Principles of Accountancy (Paperback)

This historic book may have numerous typos, missing text or index. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. 1913. Not illustrated. Excerpt: ... Tools account direct, to which account the tools ledger bears the relation of an inventory. Note.--Losses and gains arising from no ordinary operation of the business, but in the way of accident, are not to be connected with depreciation. They should be entered directly into Profit and Loss or, when desired, in a reserve account to be closed later into Pfofit and Loss. Among such causes may be mentioned theft of money, or. receipt of money by gift, also destruction of property by fires, accidents, etc. 59. Income and Expense accounts contain, as credits, the incomes earned from a certain investment of capital, and as debits, the expenses pertaining to the particular investment that yields the income. Thus, the investment in a piece of property, which we may call ' Irving Flats.' may yield a rent income, but will require expenditures for repairs, and taxes, and perhaps for advertising and commissions to an agent. (See Form 11 E.) The income would be credited, and the expenses charged, to an account of Income and Expense, Irving Flats. The balance of this account, called the net income, would be closed into Profit and Loss, at the end of the fiscal period. 59 B. Interest received is an income; interest paid is an expense. The former may be credited and the latter charged to a single Interest account, (which, when so treated, is really an income and expense account) and the balance of this account closed into Profit and Loss at the end of the fiscal period. (See Form 12 U.) It is often better to divide the general interest account into primary accounts entitled, Interest Paid and Interest Received. 60. Before closing nominal accounts into Profit and Loss, the Inventories account must be considered. (1). All resource or liability inventories, standing in the financi...