Form 3. Account Balanced and Ruled
Rulings.—The single lines above the totals, indicating the addition, extend only through the money columns and are on the same line on both debit and credit sides. The closing rulings beneath the footings are double and extend through the date columns, the money columns, and the posting reference columns. The diagonal line on the debit side from the total line to the date column for the last entry is for the purpose of filling all blank lines, and preventing any further entries on them after the account is formally closed, as such entries would have the effect of falsifying the totals shown. Thus the diagonal line which may be on either debit or credit side serves as a safeguard against fraud. Diagonal rulings, however, are not used so extensively as formerly.
Transferring.—When for any reason it is desirable to transfer an account from one page to another, the transfer is made by means of an entry similar to the “balance” entry shown in the Cash account above. Instead of the word “Balance,” the word “Transfer” or “Forward” is used, and in the column between the explanation and money columns is entered the number of the page to which the transfer is made. On that page the account name appears, and the first entry is the amount transferred from the old account, with a page reference to the old account in the reference column. In making the transfer it is customary to close the portion of the account on the old page in the manner explained above, and to transfer only the balance.
Sometimes an entry may be made in an account in error and for this or some other reason may need to be transferred. Assuming, for the purpose of illustration, that such an entry is a credit, its amount is first written as a subtraction item on the debit side in the old account, with proper reference to the page to which it goes. On the new page it appears on the credit side, like the original item, and may be considered as the contra to its transfer record in the old account. In the new account the old page number must be entered. Great care should be exercised in all transfer entries to show correct cross-indexing.
Sometimes it is desired to transfer not the balance but the total debits and credits of an account. In this case the total debit amount may be entered on the credit side of the old account and the total credit amount on the debit side, with proper page and explanatory references. This forces the equality of the two sides and the account may now be totaled and ruled off. The total debit amount of the old account is then entered on the debit side and the total credit amount on the credit side of the new account.
A much simpler and more workable method, however, is to treat the new account as a continuation of the old. There is then no necessity of formally balancing the old account. The transfer is effected by totaling both sides of the old account and indicating the new page to which these totals are transferred, taking care to enter the totals on the proper side of the new account, with proper references to the old account page. This procedure is illustrated in [Form 4].
Rulings and Entries in Personal and Note Accounts.—Some peculiarities met with in the entries and rulings of personal and note accounts, both receivable and payable, will be discussed here.
In John Adams’ personal account ([Form 5]) notice that his address is included in the heading, that the terms of credit extended to him on each sale are shown in the explanation space on the debit side, and that his payments are entered on the credit side according to the date on which they are received. If a payment appears directly opposite the corresponding charge, with no other credits intervening, lines are ruled underneath both the debit and the credit items to show that down to that point the account balances. The record of dealings with each customer should be as full as possible in order to furnish an accurate basis for credit rating. If he is prompt in his payments, taking advantage of the discounts offered him, the account should show this.
