Manufacturing costs and accounts . the cash is representedby an entry of $1,000 to the credit of selves, or in other words tothe credit of Capital account. This is because the underlying principle of double-entry book-keeping is a balance between proprietorship on the one handand goods or property on the other. As we shall see in the simple THE MECHANISM OF ACCOUNTING 15 cases to be discussed, this balance is always maintained, howevervarious the changes or transformations that take place in ourproperty. If we abstract the balances in the above accountsthey form a Balance Sheet thus: Assets Ca
Manufacturing costs and accounts . the cash is representedby an entry of $1,000 to the credit of selves, or in other words tothe credit of Capital account. This is because the underlying principle of double-entry book-keeping is a balance between proprietorship on the one handand goods or property on the other. As we shall see in the simple THE MECHANISM OF ACCOUNTING 15 cases to be discussed, this balance is always maintained, howevervarious the changes or transformations that take place in ourproperty. If we abstract the balances in the above accountsthey form a Balance Sheet thus: Assets Cash in hand, $1,000. Capital and liability Capital, $1,000. We will now suppose that we part with some of our cash andreceive goods in exchange. We have now to introduce into ourdiagram a new feature, namely, a book in which transactions arerecorded. In modern practice such books of original entry are Cash Journal yote: Owneiship tejnains asbefore, but property isnow of two kinds, vizcaali and goods. Item Goods Bougiit for Cash 800. Note: Only the total of transactionsin the journal is used for postingpurposes. There might for instancehave been 40 transactions averaging20 dollars each, or 800 transactionsaveraging one dollar during themonth. The journal thus collects amounts, and the total of these amounts is posted ed Capital Cash Goods Fig. 3.—Diagram showing simple case of goods purchased for cash. Thebalances below the ledger accounts are those remaining after the entrieshave been made. Note: Plain lines = debits or charges. Dotted lines = credits. when possible made into journals or posting mediums also,so that certain frequent classes of transactions can be totalledseparately and posted in a lump sum to the ledger accountsaffected. The alternative to this is, of course, separate postingof each item. Arranging original books of entry as journals is,therefore, a labor-saving device of an important character. Figure 3 represents a very elem
Size: 2308px × 1083px
Photo credit: © The Reading Room / Alamy / Afripics
License: Licensed
Model Released: No
Keywords: ., bookcentury1900, bookdecade1910, bookpublisheretcetc, booksubject
