4. At the time of final settlement with the bankers, all that remains to be done is for them to pay over the balance of cash in their hands belonging to the merchant. This balance of cash is reflected by the amount of margins which they have demanded at the time of discount. Hence, on the merchant’s books the transaction will be recorded as a debit to Cash and a credit to Bankers or Bankers’ Margin account.
In order to keep close track of all accounts under discount it is advisable and almost necessary to make use of what may be termed a “discounted accounts register.” Every account, as discounted, should be given a number and entered in numerical sequence in the register. As an account is paid by the customer and reported by the banker it should be there shown as paid. The banker at the time of final settlement must render an accounting for all the accounts not shown as canceled by the register, either in cash or by a return of the claim against the customer.
Numbered Accounts
Allotment of Numbers to Accounts
The allotment of a series of numbers to a certain kind of accounts not only classifies them in an orderly manner by grouping them according to their resemblances and separating them according to their differences, but the notation also greatly facilitates locating them and saves much time and effort in indicating them on vouchers, journal entries, etc. Another advantage is that posting records may be checked as to their general correctness by an official who has only a general knowledge of the system. As an illustration, if the asset accounts have the general classification of 1 and the expense accounts have the general classification of 9, it needs only a cursory survey of voucher, or ledger posting data, to see whether an expense item has been charged to a capital account or vice versa.
The framework of the classification should be so constructed that any account, new or old, not already included in the scheme, can be inserted without disturbing the general order. If this is done, the system can never become obsolete in the sense of becoming impracticable, because changes can be inserted in their appropriate place as soon as they occur.
The different schemes or symbols which have been developed from time to time are the Dewey decimal system with its variations; the mnemonic system; and a combination of the two. The Dewey decimal system is undoubtedly the most complete and highly perfected in theory of any, and, as the name indicates, is a combination of figures and periods giving a symbol of almost unlimited expansion. The use of figures and symbols offers an infinite number of possible combinations, but the straight decimal system is in no way practical for general use, chiefly because a voluminous key is necessary even to interpret the symbol.
The mnemonic system, as its name indicates, was devised for the purpose of supplying a symbol which would be suggestive and which would indicate the object that it was intended to identify. The mnemonic symbol consists of a combination of letters and figures with the occasional use of a period or a dash. In order to classify completely any object in a large system, according to general classifications and special subdivisions, it is sometimes necessary to use five, six, or seven letters to identify one particular piece of machinery. In this case also, the use of a key becomes a necessity. The mnemonic system pure and simple is more often used for identifying machinery and tools or other stock, kept in a factory stock room. It is adapted also to the filing of correspondence.
The two advantages claimed for the mnemonic over the Dewey system are:
1. The letters of the alphabet are used and so give opportunity for a more rational classification than the ten possible groups of the decimal system.