5. The Journal. This book is sometimes called the day book, and, when no other book of original entry is used, it should contain a detailed record of each transaction in the order of its occurrence.

6. The Cash Book. As its name implies, this book should contain a record of all receipts and payments of cash. The cash book is a book of original entry, and when it is used cash transactions should not be entered in the journal.

7. The Sales Book. When a sales book is used, it should contain a record of all sales of merchandise, except that in a retail business the total cash sales for each day are usually entered directly in the cash book, for the cash book must show all cash transactions. The sales book is a book of original entry, and when it is used sales of merchandise should not be entered in the journal.

8. The Ledger. The various entries which are made in the journal and other books of original entry are classified in the ledger and arranged in groups, called accounts. Bookkeeping is sometimes called the science of accounts. Each entry in your journal, or in any other book of original entry, is made with reference to its final transfer to one of the accounts in your ledger. The ledger is simply a book of accounts, and its purpose is to exhibit the results of the business. When you have learned what an account is, what it should contain, and what relations one account bears to the other accounts in your ledger, you will have laid a solid foundation for a knowledge of bookkeeping.

9. An Account is a group of similar entries taken from the books of original entry and classified under an appropriate title. The following illustration will help you to understand the form and use of an account.

F

Keeping books is simply classifying transactions. count, which is illustrated above, the bookkeeper must fi cash transactions from all others, and then he must se of cash from disbursements and enter the receipts on the account and the disbursements on the right. Th of classification must be followed in the use of any

Each account has a definite purpose and will show a The purpose of the cash account is to bring together actions. The result shown by the account is the amo hand, and this may be found at any time by subtractin bursements from the total receipts.

10. The exercises that follow in Part I are designe uses of the principal accounts. Since each entry tha book of original entry is made with reference to its tr account in the ledger, it is important that you shall, understand the nature and purpose of the several kin ordinarily used by bookkeepers. You will first study e itself, and you will then learn how this account may be and related to other accounts.

EXERCISE I.

THE CASH BOOK.

The

purpose

of this exercise is to teach the This is an enlarged form of the cash account

Cash

9771 6471

illustrated in § 9, and is one of the most important books employed in bookkeeping. It is used in practically every business office, and such. a book should be kept by every one who has the handling of any money for himself or others.

The Cash Book should contain a record of all receipts and disbursements of cash, so that it may at all times show the amount of cash on hand. It may be a book of several hundred large pages, or it may be small enough to be carried in a boy's pocket. In the model cash book shown on pages 4 and 5 the first wide column on the left page is ordinarily used for the names of the parties from whom money is received, and the corresponding column on the right page for the names of the parties to whom money is paid. The second wide column on each side is used to show the purpose for which the money is received or paid. Each amount which is received or paid is entered

4

in the first money column on the proper side. This preferred because it completely separates receipts from d but, if one prefers, one may use the two columns on one receipts in the first column and payments in the second, on page 10.

The cash book described above may, with a few cha for any business. It is also well suited to the needs athletic associations, and various other school organiz data for the transactions used in the model cash book on 5 were taken from the records of the athletic association high school.

1908

Paid Out

Cash

Sept. 21 D.6. Burbank Expenses to Pittsfield

28 S.B.Call

30 D.E.Burbank

Oct 31 D.W. Edwards

a foot ball team
Outfit for same.
Sundries,
Coaching.

Nov. 256. G. Garrettson For baseball team

Diec. 2 Leon Southmayd„basket 3 Balance

On hand.

12. Cash.

This term includes not merely coins and but checks, bank drafts, certificates of deposit, and mone of which is convertible into money on demand.

13. Results shown by the Cash Book. You cannot cash than you have received, and, since the receipts of ca on the left page and the payments on the right page, the left page must always be the greater, unless all the mo paid out, in which case the two pages will foot alike. footing is the larger, the difference between the two fo equal the cash on hand. This difference is called the bald

14. Proving Cash. The cash is proved by finding as above, and comparing this with the amount of mon cash items on hand. If these do not agree, the err

found at once. The best way to guard against errors in the cash book is to make a record for each item at the time it is received or paid out. A written receipt should be taken for each item of cash paid out, and the record of cash items paid out can then be checked with these written receipts, and any error in the record of disbursements can be easily located.

15. Closing the Cash Book. While the cash should be proved each day, it is not essential that the cash book should be formally closed so often. This may be done daily, weekly, or monthly, but it should never be closed without first proving the cash to know that the balance is correct. The purpose of closing the cash book is to make it show

the balance of cash on hand.

When the cash book is to be closed, as was done with the model, December 31, the several steps should be taken in the following order:

1. Foot the first money column on each side and carry the footing into the second column.

2. Add the left footing to the last balance, subtract the right footing, and the remainder will be the new balance.

3. Enter this balance in the second column on the right side in red ink, using for explanation, Balanee, On hand.

4. Rule and foot the two sides of the cash book, as explained in the next section.

5. Carry the new balance below the rulings on the left side in black ink, using the date of the next business day, and entering the amount in the second column.

16. Rulings and Footings. Whenever an account is to be closed, the rulings should be made first in red ink, and then the footings, in black ink, should be placed between the rulings. Some good bookkeepers use black ink for both rulings and footings. A glance at the model cash book will show you that these rulings are placed on the same lines on the two sides of the account. The first ruling is placed on the line immediately below the lowest entry in the account, and crosses only the two columns to be footed. The second ruling is one space lower and crosses each of the date and amount columns. This second ruling is usually a double line, as shown in the model cash book, though some bookkeepers use a single line, because it requires less time. You will, of course, be guided by the preference of your teacher.