Cash Book. You will now discontinue keeping a purely single entry set of books, as Mr. Burke desires you to make a systematic record of the cash received and paid out, so that the cash can be proven each day if he so desires it. Since Cash is a property account, and since only personal accounts are kept in purely single entry bookkeeping, it is apparent that it ceases to be single entry whenever an account with property of any kind is kept. Compare the single entry form of Cash Book given on pages 232 and 233 with the double entry form illustrated on pages 42 and 43. Note that the items (personal accounts) to be posted in single entry are made prominent by short extending the items (property and expense accounts) that are not to be posted.

*When two personal accounts are affected by a transaction, one a debit and the other a credit, make the journal entry as follows in single entry:

Present your Journal and Cash Book for approval.

Posting. Post the entries from the Journal, then balance and rule the Cash Book and post all items affecting personal accounts. Check over the posting.

Business Results. Make an Inventory of the Resources and Liabilities of the business, using the balances of the Ledger accounts and the amounts of the inventories given by Mr. Burke. The balance of cash you will ascertain from the Cash Book The difference between the resources and liabilities is Wm. Burke's present capital. Subtract his capital, as shown by his account in the Ledger, and you have the Gain. Present your Inventory of Resources and Liabilities for approval, after which make a neat copy of same on page 15 of the Cash Book.

Changing to Double Entry. Open accounts in the Ledger with Merchandise, Real Estate, Furniture & Fixtures, Bills Receivable and Bills Payable. Post the balances of these accounts as exhibited by the Inventory of Resources and Liabilities. Post the Net Gain to the credit of Wm. Burke's account. Balance and rule his account and bring down the Present Capital. Your books are now in condition to be kept by double entry. Take a trial balance to make certain that you have made no error. Be sure to include the balance of cash on hand in your trial balance. Copy same neatly on page 16 of the Cash Book. Present all books for inspection and approval.

Omissions in Business. In business, when the books have been kept by Single Entry, it is often impossible to obtain a correct inventory of the resources and liabilities at any given time, owing to the incompleteness of that system; and hence the net gain or net loss of the business for that period, and the proprietor's present capital, as shown by the inventory, will not correctly represent the facts. For instance: If a note had been issued, and no record made of it, and the note was unpaid and not thought of at the time of making the inventory, the liabilities would be the amount of the note too small. This omission would have the effect of increasing the net gain or decreasing the net loss, which in turn would make the present capital greater than it should be, or the net insolvency less than it should be. The omission of a resource at the time of making an inventory would have just the opposite effect of the above results.

How Corrected. There are two ways of correcting such omissions. One way is to change the inventory at the time the omission is discovered, and then make the necessary changes in the Ledger. The other and better way is to make such an entry in the Journal, or other principal book, as will cause the account to which the omitted item belonged to show its true relation to the business, and the proprietor's account to show his true present capital, so far as it can be determined at that time. If a resource had been omitted from the inventory, debit the account to which it belonged and credit the proprietor's account; if a liability, debit the proprietor and credit the liability. The advantage of the second method will be apparent when it is stated that several items are liable to be omitted from the inventory; and the omission may not be discovered until some time after the books have been changed to Double Entry. If these items were discovered at different times, as is generally the case, it would necessitate changing the inventory that number of times by the first method, while by the second only so many entries on the Double Entry books would be necessary.

It is necessary to debit or credit the proprietor's account, as the case may be, for the amount of the omitted item, or items, for two reasons: First, to cause his account to show

his true worth at the time of changing the books, and second, to be able to determine the actual gain or loss for the period following the change. This is very important in case a partner had been admitted at the time the books were changed. If the Loss and Gain account had been debited or credited for the omitted items, as is sometimes done, that account would not show the actual gains or losses for the period during which the account remained open, and the new partner would be debited with a greater net loss or credited with a greater net gain than he should be.

Single Entry as practiced in Business. Single entry as practiced in business may be defined as any system of bookkeeping in which an equality of debits and credits is not preserved, thereby making it impossible to take a trial balance. Very often all or nearly all the labor saving forms used in double entry are employed, and accounts with the different kinds of property and allowances are kept, thus enabling the bookkeeper or proprietor to ascertain the sources of the losses and gains, the same as in double entry, the only difference being that it is impossible to apply the test which the trial balance affords in double entry.

QUESTIONS. Define Single Entry. Explain the difference between Double and Single Entry. What are the only records absolutely necessary in Single Entry? Why is it not customary to keep books by the purely single entry method in business? Describe the method of making an entry in the Single Entry Day Book-Journal. Why is it impossible to take a trial balance in single entry? Can you make a balance sheet in Single Entry? How do you change to Double Entry? How can you tell when a set of books is in condition to be kept by Double Entry? How do you ascertain the Net Gain or Net Loss in Single Entry? Which method do you prefer, Single Entry or Double Entry? Give a good reason for your answer to the above. Explain the method of correcting an error or omission in the Inventory of Resources and Liabilities.

MISCELLANEOUS TOPICS.

Business Statement - Analytical Form. The Balance Sheet used throughout this book is not universally used in business. It has been given the preference over other forms of business statements because it tends to develop the mental faculties of the student better than other forms would. To persons conversant in the art and science of double entry bookkeeping, a Balance Sheet or business statement of any kind is unnecessary, as the facts desired can (or ought to be) obtained from the Ledger. The objection urged against the Balance Sheet is that it conveys little, if any, information to those who are not skilled in the art and science of accounting.

The form of Business Statement illustrated on page 237, while furnishing comprehensive information, is so simple that it may be understood by those who do not understand bookkeeping. You will observe that it contains, in compact form, the same information that is given in the illustrations on pages 4, 6, 36 and 38. This form of statement is usually made in the Journal, and with slight modifications and abridgments, is used in a large per cent. of the business offices in this and foreign countries.

The forms of business statements given in this book are intended to instruct the beginning student, and not the expert accountant. The statements used in business are of numerous designs and many of them are of a complicated nature. The student who is fitting himself as a professional bookkeeper is advised to consult the higher, technical works on accounting for further information concerning the various forms of statements that may be used in business. Ask your teacher to advise you what books of reference to consult. Every bookkeeper should read one or more of the periodicals devoted to the interests of the bookkeeping profession.

Suspense Account. With many firms it is the custom to close all doubtful accounts receivable into a Suspense Account. This account is ordinarily kept similar to the Sundry Accounts Receivable illustrated on page 131; it is debited each time an account is closed into it, and credited for all receipts (if any) directly opposite the parties' names who made the payments. This method is considered objectionable by some business men, as there is a possibility of giving offense to strictly honest customers, who may be temporarily unable to meet their obligations, yet intend to pay as soon as able. To overcome this objection the following method of treating doubtful accounts is given.

Inventory of Doubtful Resources. Before closing the books a list should be made, in the Inventory Book or Journal, of all accounts on which it is not expected that the full amount will be realized. Next have the proprietor, or some one able to judge, make an estimate of what is expected to be realized on each account and place this amount opposite the total amount of each account on your list. Foot the two columns and carry the difference between them to the debit of the Loss & Gain account, in red ink, specifying it as "Doubtful Resources." Should the losses turn out to be less than what was expected, the above Liability Inventory will help to increase the gains at a subsequent closing of the books. By this method all accounts receivable remain open and there will be no probable chance of persons learning that their accounts are considered doubtful.

C. O. D. Account. Some firms do a large business on orders sent C. O. D. When goods are so sent a C. O. D. account is opened, which is similar in form to the Sundry Accounts Receivable account, and the parties ordering goods are charged therein. When remittances are received the proper parties are credited. Often, however, these C. O. D.