James Morrison.

The elements of book-keeping by single & double entry comprising several sets of books. Arranged according to present practice & designed for the use of schools. To which is annexed an introduction on merchants accounts online

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Online LibraryJames MorrisonThe elements of book-keeping by single & double entry comprising several sets of books. Arranged according to present practice & designed for the use of schools. To which is annexed an introduction on merchants accounts → online text (page 1 of 15)
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ELEMENTS



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BOOK-KEEPING.



5S MORRISON.



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PRINTED FOR LOXGMAX. REE S,OKME. BROWN ^ND GREE:S.

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TO



HENRY BROUGHAM, Esg. M.P



As, in this Commercial Country, a knowledge
of Merchants 9 Accounts, and Book-keeping, must necessarily
form an essential branch of Education : a work which has for
its object the improvement of Youth in these branches, must at
all times be acceptable to the Trading Part of the Community,
and highly deserving of their regard and encouragement.

In testimony of your eminent services, in
patronising and promoting EDUCATION, whether MER-
CANTILE or MECHANICAL, and thereby the moral and intel-
lectual improvement of mankind ; the following TREATISE
on BOOK-KEEPING, which has been honoured with very
general public approbation, is respectfully inscribed by,

Your most obedient and

very humble Servant,

JAMES MORRISON.

LONDON,

1st September, 1825.



PREFACE.



JF an Art or Science is to be valued in proportion to its utility and im-
portance, Book- Keeping will hold a very high place in the estimation
of a Commercial People. Independent of the pecuniary advantages which
accrue to the Man of Business from order in recording his Transactions,
Book-Keeping is valuable for its own sake, as it affords an ingenious
and complete illustration of the harmony of Method, and the use of
Numbers.

As the alterations and improvements made in this Edition are nu-
merous, the Author will, rather than detail them, describe the work in its
present form.

In the INTRODUCTION, on Merchants Accounts, the form and method of
making out the several Accounts which usually occur in the Business
of the Counting-house, are explained and illustrated by Examples.

The Work then commences with a view of SINGLE ENTRY, which affords
the most simple idea of the nature of Dr. and Cr., and of the application
of those terms. This Set is extended to three months, and may be suf-
ficient for a Pupil who has only the Retail Business in view.

Next, the work contains an explanation of the Principles of DOUBLE
ENTRY ; of the use of the several Books used in Business, and of the nature
of Personal, Real, and Nominal Accounts in the Ledger. This is done
before laying down Rules for Journalizing, because these Rules are in~
ferred from the nature of the Entries on the Ledger- Accounts, and there-
fora they cannot be properly understood till these Accounts are explained.

The RULES for Journalizing are arranged under distinct heads, in order
that they may be easily referred to ; and these, it is hoped, are so com-
plete, as to extend not only to every Transaction introduced into the Sets,
but likewise to every case which usually occurs in Inland and Foreign
Trade.

The Italian method is suppressed, and the Rules for stating Cash
transactions, &c., are divested of their technical form. Thus in receiving
money, 'instead of Cash Dr. to A. B., we say, Debit Cash To A. B. ,-
and in paying money, instead of A. B. Dr. to Cash, we say, Credit Cash
By A. B., and the like in other cases.

A 2



PREFACE.



The SETS of Booh advance from the more simple to the more complex
transactions, in a regular gradation ; and comprehend the different branches
of Business, as Proper, Commission, and Company Trade. Two of these
Sets are connected, in order that the Student may understand the method
of continuing the Business, and transferring the Balances from one Ledger
to another ; and while the theory or Art of Book- Keeping is explained by
Definitions and Rules ; the work exhibits a view of the most approved
forms of arrangement in Modern Practice, so that the young. Accountant
may be at no loss how to proceed when placed in the Counting-house.

The QUERIES on Bills, Receipts, and Drafts, with their Answers, as also
the EXERCISES subjoined, are intended to impress upon the mind of the
Learner the principal points in the daily practice of Business ; and the
Author can assert, from experience, that the attentive Student will derive
the greatest advantage from them.

The Work concludes with a short explanation of COMMERCIAL TERMS
or Expressions which are used among Merchants* and Men of Business.

The above are the principal points which, in the opinion of the Author,
a proper Elementary Treatise for the use of Schools should contain ;
and this opinion is the result of much experience as a public Teacher,
and several years practice in the Counting-house.

We shall close these prefatory Remarks by an extract from Messrs.
Collins and Catlow's " GUIDE to TEACHERS" in their choice of Elemen-
tary School Books :

" For the current business of Schools, and for the general purposes of
Trade, ' The Elements of Book-keeping,' by Mr. Morrison, are un-
questionably the best adapted. His work begins with a Set of Books,
by Single Entry, which is all that many branches of Trade .require, and
is necessary to the Student, as leading to a knowledge of the subsequent
Sets by Double Entry. For the advantages of the Student, the several
Sets rise upon each other, and include every variety of Books and Ac-
counts that can present themselves to the young Accountant in after
life. The work also contains the various forms of Bills, Notes, Receipts,
and Letters, required in Trade ; and the whole concludes with a SERIES
OF QUESTIONS, *, calculated to put the knowledge of the pupil to the test,
in regard to the difficult and important parts of the work.

" One of the greatest impediments opposed to the teaching of Book-

* In this edition Answers are given to the Queries. J. M .



PREFACE.



keeping, particularly in country Schools, has been the difficulty of ob-
taining ruled Sets of Books, which should enable the young Book-keeper
to exhibit his school-labours as a qualification for preferment in the
Counting-house. The publishers, therefore, of Morrison's Book-keeping
have prepared four distinct Sets of Books, at an easy cost, exactly corre-
sponding with the four Sets contained in the work itself, beautifully
ruled in the style and manner of the Patent Ledgers and other Books,
which are so justly admired for their neatness, in our first Counting-
houses. Morrison's Set of Blank Books perfect his System, therefore,
for the use of Schools, and render it every thing which the anxious

Schoolmaster can desire for the purpose of teaching Book-keeping."

Vide p. 63.



MERCANTILE ACADEMY,
LONDON, July, 1825.



VI



DIRECTIONS FOR USING THIS WORK,



THE Author has been requested to give a few directions how this work should be taught in
Schools.

Set A. If the Learner have only the Retail line of business in view, this SET by Single
Entry may in general be sufficient : when he has transcribed the DAY-BOOK, and checked the cal-
culations, he is to proceed to form the Ledger and take a Balance : vide page 28.

After he has finished this SET, he may peruse the INTRODUCTION as far as it respects the making
out Bills of Parcels, drawing Bills, Notes, and Receipts.

Set B. In Teaching BOOK-KEEPING by Double Entry the chief point is, to convey to the
Learner a distinct idea of Debtor and Creditor, and of the application of these terms in the LED-
GER. For this purpose he ought carefully to peruse Chapters II. and III. while he is writing the
DAY-BOOK, and forming the Bill and Cash-Books, from the ENTRIES given in pages 5153.
When he has done this, he is to Journalize a month's transactions from the Day-Book, Bill and
Cash-Books, and then post them into the LEDGER, and so on with the other two months. After
he has posted all the Transactions, he is next to make a Trial Balance, agreeably to the direc
tions given in page 46. Having done this, and finds that the difference of the STOCK and BALANCE
Accounts correspond, he is to proceed to balance the Accounts and close the BOOKS : vide direc-
tions page 46.

Set C. This SET is a continuation of the same business, including the Transactions of a
Commission Trade. When the Student has written the DAY-BOOK, INVOICE, and SALES' BOOKS,
pages 103-106., and formed his CASH and BILL-BOOKS from the ENTRIES in pagesl03-106., he is
next to Journalize the Day-Book transactions monthly, agreeably to the Rules given in page 142.,
and those in Invoice and Sales Books, singly, and then proceed to post, and Balance the LEDGER
as formerly.

N. B. To this SET the Pupil may have either a new LEDGER (as in the printed copy) which
will show him how the several Balances are transferred from the old Books to the new ones ;
or, he may allot in the former Ledger a sufficient space under each Account, to contain the
entries of this Set also, and this will show him how the Balances are brought down, and the
entries continued in the same folios.

After he has finished this Set, he may peruse the INTRODUCTION, relating to Bills and Accounts.
These will tend to elucidate several entries in the SETS which he has gone through. When he
has studied these, and knows how to draw them out, he may proceed to copy the LETTERS re-
specting Drafts and Remittances Advice of Goods being shipped Rendering Account- Sales, and
Accounts Current. The several Accounts should be annexed to these Letters, and should be
folded and addressed, and the Bills drawn and indorsed as in actual Business.

Set D, is a Partnership Concern, and is intended to complete the course. The Subsidiary
Books are not givei, because by this time the Student may be supposed to understand how to
write and Journalize them; and because the principal difficulty of keeping the Books of a Co-
partnery, is the division of the Profit or Losses : stating the Partner's Accounts, and closing the
BOOKS. A knowledge of all these particulars may be obtained by attentively perusing the JOUR-
NAL, and posting and balancing the LEDGER.

The QUERIES on Bills and Book-keeping, with their answers, are intended to be committed to
memory during the course. From five to ten may be given the Student at a time. The EXER-
CISES for Practice, which follow, are intended as a criterion of his improvement in these
branches of Commercial knowledge. The answers and statements should be neatly arranged,
and given in writing.



* If the Pupil's time be very limited, he may omit transcribing the Invoice Book, and Sales
Book, and Journalize from the Day-Book, or printed copy.

The Subsidiary BOOKS may be bound as follows : the Cash and Bill- Books in one binding ;
the Invoice and Sales-Books in one ; and the Day-Book by itself.



CONTENTS.



Page

PREFACE iii

Directions for using the Work vi

INTRODUCTION containing the Form and Method of making
out the several Accounts which usually occur in Business,
viz.

I. Receipts 1

II. Inland Bills 2

III. Foreign Bills of Exchange 3

IV. Bills of Parcels 7

V. Invoices 8

VI. Account-Sales JO

VII. Account-Current with the Interest Account 11

PART I. BOOK-KEEPING BY SINGLE ENTRY.

Book-keeping defined Single Entry described 15

Set A. RETAIL BUSINESS.

Day-Book 19

LEDGER 24

Cash-Book 32

Specimen of a Ready-Money Sales-Book 34.

PART II BOOK-KEEPING BY DOUBLE ENTRY.

Introduction Double Entry described 35

Chap. I. Of the DAY-BOOK and Subsidiary Books ib.

II. Of the LEDGER, and an EXPLANATION of the Accounts 37

III. Of the JOURNAL, and RULES for Journalising 38

I. Cash Transactions 39

II. Bill Transactions 40

III. Purchases and Sales 41

IV. Shipping Goods Abroad 42

V. Goods on Consignment ib.

VI. Effecting Insurances 43

VII. Entries in Bankruptcy ib.

VIIL Entries in Joint- A dventures 44

IV. Of POSTING and BALANCING the Books .. 45



riii CONTENTS.

Page

Set B. ON PROPER TRADE, or when a Merchant buys and sells on his
own Account.

Inventory-Book $1

Bill-Book Entries 53

Cash-Book Entries 55

DAY-BOOK 59

Bill-Book 64.

Cash-Book 70

JOURNAL 75

LEDGER 84

Set C. ON COMMISSION, or Agency Business, or when a Person buys
and sells on another's Account.

Preliminary Remarks on the Subsidiary Books 102

Cash-Book Entries 103

Bill-Book Entries 106

Cash-Book 110

Bill-Book 114

Invoice-Book, outward 120

Sales-Book 125

Day-Book 135

RULES for Journalising Monthly 142

JOURNAL 143

LEDGER 156

Set. D. On PARTNERSHIP, or when two or more Persons join their
CAPITALS in Trade.

On Partnership Accounts 179

Remarks on the Journal 180

Remarks on the Ledger 181

JOURNAL 184

LEDGER 204

APPENDIX.

I. QUERIES, with Answers, on Bills and Accounts 229

II. QUERIES, with Answers, on Book-keeping 233

III. EXERCISES for the Improvement of the Student 241

Letters and Mercantile Precedents 248

Explanation of Commercial Terms 253



INTRODUCTION.



JN this Introduction we shall explain the method of drawing out
Receipts and Drafts, and such Accounts as usually occur in the
business of the Counting-house. That ihe Learner may the more
readily comprehend the nature and use of these, they are selected from
the Transactions which compose Sets B. and C.



I. RECEIPTS.

A RECEIPT is a written acknowledgment of having received a Sum of
money or a Bill in the settlement of an Account. The usual form of
drawing out these is exhibited in the following Specimens.

No. I.

LONDON, 18tk January, 1825. Received of Mr. William Fenton,
One hundred and seventeen pounds ten shillings in fall.

,, 10. A. B.*



Cash Book B.

No. II.

RECEIVED Vlth February, 1825, of Mr. Thomas Attwood, Fifty
pounds on account.

^50. A. B.

No. III.

MARCH 10th, 1825. Received of Mr. Thomas Allwood, Fifty-few
-mids sixteen shillings and three-pence, being the balance of his account.
16,3. A. B.



* A. B. is understood to be the name of the Learner, or Owner of the Books in the
following Sets.



INTRODUCTION.



No. IV.

LONDON, 8th January, 1825. Received of Mr. A. B. Twenty-one
pounds fourteen shillings, for repairs to his house at Windsor.

<2\ 14. JOHN WRIGHT.

No. V.

WINDSOR, February 2?th, 1825. Received from John Tennant,
Esq., Fifty pounds, being payment of the rent till this date, of a house pos-
sessed by him from me.

50. A. B.

No. VI.

RECEIVED of Mr. A. B., Merchant, London, Seventeen pounds ten
shillings, being the amount of my Salary from 1st January till 1st April.
MARCH 6th, 1825. JOHN PENMAN.

\*l 10.

II. INLAND BILLS.

A BILL or DRAFT is a note on stamp paper given by one Person to
another, to pay to him, or to his order, a certain sum of money at a
specified time.

In every Bill there are at least two persons concerned, the Drawer
and the Acceptor. In the first draft A. B. is the Drawer or Holder of
the bill, and John Howie and Co. are the Acceptors or the Persons who
pay the bill when due. In the second draft, Edward Weston is the
Drawer, and A. B. the Acceptor.

When the TERM of a Bill is expressed in months, calendar months
are always understood. Thus if a Bill be dated the 1st January, and
made payable at one month after date, the term or month expires on the
1st February; and if a Bill be dated the 29th, 30th, or 31st January,
and payable at one month after date, the term expires on the last day
of February, which in common years, is the 28th day, and in leap-
years on the 29th.

When a Bill falls due on Sunday, or any holiday, it must be paid on
Saturday, or day before. A Bill dated on a Sunday is not considered
valid, at least Bankers will not discount such Bills.

If a Bill be not payable at the Place where the Acceptor resides, and
no particular house be mentioned in the Bill for payment, it is proper
to add to his acceptance the House at which he intends to pay it.

Inland Bills are distinguished into Drafts and Promissory Notes, the
former containing an Order, and the latter a Promise. The form of
making them out is as follows :



INTRODUCTION.



1. FORMS OF DRAFTS.

<^fllO u 4. LONDON, January 7th, 1825.

TWO months after date pay to my order, One
hundred and ten pounds four shillings, value received.
Messrs. John Howie and Co. 1 A. B.

LONDON. 3 Accepted, JOHN HOWIE and Co.

No. 164, Bill Book B.

^370 // 1. MANCHESTER, January 3d, 1825.

THIRTY-ONE days after date pay Mr. William

Jones, or order, Three hundred and seventy pounds one shilling, value
received.

^EDWARD WESTON.

Mr. A. B. \ Accepted, A. B.

LONDON. f payable at Le Fevre and Co's.

No. 75, Bill Book B.

2. FORMS OF PROMISSORY NOTES.

^156 // 7 8. LONDON, January 14th, 1825.

THREE months after date I promise to pay to

the order of Messrs. James, Fielding, and Co., One hundred and fifty-six
pounds seven shillings and eight-pence, value received.

No. 76, Bill Book B. A. B.

^147 ,, 7 6. LONDON, April 8th, 1825.

THREE months after date I promise to pay Mr.

A. B., or order, One hundred and forty-seven pounds seven shillings
and sixpence, value received.

No. 172, Bill Book C. THOMAS ALL-WOOD.

We shall only farther observe on Inland Bills, that a Bill or obligation
drawn out either in the form of a Draft or Promissory Note is equally
valid, and entitled to the same summary diligence in enforcing payment ;
but it is more business-like, that when the Drawer writes out the Bill, he
should make it a Draft, and when the Acceptor draws it out, he ought
to make it a Promissory Note.



III. FOREIGN BILLS OF EXCHANGE.

A BILL of EXCHANGE is a Written Order from one Person to another,
requiring him to pay a certain Sum of money to a third Person, or to
his order, and that either on demand or at a specified time.

B 2



INTRODUCTION.



It is by means of Bills of Exchange, that money is usually remitted
from one Country to another. There are generally four Persons con-
cerned in a Foreign Bill ; two at the place where the Bill is drawn, and
two at the place of payment. Thus, for instance, A. of Amsterdam,
owes to B. of London ; and, instead of remitting the money in specie
to B. he applies to C. residing at Amsterdam, to whom D. at London
is indebted. A. pays the money to C. and receives from him a Bill ad-
dressed to D. to pay the amount to B. or to any other appointed by
him, who sends it to his Correspondent B. with an order that the money
be paid to him by D.

But it often happens, that only three Persons are concerned, as in the
first specimen ; for example, R. Conder, residing at New York, and
wishing to remit money to A. B. at London, and having George Kay
owing him money in London, addresses his Bill to Kay, desiring to pay
the sum therein mentioned to A. B. or to his order.

The TERM of a Bill varies according to the agreement of the Parties,
or the custom of the Countries. Some Bills are drawn at sight, others at
a certain number of days after sight, or after date ; and some at Usance.

USANCE * is the usual time at which Bills are drawn between certain
Places, such as one, two, or three months after date ; and double or
half Usances, means double or half of the usual time. If the Usance be
one month, fifteen days are allowed for Half usance.

DAYS of GRACE, are a certain number of days granted after the
term mentioned in the Bill is expired. These also vary according to
the custom of the different Places. Bills at sight, however, must be paid
when presented.

The use of Bills of Exchange, and the manner of negotiating them will
be understood by the illustration of the following Bill:

No. I.

^150. HAMBURGH, June 2d, 1825.

At USANCE pay to the order of Messrs. Hol-

fwd, Mucker, and Co. ONE hundred and jifiy pounds sterling, value
received, and charge the same to the account of

MOSES REISS.



' } Acce P ted ' SOLOMON SHELDON.



To explain the business transacted by this Bill, suppose that Holford,
Rucker, and Co., who reside at Hamburgh, have occasion to remit to



* USANCE between London and any part of France, is thirty days after date ; between
London and Hamburgh, Amsterdam, Rotterdam, Middleburgh, Antwerp, Brabant, Zealand,
and Flanders, one calendar month after the date of the bill ; between London, Spain, or
Portugal, two calendar months : between London and Genoa, Leghorn, Milan, Venice,
and Rome, three calendar months.



INTRODUCTION.



London, and apply to Moses Reiss for a bill on London, Reiss agrees to
supply them, and draws the Bill on his Debtor or Banker, Solomon Shel-
don ; Holford, Rucker, and Co. on receiving the Bill, pay the value to
Reiss, arid send it to their Creditor, suppose A. B. of London, first writing
on the back of the Bill,

Pay Mr. A. JB. 9 or order,

HOLFORD, RUCKER, & Co.

This is called Indorsing the Bill to A. B. and when he receives the
Bill, he applies to Sheldon, and requires him to accept the Bill ; Sheldon
agrees to do so, and writes under Reiss's signature, Accepted, Solomon
Sheldon, and delivers it back to A. B., who may either keep it till it fall
due and demand payment, or he may transfer the money by indorsing the
Bill.

Moses Reiss is called the Drawer of the Bill ; Holford, Rucker, and
Co., the Indorsers; A. B. the Holders and Solomon Sheldon, the Acceptor.

Bills from America and the East Indies are generally made payable
at so many days or months sight, on account of the uncertainty of their
coming to hand at any fixed time. When a Bill is drawn after sight,
as in the folio wing, the Acceptor marks the date of his Acceptance, in order
to fix the time of payment :

And as security against accidents or delays, Merchants frequently make
out three or four Bills at the same time, all of the same tenor and date,
which are called a Set of Exchange. These are transmitted by different
Ships or Posts, and when one of them is paid, the orders are of no force.

The form of the first Bill is as follows :

No. II.

^400 Sterling. NEW YORK, February 20th, 1825.

THIRTY days after sight pay this my first of

Exchange (second and third unpaid} to the order of Mr. A. B., Four hundred
pounds sterling, value received.

RICHARD CONDER.
GEORGE KAY.

> March Slst > l825 -

+

In drawing the second Bill, write my first and third unpaid, and in
drawing the third Bill, write first and second unpaid.

Bills of Exchange are mostly drawn in the money of the Places where
they are to be paid. If the Sum be expressed in the money of the
place where it is drawn, the Hate of Exchange should be mentioned ;
or it may be drawn payable at the Current Exchange, which,, in that
case, is settled between the Parties, according to the rate which prevails
when the Bill falls due.

B 3



INTRODUCTION.



When Merchants draw Bills on a House which they suspect may not
be inclined to come under more obligations, or in case of an accident
happening with the drawee, such as a failure or disappointment, it is
common to write, either at the foot of the Bill or on a small piece of
paper attached to it, in case of need, apply to (suppose) Messrs. Ellis
and Co. their Correspondents at the Place of payment. This prevents
the expence and loss of credit which arise from Bills being returned.

The incidents which Bills are subject to, after they are delivered by
the Drawer, are, acceptance, indorsement, payment, and protest.

I. The acceptance is written at the foot of the Bill, as in the fore-
going specimens. A Bill should be presented for acceptance as soon
as it comes to hand; and if the person on whom it is drawn subscribes
his name, or even any other writing which does not imply a refusal,
it is sufficient to bind him for the payment. If he hesitate with re-
gard to acceptance, the Holder may mark the date when it is pre-
sented, in order to fix the time of payment. In London, Bills are
generally left at the House of the Drawee for acceptance, and called for
next day.

II. Indorsement is commonly written across the paper on the back
of the Bill, and against the end of the line. It is not necessary to
mention the place and date ; but if a Bill drawn in England, and
also made payable there, be sent abroad in the course of business, an
indorsement dated from a Foreign place has the effect to bring it under
the regulations of Foreign Bills ; whereas, if the indorsement be not
dated, the Bill, after it is sent back to England, carries no evidence of
having been Abroad, and is considered as an Inland one. The Holder
of a Bill may indorse it blank, by writing only his signature on the back
of it ; and the Bill, in this situation, may pass through several hands,
and the last Holder may fill up the indorsement in his own favour ;
but it is not safe to send Bills by Post, unless the indorsements be
filled up.

III. Payment of a Bill should be made exactly when due. In order
to know when a Bill becomes due, attention must be paid to the Usance
and days of grace in different Countries. In Great Britain and Ireland


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Online LibraryJames MorrisonThe elements of book-keeping by single & double entry comprising several sets of books. Arranged according to present practice & designed for the use of schools. To which is annexed an introduction on merchants accounts → online text (page 1 of 15)