SETTLEMENT AND BALANCE.

29

may be extended to two weeks, or even to the close of each calendar month.

Nothing can be more awkward than to see an accountant posting books, with his Day-book at the right hand side of his Ledger.

NOTE. The pupil should now prepare a few blank Ledger pages, and post the Day-book entries made by him as directed in the Note, page 17, and submit them to the teacher for examination and correction.

SETTLEMENT AND BALANCE.

T30. Settlement, as applied to accounts, means nothing more nor less than deducting the amount paid from the amount received, or vice versa, for the purpose of ascertaining the true state of the account.

Balance signifies to make equal; that is, to make the sums in Dr. and Cr. columns equal to each other. Hence, balance implies not settlement merely, but settlement and pay.

NOTE.

An account cannot be settled or balanced, unless both parties, or some persons duly authorized to act for them, are present.

The above account appears to have been settled Feb. 7th, 1848, at which time a balance was due me of $5.00. Wishing to avoid the trouble of looking over this account again, I gave Number 1 credit for balance,

¶ 29. Periods of posting books. Advantages of posting often. Awkward habit in posting to be avoided. Note.

Note.

30. Settlement. Balance.

Distinction between Settlement and Balance.

31. Number 1, when settled. Balance in whose favor? Object in balancing the account. Difference in the account before and after settlement. Business with Number 1 in future. Double lines under the $14.00, both parts of the page. Oblique lines. The object in placing them there,

$5.00, and this balanced the account. But Number 1 did not pay me $5.00, nor any other sum, at settlement; therefore, I entered, on the Dr. side of the page, Feb. 7, To Balance, $5.00. This account stands precisely as it did before settlement, for there was a balance of $5.00 due me then, and there is a balance of the same sum due me now. The object in balancing the account, was to show that it had been settled, and thus to prevent the necessity of looking it over, or settling it again.

Should I transact any more business with Number 1, the account would be posted to this page of the Ledger, in the same manner as it would, had the account not been settled. The double lines drawn under the $14.00, on each part of the page, serve to separate the old account from any other entries that may hereafter be entered upon this page. The oblique lines, on the left hand side, serve merely to fill the space. Their presence will prevent me from posting any more entries in the space which they cross, which in a hurry might be done, were not these lines there.

It appears from the above account, that on settlement with Number 2, there was a balance against me of $3.44. The balancing of the old account and the opening of a new one were effected in the same manner as with Number 1. There is a slight difference in the forms, which the pupil may point out. The pupil will notice that no Day-book page is mentioned in the settlement entries. The reason for this is, the settlement is generally made from the Ledger entries, and the accounts being looked over and settled from that book, no Day-book entry of the transaction is made.

The two forms of settlement now given are often and perhaps properly called a balance.

32. Number 2, when settled. Balance in whose favor? Balanced in same manner as Number 1. A slight difference between Number 1 and Number 2. No Day-book page mentioned. The reason. The two forms are often called a balance.

FORMS OF BALANCE.

31

T33. An account may be balanced by cash, note, check, order, or any other kind of property, as seen in the following

June 1 To 1 Set Harness, 50 33 50 Sept. 1 By note to Balance,

July 15 To Sundries, 61 2563 Feb. 8By Order on J.

Cr.

3350

Cr.

Brown, to Balance,

25 63

33. An account may be balanced by what? To whom was balance due in Number 1, and how was it satisfied? In Number 2? Number 3? Number 4? Number 5 Number 6? Object in exacting a man's note, when a balance is due you at settlement, which he is not prepared to pay. Transferring an account against a poor paymaster to the account of one whom you consider good. Note.

||1848

Nov. 1To Sundries, 150 1800 Nov. 1 By Sundries,

Cr.

150 700

If, on settlement with an individual, a balance is due you which he is not prepared to pay, it is advisable to take his note, and thus balance your books. A note against an individual is considered better than an account, as it carries on its face an acknowledgment of a sum due; whereas an account is likely to be disputed, if legal means are resorted to for its collection. Hence the propriety of adopting this course.

Some persons may find fault with you for exacting their note; but every candid person, when once informed that it is a rule with you to do so by all, will unhesitatingly commend your course, and comply with your request.

If a balance is due you by a man whom you consider 'unsafe, it is a good plan to have him get some other person, whom you consider safer, to assume the obligation, thus enabling you to make a satisfactory transfer of accounts.

NOTE. The pupil should now be required to settle some of the accounts which he has posted to Ledger forms, (see page 17, and ¶ 29,) and to balance the The work should be carefully examined by the teacher, and all errors pointed out and corrected, before proceeding farther.

rest.

AUXILIARIES.

T 34. Auxiliaries, as the name implies, are helpers, and when applied to books used in Book-keeping, are understood to be books used not from necessity, but for convenience. Their number and forms may be adapted to the nature and extent of the business.

In the prosecution of any considerable amount of business, the Cashbook and the Bill-book are very important auxiliaries, and cannot well be dispensed with. For this reason we deem it expedient to consider their forms and uses in this place. The other auxiliaries, being less important, will be taken up in subsequent ¶¶.

CASH-BOOK.

T 35. A Cash-book is a book in which is kept a register or an account of money received, disbursed, and on hand.

In this book are recorded all receipts and disbursements in cash, in the order of time in which they occur.

Various forms of Cash-book are in use among business men. Some accountants use the common Day-book form, others the form of the Ledger page already described; but the form in more general use is that given in the following form of Cash Account. The book ruled in this manner is not usually as wide as the common Day-book.

In this form, two pages are considered as one, and are so numbered. The left hand page is used for Dr. and the right hand page for Cr. entries.

T36. The account is kept with cash as with an individual; the amount of cash on hand, and all sums received, being entered on the Dr. side of the account, and all sums disbursed, on the Cr. side. In other words, we may consider the Cash Account as a box. Now this box is Dr. for all sums put into it, and Cr. for all sums taken out of it; that is, Dr. for what it receives, and Cr. for what it pays.

The Cash Account is balanced at the close of each day or week, as may best answer the nature of the business. In a considerable business it should be balanced at the close of each day, for this reason: if any error occurs in the account, (which is not unfrequently the case,) it is more readily detected by comparing the Cash Account of one day with the amount of cash on hand at the close of the day, than by comparing a week's account of receipts and disbursements with the cash on hand at the close of the week.

34. Auxiliaries. Their number and forms. Important auxiliaries in any considerable business. Other auxiliaries.

¶ 35. Cash-book. Matter recorded in Cash-book. Forms of Cash-book used. Numbering and use of the Cash-book pages.

36. Account with Cash, how kept. Illustration by considering Cash Account a box. Time for balancing Cash Account in a considerable business. Reason. Time for balancing Cash Account in a small business. Custom among mechanics

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