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ACCOUNTS AND BILLS

153. Individuals or groups of individuals transacting business with one another are called parties to the transactions.

154. A record of the business transactions between two parties

is an account.

Merchants and others transacting any considerable amount of business have sets of books in which accounts are kept.

There are various methods of recording transactions as they occur, and arranging them in the different books to suit the needs of the business; but it is the general custom to copy all accounts, finally, in a ledger, which shows in clear, concise form the complete account of each person, firm, or company with whom business is transacted.

In the ledger, each person's account is headed by his name. Money paid, services rendered, and goods sold to him are entered in the left-hand or debit side of the account.

Money, services, and goods received from him are entered in the right-hand or credit side of the account.

Accounts are balanced at regular intervals by footing the debit side and the credit side, and subtracting the smaller amount from the greater. The difference, called the balance, is then entered on the side having the smaller amount. This makes the two sides equal, or balance, each other.

Horizontal lines are then drawn below the footings, and the balance is brought forward to begin the account for a new period.

The following form represents the ledger account of Adolph Schiller, for October and November, at a hardware store. The number in the column at the left of dollars refers to the page of the day book (the book in which each day's transactions are recorded as they occur) in which the item was first entered.

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Many bookkeepers omit from the ledger the words describing the articles bought and sold, as nails, locks, etc., leaving those columns blank. This practice is increasing.

Copy Mr. Schiller's account for November; balance it, and make the proper entry to begin the account for December.

At the time of balancing an account, it is customary to send to the debtor a copy of the account for the period for which the balance is made. This is called a bill or statement. Many business houses send monthly statements to their customers. Some business houses send a bill, or invoice, as it is called, with each list of goods sold.

155. The party who sells the goods is the creditor; the party who purchases the goods is the debtor.

In common usage, the term debtor means any one who owes a debt, and the term creditor means any one to whom a debt is owed. 156. A bill may be defined as follows:

A formal statement of a debtor's account, or of goods sold, services rendered, or cash paid, made out by the creditor and presented to the debtor, is a bill.

A bill should always contain these things:

1. The time and place of making out the bill.

2. The debtor's name and address.

3. The creditor's name and address.

4. A list of the items-that is, the goods sold, money paid, or services rendered, with the amount of each item.

5. The date of each transaction, if any of them occur at any other time than that of making out the bill.

6. The amount, or footing, of the bill.

157. When a bill is paid, the creditor receipts the bill by writing at the bottom, "Received Payment," followed by the date, and his own name. This shows that the bill has been paid. The debtor keeps the receipted bill. Why?

Sometimes a clerk, an agent, or a bookkeeper of the creditor receives the money for payment of a bill. He should then write the creditor's name under the words "Received Payment," and under the creditor's name, his own name or initials.

158. The following forms illustrate some of the ways in which bills are made out:

Mrs. John Doe

1421 West Street,

FORM I

Boston, October 1, 1908.

Boston, Mass.

Bought of R. H. Stearns & Company

140 TREMONT STREET BOSTON

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1. Name the debtor and the creditor in Form 1. In Form 3. In Form 4.

In Form 2.

2. Which of the forms contain both debit and credit items? 3. Which of the forms contain items for which bills have been previously sent?

4. In Form 5, what is the amount of the credit items? Of the debit items? What is the balance?

160. Written

1. Make out the bill sent to Mr. Schiller (see page 62) on Dec. 1, 1907, supplying names, dates, and addresses. The

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