Manufacturing costs and accounts . 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. Arrangin
Manufacturing costs and accounts . 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 elementary form of this only one transformation is concerned, namely. Cash intoGoods, only one column is required to record the we have purchased $800 worth of goods for $800 cash, andhave recorded the transactions, the results will be as shown in 16 MANUFACTURING COSTS AND ACCOUNTS. THE MECHANISM OF ACCOUNTING 17 Fig. 3. The book of original entry shows the total of the transac-tions ($800) and from the column recording this two lines start,one dotted, which represents a credit, and one plain, which repre-sents a charge or debit. Cash account is thereby shown to becredited with $800 and Goods account is shown to be debitedwith $800. Starting at the posting medium or journal, andfollowing the lines we can see just what accounts are reached andaffected by the transactions recorded in the journal. In this casethe whole matter is very simple but in the course of this book weshall find the use of this kind of symbolizing very useful to explaincomplicated transactions. Its principle, should, therefore bethoroughly mastered by the reader at this stage. The transactions shown in Fig. 3 can now be subjected to thetest of a Balance Sheet, thus: Assets Capital and liabilities Cash in hand, $200 Goods in hand, $800 Capital, $1,000 $1,000 $1
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