, 247
day book, 43
day book or blotter, 121
delivery receipt, 24
demand note, 24
departmental sales book, 155, 178
departmental sales and purchase books, 179
draft, 25
endorsement, 58
file showing method of indexing vouchers, 293
installment certificate, 208
inventory sheet, 137
invoice register, 258
journal, 74
journal entries recording all transactions, 128-130
journal ruled retail ledger, 132-137
journal showing opening entries for partnership, 176
journal voucher for adjusting entries, 284
lease, 27
ledger accounts, classified, 180-188
ledger with journal ruling, 120
manufacturing account, 99
manufacturing ledger with closing entries, 320-322
merchandise inventory, 100
monthly recapitulation and distribution sheet, 303
opening entry in journal, 122
order, 29
order book, 42
pay-roll, 249
power of attorney, 32
profit and loss account, 99
promissory note, 31
proprietor's account, 99
purchase book, 75
purchase ledger, 267
receipt, 33
retail ledger, journal ruled, 132-137
sales book, 74
scale book, 144
signature card, 57
special account, 12
statement, 34
statement of incorporation on stock plan, 198
trading account, 98
transfer book, 206
trial balance, 138, 162, 269
unit system of voucher accounting, monthly recapitulation for, 300
voucher, 35
voucher, back of, showing distribution, 277
voucher with check attached, duplicate, 283
voucher check in loose-leaf form, duplicate, 280
voucher check that requires no folding, 280
voucher check, triplicate form of, 282
voucher and check combined, 278
voucher distribution sheet, 281
voucher register showing entries, 294
voucher registers, typical forms of, 286
voucher to be receipted and returned, 276
vouchers paid, card index of, 292

Freight, definition of, 26

G

Gain, definition of, 26

Gauging, definition of, 26

Going business, definition of, 26

Goodwill, definition of, 26

Gross, definition of, 26

Gross profit, transfer of, 99

Guarantee or guaranty, definition of, 26

Guaranteed stock, 200

H

Honor, definition of, 26

Hypothecate, definition of, 26

I

Import, definition of, 26

Income, definition of, 26

Income bonds, definition of, 26

Indemnity, definition of, 26

Indorse, definition of, 26

Indorsee, definition of, 26

Indorsement of checks, 57

Indorser, definition of, 28

Infringe, definition of, 28

Installment, definition of, 28

Installment book, 207

Insolvent, definition of, 28

Instant, definition of, 28

Insurance policy, definition of, 28

Interest, definition of, 28

Inventory, 137
definition of, 28

Investment, definition of, 28

Invoice, definition of, 28

Invoice or bill, 46

J

Job lot, definition of, 28

Jobber, definition of, 28

Joint stock, definition of, 28

Joint stock companies, 196

Journal, 45
posting from, 88

Journal vouchers, 283

Journalizing drafts, 113
when we accept draft, 114
when discounting time draft, 114
when we pay an acceptance, 114
when we pay a sight draft, 114
when our sight draft is paid, 113

Journalizing notes, 107
when collected by bank, 107
when discounted, 107
when discounted note is not paid, 109
when note drawing interest is discounted, 108
when note drawing interest is paid, 108
when note is past due, 109
when note is renewed, 110
when our note has been discounted, 111
when paid, 107
when received, 107
when renewed note has been discounted, 110
when we discount our note, 112
when we give or pay note, 111
when we pay for goods with our note, 112
when we pay our note with interest, 112
when we renew a note, 112
when we renew our discounted note, 113

Journalizing, rules for, 82

L

Leakage, definition of, 28

Lease, definition of, 28

Ledger, 46
arrangement of accounts in, 91

Ledger accounts, sample, 92, 93

Ledger index, 47

Legal tender, definition of, 28

Lessee, definition of, 28

Letter of advice, definition of, 28

Letter of credit, definition of, 28

Liabilities, definition of, 29

License, definition of, 29

Liquidation, definition of, 29

Loss and gain, definition of, 29

M

Maker, definition of, 29

Manifest, definition of, 29

Manufacturing account, 98

Manufacturing and cost accounts, 242
accounts used
factory assets, 243
factory expenses, 244
summary accounts, 245
balance ledger, 250
expense inventory, 250
expense liability, 250
manufacturing data, 256
pay-roll records, 248
routine followed, 245
sample transactions, 251

Maturity, definition of, 29

Mercantile agency, definition of, 29

Merchandise, definition of, 29

Merchandise account, 71

Merchandise inventory account, 100

Minute book, 207

Money order, definition of, 29

Monopoly, definition of, 29

Mortgage, definition of, 29

Mortgagor, definition of, 30

N

Negotiable, definition of, 30

Net, definition of, 30

Net profit, transfer of, 99

Nominal, definition of, 30

Nominal account, 70

Nominal partners, 164

Non-cumulative preferred stock, 200

Notes, journalizing, 107

O

Obligation, definition of, 30

Open account, definition of, 30

Opening entries, definition of, 30

Option, definition of, 30

Order book, 43

Orders, definition of, 30

Original entry, definition of, 30

Ostensible partners, 164

Overdraw, definition of, 30

P

Par, definition of, 30

Partnership, definition of, 30

Partnership accounts, 164-193
capital and personal accounts, 165
closing the books, 166
division of profits, 191
illustration of closing entries, 166
interest on investment, 165
kinds of partners, 164
opening the books, 166
participation in profits, 165
partnership, defined, 164
partnership agreements, 164
sale of partnership, 189
sample transaction, 167-175

Pass book, 57

Passive assets, examples of, 73
goodwill, 78
patents, 78
speculative, 78

Pay-roll records, 248

Payee, definition of, 30

Per annum, definition of, 30

Per cent, definition of, 30

Per diem, 30

Personal accounts, 69
definition of, 30

Personal property, definition of, 30

Petty cash
definition of, 30
treatment of, 58

Post, definition of, 30

Postdate, definition of, 30

Posting, 46
from cash book, 89
from journal, 88
routine, 88

Power of attorney, definition of, 30

Preferred stock, definition of, 30, 200

Premium, definition of, 31

Present worth, definition of, 31

Private ledger, 304
advantages of, 304
how operated, 305
manufacturing accounts in, 306

Proceeds, definition of, 31

Profit and loss, definition of, 31

Profit and loss account, 97
manufacturing, 98
trading, 97
transfer of gross profit, 99
transfer of net profit, 99
turnover, 98

Promissory notes, 54
acceptance, 56
bill book, 54
bills payable, 54
bills receivable, 54
definition of, 31
discount and exchange, 56

Promotion, stock issued for, 221

Pro rata, definition of, 31

Protest, definition of, 31

Purchase account, 71

Purchase book, 45

Purchase ledger and invoice file combined, 301

Q

Quotation, definition of, 31

R

Ratify, definition of, 31

Raw material, definition of, 31

Real account, 69

Real estate, definition of, 31

Rebate, definition of, 31

Receipt, definition of, 31, 273

Receiver, definition of, 31

Recording transactions, 46

Remittance, definition of, 31

Renewal note, definition of, 33

Rent, definition of, 33

Representative account, 70

Reserves for bad debts, 236

Reserves for buildings in hazardous undertakings, 236

Reserves for depreciation, 236

Reserve funds, 237

Reserves for patents, franchise, goodwill, 236

Reserves for permanent improvements on leased property, 236

Resources, definition of, 33

Retail business, 119
balance sheet, 139
books used, 119
closing the books, 138
exercise, 141
inventory, 137
opening the books, 119
proprietor's account, 120
sample transactions, 123-127
statements, 120

Retail coal books, 142
sample transaction, 144
uncollectible accounts, 143

Revenue, definition of, 33

Revenue accounts, 80

Revenue receipts, 80

Revoke, definition of, 33

Royalty, definition of, 33

S

Sale of stock below par, 205

Sales, 72

Sales books, 45

Sales tickets, 147

Sample ledger accounts, 91

Sample transactions, 72, 83, 101, 149

Schedule, definition of, 33

Secret partners, 164

Sight draft, definition of, 33

Signature card, 56

Silent partners, 164

Single entry, 39

Single proprietorship accounts, 119-163

Sinking funds, 237

Solvent, definition of, 33

Statement, definition of, 33

Stock certificate book, 206

Stock dividends, 204
declaring, 224

Stock ledger, 207

Stock register, 208

Stock subscriptions, 201

Stock transfer book, 206

Stockholders, 197
definition of, 33
meetings of, 205
rights of, 203

Storage, definition of, 33

Surety, definition of, 33

Syndicate, definition of, 33

Surplus subdivided, 223

T

Tare, definition, 33

Tariff, definition of, 33

Terms, definition of, 33

Theory of accounts, 11-116

Three-column journal, 82

Tickler, definition of, 34

Time draft, definition of, 34

Trade discount, definition of, 34

Trade mark, definition of, 34

Trading account, 97

Transactions, 46
ledger index, 47
posting, 46
sample, 47, 59, 72, 83, 101, 149

Treasury stock, 200

Trial balance, 90

Turnover, 98

U

Ultimo, definition of, 34

Unit system of voucher account, 298

V

Valid, definition of, 34

Value received, definition of, 34

Void, definition of, 35

Voucher checks, 279

Voucher file, 293

Voucher register, 284

Voucher system of accounting, 273-303
auditing of invoices, 290
combined purchase ledger and invoice file, 301
demonstration of, 293
executing and registering vouchers, 290
filing audited vouchers, 290
filing paid vouchers, 291
indexing vouchers, 292
operation of, 289
paying vouchers, 291
unit system of, 298
voucher file, 293

Vouchers
definition, 35, 273
filing, 290
forms of, 277
indexing, 292
paying, 291
use of, 274

W

Warehouse, definition of, 35

Warehouse receipt, definition of, 35

Warranty, definition of, 35

Watered stock, 201

Way bill, definition of, 35

Wholesale, definition of, 35

Working capital, definition of, 35

TRANSCRIBER'S NOTE

-Obvious print and punctuation errors were corrected.