Below the names of the parties the terms of sale are sometimes put: “Nett Cash” or “Cash in 14 days,” or “Accounts rendered monthly,” or whatever the conditions are. Then follow the particulars of the goods sold, the dates when they passed into the hands of the purchaser being put in the left hand margin.
People who have any money transactions at all, and do not wish their affairs to get into hopeless confusion, must keep books of some sort—that is to say, they must adopt a plan of writing down their transactions in regular order for easy reference.
It may be a primitive method or a very elaborate one—that depends on the nature and requirements of the business—but some system there must be, and of book-keeping in at least its general principles every business woman should make a study. By its means we gain an exact knowledge of how we stand, we see what comes in and what goes out, how much we owe and how much other people owe us, and whether we are putting any of our money into bags with holes.
There are many good books published on the subject of book-keeping, and by all means study the best treatise you can get; but better than all books is actual practice. The experience of keeping an account of one’s own transactions for a week gives more insight than all the books that have ever been written. In a book, things seem sometimes exceedingly puzzling, whilst in reality they are simple enough.
The main fact to be grasped in book-keeping is the distinction between debtor and creditor; you must get it well into your head that the person or thing represented by an account is “debtor to” what he, she, or it receives, and “creditor by” whatever he, she, or it gives or parts with.
The simpler business books are the better, so long as they answer the purpose for which they are intended. They must be clear to the person who keeps them, and clear also to any who have to consult them. The utmost care should be taken with them, so as to have no blotting, no scraping out of figures, and no tearing out of leaves.
There are two ways of keeping books, known as single entry and double entry. Single entry is called so because each item is entered only once in the accounts of the ledger, which is the principal book. In double entry, on the other hand, it is entered twice, to the debtor side of one account and to the credit of some other account.
In this way, when books on the double entry system have all the sums on the debtor side and all the sums on the creditor side added up, the total amounts in both cases are the same. That is, if the books have been rightly kept and no mistake has been made in addition, like that of the man who spent a long time trying to make them come right, and found at last he had made the slight mistake on one of the sides of adding in the figures of the current year.
The object of double entry is to establish a series of checks so that mistakes are not likely to occur, and in all establishments of any importance this is the system adopted. Books kept by the other and simpler system of single entry afford no check upon themselves. “Errors in addition,” says Mr. A. L. Lewis, “which are as easy to make in hundreds of pounds as in pence, errors and omissions in posting or in carrying forward balances, any or all of which may entail serious loss, can only be prevented in single entry books by the most careful checking and rechecking every item, and no one, however sharpsighted, can always avoid making an error, and even failing to discover it when made.”
What is called posting in book-keeping is the operation of transferring items from one book to another, and arranging them there under their proper heads. The difference between the Dr. and Cr. sides of an account is known as the balance.