terms of credit, the terms should be indicated in the ledger. Each journal entry will be posted as before, and in the explanatory column of the account you may write the initial, . Remember to post all the f. debits first and then the credits. Take care to post the transactions in the order of their dates. After you have finished the posting and checked your postings, you may take a trial balance which should agree with your other trial balance for the same transactions.

You may next post the February transactions from your cash book, sales book, and journal, check your postings, take a trial balance, and submit your work for approval. For the work of this exercise you may use a continuing trial balance, like the one described in the next section.

The transactions for March and April are to be recorded in the same books, and a trial balance is to be taken at the end of each month; but a balance sheet will not be prepared, nor will the ledger be closed till the end of April.

131. A Continuing Trial Balance. When a bookkeeper has many accounts in his ledger, it requires a good deal of work to rewrite the names of the accounts each time a trial balance is taken, but by using a continuing trial balance he adds only the names of the new accounts. The following illustration explains itself.

132. Directions. After you have finished the work assigned, in cluding the trial balance for April, prepare a balance sheet and close your ledger. This balance sheet will not be exactly like the one that you prepared at the close of Exercise VIII, but the present worth will be just the same.

NOTE. -If any pupil has had serious difficulty with the work of this exercise, it would be well to have him do additional work of the same kind, using one or more of the series of transactions used for previous exercises.

Questions.

1. What are the reasons for using a cash book?

2. Why is an entry on the debit side of the cash book posted to the credit side of the ledger?

3. What are the reasons for using a sales book?

4. Since each entry in the sales book is posted to only one account, how is the equality of debits and credits maintained in the ledger?

5. You may answer the following questions about the balance sheet that you have just prepared:

(a) Why is it that the present worth shown by this balance sheet is the same as that shown by your first balance sheet for April, when the method of recording the transactions has been so different?

(b) How can the present worth for April be the same, when so many of the items in the balance sheet are different?

(c) Since the present worth is the same, why is not the net gain also the same as

on your first balance sheet for April?

EXERCISE XI.

REVIEW.

133. The purpose of Part I is to teach the uses of accounts. Each entry that is made in any book of original entry is made with reference to its final transfer to some account in the ledger. If you have formed the habit of looking beyond the journal entry to the accounts affected by the transaction, and if, instead of relying upon abstract rules which are easily forgotten, you have mastered the purpose of each account, you are not likely to make many mistakes in journalizing ordinary business transactions.

There is an endless variety of books in use in business, for an intelligent bookkeeper will adapt his set of books to the particular business for which he is keeping the records; but the fundamental purpose of each account is practically the same, whether it is used in a small grocery store or in the office of the largest corporation.

134. The Work of a Bookkeeper is to keep a full, accurate, and systematic record of business transactions. The original entry for a transaction should be made at once before there is any possibility of forgetting any of the details. Posting may be done at any time, when there is leisure from more pressing duties. A trial balance should be taken once a month, in order to test the accuracy of the work. A balance sheet need not be prepared, except when it is desired to close the ledger. The ledger is closed only in order to transfer the losses and gains to the proprietor's account, usually once or twice a year, though many corporations close the ledger once a quarter.

135. Rules for Debiting and Crediting Accounts:

1. Debit Cash when any item of cash is received. Credit Cash when any item of cash is paid out.

2. Debit Merchandise for the cost of goods bought for the purpose of selling them at a profit. Credit Merchandise for the sums for which these goods are sold.

3. Debit the appropriate account for the value of any property that comes into your possession, and also for any subsequent expenditures on account of this property. Credit the same account when any of this property is disposed of, and for any returns from the property.

4. Debit Expense, Office Furniture, etc., for their cost. Credit the proper account for any returns.

5. Debit Interest, Discount, Commission, or any similar account for what it costs the business. Credit the proper account when any of these items is paid or allowed to the business. 6. Debit a person when he receives something of value from you on account. Credit a person when something of value is received from him on account.

7. Credit Bills Payable for the face of each of your written promises to pay money to others when it is issued. Debit Bills Payable for the face of each of these written promises to pay when it is paid.

8. Debit Bills Receivable for the face of each of the written promises of other people to pay money when it comes into your possession. Credit Bills Receivable for the face of each of these written promises to pay when it is paid or otherwise disposed of.

9. Credit the Proprietor for all investments and for the net gain shown by the loss and gain account. Debit the Proprietor

for his withdrawals and for the net loss shown by the loss and gain account.

10. Debit loss and gain account for all losses, and credit loss and gain for all gains that are not shown in other accounts.

11.

General Rule. Debit the account that costs value or that takes value from the business. Credit the account that produces value or that brings value to the business.

136. Some Little Things easily Forgotten:

1. In each of your books the date column should always show the year in which you are doing the work.

2. In footing the accounts in your ledger, use a hard pencil with a sharp point, and place the figures close to the line on which the last item was written. Do not erase these footings.

3. Poor rulings detract greatly from the neatness of a set of books. Perhaps you had better study § 17 again.

4. In closing an account, the rulings on the two sides should be on the same lines.

5. In closing your ledger, the proprietor's account should always be closed last.

6. Each entry in your ledger should show the page of the book from which it was posted, and each entry in your journal, cash book, or sales book should show the page of the ledger to which it was posted.

7. Addition is simple, and perhaps this is the reason why so many of the difficulties of pupils are due to errors in addition.

8. If you would avoid errors, think before making an entry. 9. Do not hesitate to ask for explanations of difficult points. 10. Your ledger should always be in balance. While it is customary to take a trial balance only at the end of a month, one may be taken on any day during the month. 11. A balance sheet or statement of your business be prepared at any time; it is not necessary to wait till the end of a month or until some particular account has been settled.

137. Test Exercises:

may be

No. 1. Take a sheet of paper with only the faint blue lines and make the necessary rulings for two ledger pages. On this sheet you may open the following accounts, using the items given below: