sidiary books, (for cash, bills, invoices, and account sales,) from which it is composed. The Journal, being a complete record of the business of the house, is very varied and comprehensive in its nature, and may be termed an index to every book of consequence in the counting-house. But while in the cash book every payment or receipt is entered on the day it takes place, and in the bill books every bill is registered on the day it comes to hand, or is accepted, the Journal entries, being completed only at the end of the month, admit of being combined to a considerable extent, so as to exhibit a number of transactions in collective sums. Thus all the acceptances of the house paid in the course of the month appear in the Journal entry of Bills Payable Dr. to Cash: they are arranged in this entry as they fall due, after which the whole are added into one sum, which sum alone needs be carried to the Ledger. In like manner, all bills receivable, whether discounted, or kept by the house till they fall due, are collected under the head of Bills Receivable Dr. to Cash, summed up together, and carried to the Ledger in one line; a point of great importance, as we shall see presently, in facilitating the balance of the Ledger.

We proceed to give a specimen of the Ledger: the whole of the Journal entries in the preceding pages, when posted into the Ledger, will stand thus:

The Ledger is thus a register of all the entries in the Journal; and a register so arranged as to exhibit on one side all the sums at Debtor; on the other all those at Creditor. It is kept in the most concise form, the insertions in it hardly ever exceeding a line each, or containing more than the title of the entry in the Journal. On opelang

a page in the Ledger, a person unacquainted with book-keeping is apt to consider this brevity unsatisfactory; and it was formerly the practice to add in each line a few explanatory words. Thus the entries in the account of Simon Frazer, which in our preceding page are briefly

March 26. To cash
31. To bulls payahle

d.

334 50

132 10 0

would, at an earlier date in the practice of book-keeping, have been expanded to

This method is still followed in some counting-houses, and such explanatory additions are certainly conducive to clearness; but they are practicable only in a house of limited business: wherever the transactions are numerous and varied, they should be left out of the Ledger, for two reasons; they increase greatly the labour of the book-keeper, and they never can be so full or circumstantial as to supersede the account current book.

The same Ledger may continue in use from one to five years, according to the size of the book, or the extent of the transactions of the house. On opening a new Ledger, it is proper to place in succession accounts of the same class or character: thus, Stock account ought to be followed by that of the three per cent. consols, Exchequer bills, or other property belonging to the house; and if the business be with the West Indies, it is fit that accounts with Jamaica should be placed near those with Demerara, Trinidad, and other sugar colonies.

Balancing the Ledger. - This important operation is performed by adding up the Debtor and Creditor side of every account in the Ledger, ascertaining the difference or balance in each, and carrying such balance, as the case may be, to the Debtor or Creditor column in the balance sheet. On closing, for example, a few of the preceding Ledger accounts, we find them to stand thus:

And so on with every account except Stock, which, having no entries in the current year, is put in the balance sheet exactly as it was in the beginning of the year. Including Stock, the total at the Debtor side of the balance sheet ought to agree exactly with the total at the Creditor side; and if it do not, it is a rule in all well-regulated counting-houses to follow up the examination perseveringly, until they are made to agree. The apparent difference may not exceed a few shillings, or a few pence; still the search is continued, because the smallest discrepancy shows the existence of error, and to an extent perhaps greatly beyond the fraction in question. It often happens, indeed, that, as the examination proceeds, the difference undergoes a change from a smaller to a larger amount, and without increasing the difficulty of discovering the error, which is as likely to have occurred in the case of a large as of a small sum. Differences, when in round sums, such as 101. 100l. or 1000l., generally lie in the addition; fractional sums frequently in the posting. All this, however, is uncertain; for the error or errors may be in any month in the year, and in any one of the thousand entries and upwards which have been made in the course of it. Hence the necessity of examining the whole; and young book-keepers are often obliged to pass week after week in the tedious labour of revising, adding, and subtracting. On the other hand, there are sometimes examples of the balance being found on the first trial; but such cases are rare, and occur only to careful and experienced book-keepers. The only effectual means of lessening the labour and perplexity of balancing the Ledger, is to exercise great care in every stage of the book-keeping process; as well in making the additions in the Journal, as in posting from the Journal into the Ledger, and casting up the Ledger accounts; and, lastly, in adding up the balance sheet, which is generally of formidable length.

Accuracy in addition is one of the main requisites in a clerk, and particularly in a book-keeper. Of the extent to which it may be attained by continued practice, those only can judge who have experienced it themselves, or have marked the ease and correctness with which clerks in banking-houses perform such operations. They are in the habit of striking a daily balance which comes within small compass; but a merchant's balance, comprising the transactions of a year, extends commonly over a number of folio pages. It is advisable, therefore, to divide each page into portions of ten lines each, adding such portions separately. This lessens the risk of error, as it is evidently easier to add five or six such portions in succession, than to do at once a whole folio containing fifty or sixty sums.

Another important point towards agreeing a balance, is to limit carefully the number of Ledger entries; in other words, to comprise as much as possible in those aggregate sums in the Journal which are posted in the Ledger. Thus, in the case of the monthly entries for bills, whether receivable or payable, while the inner column of the Journal contains the amount of each specific bill, the final column - that which is carried to the Ledger should, and generally does, comprise a number of bills in one sum.

Entries

in the cash book, which generally form so large a proportion of the transactions of the month, are carried by some book-keepers directly from the cash book into the Ledger, without an intermediate arrangement in the Journal form. In some lines of business this plan may answer; but as a general rule it is better to take the trouble of journalising the cash, thereby comprising in 30 or 40 Ledger entries the transactions of the month, which, when posted separately, would exceed 100. The time required for rewriting or rather re-casting them, will, in most cases, be amply made good, by exhibiting the cash in a proper form, and by facilitating the balance of the Ledger at the close of the year.

We have said the close of the year, because, in nine mercantile houses out of ten, that is the period for striking a balance. In some branches of trade, however, the case is otherwise. Thus, among West India merchants, the 30th of April is the time of balancing, because at that season the sales of the preceding crop are, in general, completed, and those of the current year not yet begun.

Arrears in book-keeping ought to be most carefully avoided — calculated as they are to engender mistakes, and to produce loss from delay in adjusting accounts. The practice of balancing the ledger every six months, and of transmitting as often accounts current to the correspondents and connections of merchants, will, it is to be hoped, become general. It is, however, hardly practicable in cases where, as too often happens in the lesser mercantile establishments, the book-keeper is charged with a share of the active management. Exemption from interruption, and removal from the bustle of current business, are main requisites to accuracy and despatch in accounts. In examining, or, as it is called, collating the books, the book-keeper requires not only a retired apartment, but the assistance of a clerk for the purpose of calling them over. A similar arrangement for another purpose-we mean for composing the Journal, the book-keeper dictating from the subsidiary books to a clerk whose writing forms the draught or rough copy of the Journal, has as yet been seldom adopted; although, when properly applied, it is highly conducive both to accuracy and expedition.

A Ledger must, of course, have an index; but it is very brief, containing merely the titles of the accounts and a reference to the page, as follows:

The Subsidiary Books. In former times, when business in this country was conducted by most persons on a very limited scale, the accounts of a number of merchants, or rather of those dealers whom we should now think it a compliment to call merchants, were often kept on a plan somewhat like that at present followed by our shopkeepers. The merchant or his chief clerk kept a daily record of transactions, whether sales, purchases, receipts, or payments, in a diary, which was called a Waste-book, from the rude manner in which the entries or rather notices in it were written, being inserted, one by one, soon after the transactions in question took place. From this diary the Journal and Ledger were posted; and book-keeping by double entry being in those days understood by few, one person frequently kept the books of several merchants, passing one or two days in the week at the house of each, and reducing these rough materials into the form of regular entries. In process of time, as transactions multiplied and mercantile business took a wider range, separate books were more generally required for particular departments, such as a bill book for all hills of exchange, and a cash book for all ready money transactions. This had long been the case in the large mercantile towns of Italy and Holland; and above a century ago it became a general practice in London and Bristol, which were then the only places of extensive business in England. But in English, as in foreign counting-houses, the bill book and even the cash book were long considered as little more than memoranda of details; not as books of authority, or as fit documents for Journal entries: for that purpose the diary only was used. In time, however, the mode of keeping these subsidiary books improved, and merchants became aware that, when cash or bill transactions were properly entered in them, the Journal might be posted from them as well as from the diary.

Similar observations are applicable to the other subsidiary books, viz. an invoice book for goods shipped, and an account of sales book for goods received and sold. When from the gradual improvement in the management of counting-houses these books were kept in a manner to supply all that was wanted for Journal entries, the use of the diary was dispensed with for such entries also. And at last it was found, that in all wellregulated counting-houses the books kept for separate departments of the business were sufficient for the composition of the Journal, with the exception of a few transactions out or the regular course, which might be easily noticed in a supplementary book called a Petty Journal, or a book for occasional entries. The consequence was, that the diary or waste book, formerly the groundwork of the Journal and Ledger, became excluded from every well-regulated counting-house. This has long been the case, and the name

of waste book would have been forgotten, were it not found in the printed treatises on book-keeping which have appeared from time to time, and have been generally composed by teachers in schools or academies, who, unacquainted with the actual practice of merchants, were content to copy and reprint what they found laid down in old systems of book-keeping.

The subsidiary books required in a counting-house are, the Cash book;

Book of Acceptances of the house, or Bills Payable;

Book of Bills receivable, or bills on other merchants which are or have been in possession of the house;

Bought book, or book for bills of parcels ;

Invoice book, or register of goods sold or exported;

Account of Sales book;

Insurance Policy book; containing copies of all policies of insurance;

Petty Journal, or book for such occasional entries as do not belong to any of the preceding.

Such are the authorities from which it is now customary, in every well-regulated house, to compose the Journal. Their number indicates a repartition or subdivision, to a considerable extent, of counting-house work, and nowhere is such repartition productive of greater advantage. How much better is it to enter all bills receivable in one book, all bills payable in another, and all cash transactions in a third, than in any way to blend these very distinct entries. The effect of this subdivision is to simplify the Journal entries in a manner highly conducive to accuracy and despatch; and to present such means of checking or examining them, that many transactions may be stated, and an account extended over a number of folios, without a single error.

The use of most of the subsidiary books is sufficiently pointed out by their names; but it may be well to add a few remarks on the "Bought Book," or receptacle for the accounts of goods purchased. A bill of parcels is the name given to the account of goods supplied by a manufacturer, tradesman, or dealer, to a merchant. Such accounts soon become numerous, and it is evidently of consequence to adopt the best method of keeping them. In former times it was the practice to fold them up in a uniform size, and after writing on the back the names of the respective furnishers, to put them away in bundles. But wherever the purchases of a merchant are extensive, and the bills of parcels numerous, the better mode, after arranging them alphabetically, is to paste them in a large book, generally a folio, made of blue or sugar-loaf paper: this book to have its pages numbered, and to have an alphabetical index. Any single bill of parcels may thus be referred to with the same ease as we turn to an account in a ledger; and one of these folios may be made to hold a very great quantity of bills of parcels; as many as would form a number of large bundles when tied up on the plan of former times.

Book of Bills Payable. - The notice, or, as it is termed, advice of bills payable after sight, generally comes to hand before the bills themselves. As the time of the arrival of the latter is uncertain, the better plan is not to enter them from the advice among the other bills payable, but to appropriate a space of 10 or 12 pages at the beginning or end of the book of bills payable, and to insert there the substance of the advice received.

There are a few books in every counting-house which do not form part of the vouchers or materials for the Journal; viz. the Account Current book, containing duplicates of the accounts furnished by the house to their different correspondents and connections; The Letter-book, containing copies of all letters written to the correspondents or connections of the house;

The Petty Cash book, or account of petty disbursements, the sum of which is entered once a month in the cash book;

The Order book, containing copies of all orders received;

The Debenture book, or register of drawbacks payable by the Custom-house.

It was formerly a practice in some houses for the book-keeper to go over the letter book at the end of each month, that he might take note of any entries not supplied by the subsidiary books. This, however, is now unnecessary; these books, when carefully kept, containing, in one shape or other, every transaction of the house.

The Principle of Double Entry. From these explanations of the practice of bookkeeping, we must call the attention of our readers to a topic of more intricacy -- the origin of the present system, and the manner in which it was adopted. To record the transactions of a merchant in a Journal or day book was an obvious arrangement, and to keep a Ledger or systematic register of the contents of the Journal was a natural result of his business, particularly when conducted on credit. Such, in a rude form, are the books of our shopkeepers, who enter their sales and purchases in a day book, and in their Ledger carry the former to the Dr. of their customers, the latter to the Cr. of the wholesale dealers who supply them with goods. By making at the end of the year a list of the sums due to him by his customers, and of those due by him to wholesale.

M S