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iilGeneral Index 

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Harold Dudley Greeley, C.P.A., Editor 

Volume I — Theory of Accounts 

By Harold Dudley Greeley 

II — Constructive Accounting 
By George E. Bennett 

III — Cost Accounting 

By DeWitt Carl Eggleston 

IV — Advanced and Analytical Accounting 
By Henry C. Cox 

V — Illustrative Accounting Problems 
By Charles F, Rittenhouse and 
Harold Dudley Greeley 

Business Accounting 



Professor of Accounting, New York University 

• And 


Lecturer in Cost Accounting, New York University 




Copyright, 1920, by 
The Ronald Press Company 

All Rights Reserved 


The volumes of this set are designed for practical 
use. For the man who desires to obtain a working 
knowledge of accountancy but is compelled to pursue 
his study by himself, the five volumes constitute a 
graded course of reading. If he will begin with Vol- 
ume I and work methodically through the series, he 
will come out with a broad and trustworthy grasp of 
the principles of the subject, and an acquaintance 
with a wide variety of the points of current practice. 
The man who has already a knowledge of accounting 
will find in these volumes a compact and convenient 
presentation of the entire subject, eminently worthy 
of frequent reference. 

In using the set for reference purposes the reader 
will naturally turn first to the General Index in this 
volume. He is urged to read over carefully the sug- 
gestions on pages 135 to 138 regarding ways of 
using the index. This Reading Guide, moreover, 
briefly directing attention to outlining the high spots 
of all the volumes, will prove a useful supplement to 
the index, by enabling the reader to check his imme- 
diate recollections as to the importance and the fuU 
range of points involved in a specific problem. 

Knowledge of accountancy is virtually a necessity 
for any business man doing important work, not 
merely because of its immediate information value in 
handling business details, but as a prerequisite for 




any' reliable command of* organization and manage- 
ment. It is the only way in which one can tell what a 
business is really doing. 

Though a man may never have occasion to draw 
up a consolidated balance sheet, yet he may want to 
invest in the stock of a corporation which belongs to 
a consolidation and therefore he will need to under- 
stand its financial statements. His business may not 
be a manufacturing one and perhaps he can see little 
or no use in the study of cost accounting, j^et the 
theory of the subject is applicable to every type of 
business, and excess profits taxes and other forms of 
taxation are making the application of this theory 
more and more necessary in every mercantile con- 
cern. He may think the subject of annuities too 
complicated to worry over, but he cannot intelligently 
compare the relative merits of sinking fund or other 
methods of liquidating bonded debt without under- 
standing the principles on which annuity computa- 
tions are based. There is hardly a business day in 
which he will not find use for a knowledge of accounts. 

Another fact comes more plainly to the front as 
business takes on increasingly the intensity of pro- 
fessional work, namely: the value of the study of 
accountancy in developing mental power. The close 
analysis of business situations and problems which it 
necessitates develops to an unusual degree the sense 
of logic — the power both of analyzing facts and of 
thinking constructively. It is not too much to say 
that the business man trained to the ready use of 


accounting methods has an entirely different class of 
brain power on account of that ability. 

Professional mastery of accounting comes only 
with practice. But the accountancy attitude of mind 
can be developed to a very considerable degree 
through systematic study, even without an instructor, 
and at home. Accountancy in this respect is unlike 
the sciences which deal with physical things — medi- 
cine, engineering, chemistry — and somewhat re- 
sembles law. Many an obscure law student has 
gradually acquired, by sticking at it night after night, 
a grasp of legal principles and a familiarity with 
important rulings which greatly expedited his mas- 
tery of the technique of actual practice. The busi- 
ness man, similarly, can acquire a sound understand- 
ing of accounting principles and a wide acquaintance 
with the subject through systematic reading of the 
volumes of this set. 

The business man has this advantage besides, 
over the lonely law student : that the circumstances of 
his own business afford constant occasion to test his 
grasp of theory by applying it to the changing facts 
of life. 

A good many persons, when they take up an 
accounting book, try to do their studying in the 
wrong way, and as a result think the subject far more 
difficult than it is. Memory alone will not carry one 
far with a subject such as accounting, involving mani- 
fold detail; he must from the first put some of the 
load upon his powers of analysis and judgment. 


When one istudies any subject mechanically, trying 
merely to learn what is done, without knowing why 
it is done in this way or that, the effort soon becomes 
wearisome. Learning accounting item by item, by 
memory only, would be a difficult and indeed an end- 
less task. 

But when a student understands reasons, and 
recognizes the connection between the knowledge thus 
acquired and the improved operation of his business, 
the study of accounting becomes interesting. The 
larger and more firm the grasp of its principles, the 
more interesting and fascinating its study becomes. 
The requisite for sustaining an interest in these vol- 
umes is to try to understand. The Reading Guide, 
prepared in the light of extensive experience in teach- 
ing business men, is designed to help the reader to 
grasp the reason behind accounting procedure. 

In its preparation, the functions of a guide — 
serviceableness and unobtrusiveness — have been kept 
in mind throughout. It is to facilitate the reader's 
journey, not to offer him a quick and easy substitute 
for his own effort. Effort, active and persistent, is 
essential if he is to reach his journey's end; the sug- 
gestions in the Guide, like the comments of a skilled 
and sympathetic instructor, will aid the reader to 
apply his effort to best advantage. 

]yiastery of a subject which deals with an extended 
and complex field of knowledge can never be acquired 
quickly. The factor of time is of prime importance. 
The reader must be prepared to make haste slowly. 


Accounting practice has taken several hundred years 
to develop. Its principles, with the exception of 
occasional changes due to legal rulings, remain the 
same, but year by year its details grow in complexity 
as business grows in size. No matter what may be 
the reader's powers of concentration, the information 
in these volumes cannot be gained by sudden assault. 
It calls for a long succession of short attacks, each 
of them followed by digging in and consohdating the 
position won. Only by really assimilating what has 
been studied, lesson by lesson, can genuine advance be 

From the very first day the reader will find his 
new knowledge of value, but there is enough informa- 
tion in these volumes to occupy his attention for two 
years of quiet and steady work. 

Now the man who must do his work alone finds 
difficulty always in holding himself down to such 
gradual procedure. For one thing, it is hard for him 
to work at an even pace. At times, when the subject 
becomes especially interesting, he hurries on over 
many pages. What he reads may seem so clear at 
the moment that he fails to pause often enough, to 
test by sober reviewing how much he has actually 
grasped — so that he could use the procedure in 
further work. Or, perhaps the going is heavy, deal- 
ing with many matters that are difficult to grasp. 
Nevertheless, as he catches a glimpse of something 
further on that is interesting and appears clearly in- 
telligible, he pushes along in the hope that when he 


reaches that hill-top tbe intermediate road will clear 
itself up for him. In either case he is pretty sure 
somewhere and unexpectedly to find his progress 
blocked. Back in those pages he has skimmed are 
processes which are indispensable for any further 

On the other hand, the conscientious reader who 
works alone may apply his energy uneconomically. 
He may go too slowly at first, and waste time in 
memorizing matter which is merely preliminary to 
the points of real importance, and which requires only 
a quick, general reading. After a while he finds that 
the study pursued in this way involves more time and 
energy. than he can justifiably take from his other 
duties, and he feels compelled, however regretfully, 
to drop it. 

The Reading Guide, like the comments of a 
trained instructor, can help the reader to distribute 
his effort wisely. 

1. The reader can learn from the suggestions 
here given when to spurt and when to go slowly; 
when to read cursorily and when to get down and 
grind ; when to work for exact information and when 
for merely general comprehension of a matter; when 
to stop and digest what he has been reading, to fix 
it in mind by means of original observation and ex- 

2. In the study of an extended subject the rela- 
tionships among items apparently unconnected are 
of great significance. The parallels and cross-refer- 


ences in the Guide call the reader's attention to such 
relationships and enable him thus to build properly 
together the various divisions of the subject as the 
successive volumes develop them. 

3. One notable service of an instructor consists 
in interpreting and reinforcing the matter of the text 
as occasion requires, presenting it in various lights 
according to the varying need of the student. Some- 
thing of what the experienced instructor can do in 
this way is done by means of the Reading Guide. The 
text itself must present the subject in logical per- 
spective, and on a substantially uniform scale. The 
Guide can single out for special attention passages 
that offer to the student some special difficulty on 
first approach, and illuminate them with paraphrase 
or comment. 

4. The Guide aids the reader to break up his task 
into divisions that are roughly equivalent in extent 
and not too large, and that are grouped partly ac- 
cording to the logical lines of the subject, partly 
according to convenience of handling under the con- 
ditions. In this respect it does for him something of 
what is done for members of a class by the successive 
lesson-assignments of the teacher. 

5. Similarly, and what is perhaps most important 
of all, the Reading Guide can furnish to the individual 
working alone a method of comparing his progress 
with what is expected of other students by teachers of 
long experience. It enables him to a degree to meas- 
ure his own powers and standards of attainment 


against those of other men. He will be less prone to 
either discouragement or slackness. 

Here may be added one or two general sugges- 
tions of very practical nature. Emphasis has been 
laid upon the need of assimilating each successive 
point before proceeding further. The best way to 
insure this is to combine the study of theory with 
practical work. For the business man, it may be suffi- 
cient to carry through mentally the practical applica- 
tion of theory. For the bookkeeper, it will be neces- 
sary actually to perform the operations in question 
over and over again until both theory and practice 
are firmly fixed in mind. Suggestions as to the kind 
of practical work to be done are given in connection 
with the individual assignments of the work in each 

The test as to the thoroughness of a reader's grasp 
of the subject is simple. Can he answer readily the 
review questions at the end of each chapter? If so, 
he is ready to pass on. If not, his knowledge is hazy 
and indefinite; it will lead to mental confusion. Ex- 
perience in instructing has shown that the difficulties 
of the student are largely of his own making; they 
come from his overlooking or forgetting an important 
iiile of theory or principle. When the transaction 
turns up to which the theory applies and the need 
comes for making the correct records on the books, 
the student is nonplused. 

Therefore, if the reader finds in any instance that 
he cannot readily answer the review questions, let him 


go over the chapter to which they refer and study it 
carefully until he can answer them. 

Another suggestion is this: Make a practice of 
checking with a pencil in the margins as you read, 
those paragraphs or sections which contain important 
principles or rules of procedure and which for this 
reason should be memorized. 

It is not sufficient merely to understand a prin- 
ciple or see through a theory. There is hardly any- 
thing in Volumes I to IV of this series which cannot 
be understood at least on the second or third reading. 
But the rule or principle must be remembered defi- 
nitely, when needed, together with the method of its 
application. Unless one's knowledge is ready at 
hand, he will never be able to handle difficult or com- 
plicated transactions. If knowledge is to be of prac- 
tical value, the reader needs so to master the theory 
of accounts, so to fix the theory of the subject in mind, 
that he can recognize quickly and surely the transac- 
tions to which a particular point of theory is appli- 

A good deal of the theory of accounts is simple 
and self-evident and no one will have much difficulty 
in mastering it and memorizing it. This will usually 
be the case when the explanation is easily grasped at 
the first reading. But if anything is at all difficult to 
understand, if it requires two or three or four read- 
ings, the reader should check that paragraph in the 
margin with his pencil. He should make it a firm 
rule, before taking up a fresh assignment of work, to 


go over all the marked paragraphs and formulate ii 
his own mind their contents, taking his cue from th( 
section head or the opening sentence. 

If the reader can readily and accurately recall th( 
first of any marked paragraph, he may safely rub ou 
the pencil mark in the margin. But if he cannot, th( 
pencil mark should be left in the book — and th( 
marked paragraphs should be read again and again 
until at last their contents have been mastered. Th 
suggested procedure may sound irksome, but this, o: 
something like it, is the only condition of sure anc 
ready command of the subject. 

Having mastered the theory and faithfully 
worked through the illustrative practice material ii 
Volimies I to IV> the reader should by all means tes 
the acuteness and thoroughness of his work by sys 
tematically applying the theory which he has beer 
studying to the problems of Volume V. Some of the 
more simple of these may be taken up concurrentlj 
with the study of the theory to which they refer, ir 
Volumes I to IV, as suggested in various assign- 
ments to those volumes. The greater number, how- 
ever, are of the nature of general review and tesi 
material, designed to try the reader's ingenuity and 
resourcefulness. They are most important labora- 
tory material. 

No one should be discouraged if he cannot solve 
these problems at the first attempt. They have been 
selected not as being easy to solve — nor yet as being 
difficult — but as illustrating fairly the problems 


which actually present themselves in the course of 
business. Many of these problems have been set for 
C. P. A. examinations, which test the candidate's 
power of hard, analytical thinking as well as his prac- 
tical sense of business values. Without a knowledge 
of accounting, the business man, when such a prob- 
lem develops in his own business, can do nothing but 
blindly guess, or blindly trust the advice of some other 
person. On the other hand, the business man who has 
worked through the volumes of this series should 
possess the knowledge to enable him to face such an 
emergency with clear understanding. But the more 
diligently he has ''shaken down" his knowledge of 
theory by the practical applications in which this vol- 
ume of problems exercise him, the quicker and prob- 
ably the more sure will be his diagnosis of actual situa- 

It need hardly be said that the suggestions of this 
Guide are not offered as in any sense authoritative 
directions. Many men will strike out for themselves 
other ways of proceeding, better suiting their own 
needs. Others perhaps will find in the Guide one or 
two features only which they desire to apply to their 
own case. On the other hand, however, a large num- 
ber of readers will doubtless find it a distinct con- 
venience to have set down for them a map of the 
road, worked out to suit the ordinarily intelligent man 
and taking into account the limitations of time and 
energy imposed by a business position of average 


One last admonition. By far the most important 
factor in mastering any subject — more important even 
than acuteness of first perception, or vivid realization 
of background, or orderliness of logical development 
— ^is frequent and painstaking review. Therefore, 
after one has worked through the volumes of the set, 
making use of such aid as this Guide affords, he 
should by all means come back and read the Gvide 
again. In this swift review, if here and there a point 
is still hazy, let him turn back once more to the text 
and chnch the point. Running over the Guide now 
and then will do much to keep the whole field of ac- 
counting procedure clear in recollection. 

Reading Guide 

Volume I 
Theory of Accounts 


For the reader who desires to take up the subject 
carefully, the division of each volume of this series 
into working sections or ''tasks" of convenient size is 
most desirable. The man working alone may thus 
have some indication of the scale by which to measure 
his own rate of progress. 

To some extent the grouping into parts and chap- 
ters followed in the text facilitates such a division, 
but, as has been noted already, that grouping is de- 
termined primarily by considerations of logic. The 
fact that a certain chapter actually requires much 
more time on the part of the student than do others 
of equal length would hardly be revealed by the table 
of contents, nor yet that certain chapters are grasped 
.more easily if taken up in connection with others in 
a quick preliminary survey. Such information is 
given in the Guide. The assignments here given not 
only set up ''red arrows" at points where there is dan- 
ger of losing the way, but they indicate also the more 
convenient stopping places where the traveler may 
break his journey. 

The circumstances of the readers of these volumes 
are widely various, and no less various is the amount 
of time which each man can allow day by day for bis 
reading. The assignments must be adjusted to the 
actual convenience of the average reader. It is a fair 
assumption, however, that close and careful readuig 



of any volume of this series will occupy the man of 
average position, who has the average number of calls 
upon his time, from three to five months — hardly less, 
at any rate, than thirteen or fourteen weeks. 

Allowing for vacation time and the inevitable in- 
terruptions to which a busy man is subject, he might 
fairly expect to complete the five volumes in from a 
year and a half to two years. For each of the first 
four volumes, accordingly, from twelve to fourteen 
assignments have been drawn up, each assignment — 
with the practice work or problems connected with it 
— calculated to require about a week's work. For 
the problems in Volume V such grouping into defi- 
nite assignments is hardly possible, but the volume 
would require, if the reader works carefully, at least 
as much time as any of the others. 

Each assignment, therefore, may be taken as rep- 
resenting on the average a week's work. Many men 
may find it convenient to work faster, but in plan- 
ning the whole series of assignments it seemed best to 
set a pace such as a man actively engaged in business 
might fairly hope to maintain. 

Assignment 1 

The three chapters with which this book opens 
contain information of a general character, a knowl- 


edge of which must precede the study of accounting 
in general and the theory of double entry in par- 

Modern Accountancy (Chapter I) 

The matter in this chapter is introductory and requires 
merely careful reading. 

Preliminary Information (Chapter II) 

To the business man or the bookkeeper employed by a busi- 
ness house, the contents of this chapter will seem elementary. 
If you know the definitions, that is, if there is no doubt in your 
mind as to the meaning of the terms used, you can pass to the 
next chapter after a careful reading. If the study of account- 
ing is a wholly new subject, master the definitions and pay par- 
ticular attention to §§9 and 10. 

Capital (Chapter III) 

The same observations apply to this chapter as to Chapter 
II. Sections 8 and 9 should be studied closely and reread sev- 
eral times. If you can give the definitions accurately in answer 
to the review questions, you may assume a knowledge of the 
contents of this and the preceding chapter. But if you cannot 
define them readily and accurately, study them until you can. 

Assignment 2 

The three chapters in this division of work cover 
the theory on which the principle of double entry is 


based. Here the emphasis begins to be placed on 
practice work as shown by the exercises and prob- 
lems in the text and at the end of each chapter. 

Double-Entry Bookkeeping (Chapter IV) 

Full command of the theory of double-entry bookkeeping 
comes witli continued study and practice work. Here the sub- 
ject is presented only in its simpler aspects. The transactions 
discussed are the more simple ones, the debiting and crediting 
of wliich do not present any difficulty when the general theory 
is grasped. Do not fail to do the practical work called for in 
Review Questions 2, 6, and 7. 

Determination of Capital (Chapter V) 

The discussion in §§ 1 to 3 is fairly simple; in §§4, 5, and 6 
it is more difficult to grasp. These three sections are particularly 
important. The points they present need to be closely studied 
and memorized. Work out answers to the review questions and 
compare with tlie text. Rewrite when necessary. 

As noted in the introduction to this book, there is nothing 
inherently difficult in the study of accounting. Doubts, per- 
plexities, and difficulties arise only where the theory of the sub- 
ject has not been understood or has been inadequately mastered. 
Concerning few other subjects is a "smattering'* of information 
more dangerous and in the study of few other subjects does 
thoroughness pay larger dividends than in the study of account- 
ancy. The student of bookkeeping is sometimes puzzled as to 
why an expense account should be debited, in view of the fact 
that an expense is the reverse of an asset and represents either 
cash paid or to be paid at some future date. It is precisely 
because the asset cash must be credited when payment is made 
that an expense account must be debited. If the payment were 
made to a creditor of the business, that creditor would be 



debited. If the payment is made for expenses, such as salaries, 
postage, gas, office supplies, and so on, these impersonal accounts 
must be debited to show for what purpose the money has been 
spent, that is, for what purpose the asset cash has been with- 
drawn from the business. An expense account, therefore, has a 
debit balance. 

An income account, such as Sales, must always have a credit 
balance for a similar reason. When a sale is made, cash is re- 
ceived or the vendee's promise to pay cash to us at a future date 
is accepted in lieu of cash. If the sale is on credit, the cus- 
tomer's account is debited and Sales account is credited as below: 


J. Smith 



Jan. 5 Sales 





Jan. 5. J. Smith 


When the customer pays us and his indebtedness disappears. 
Cash account is debited and J. Smith's account is credited. 
Thus, when the sale is finally paid for, J. Smith's account bal- 
ances, and two entries remain — a credit in Sales account as 
above and the off-setting debit in Cash account. 

The principle of double entry or the reason why two entries 
are made for each transaction is usually a difficult matter for 
the beginner to understand. It is helpful to compare double- 
entry bookkeeping with a balance scale the two sides of which 
must be kept in balance at all times. 

Let us assume for the purpose of illustration that O. Bliss 
begins business with assets amounting to $10,000, consisting of 
$8,000 in cash and $2,000 in merchandise; that his liabilities, 
i.e., debts, amount to $2,000 due A. Brown on open account for 
merchandise purchased; and that his capital amounts to $8,000. 



The elements, expressed in the form of an equation, are as 
follows : 

Assets equals Liabilities plus Capital 

$10,000 = $2,000 + $8,000 

and the debits on the left equal the credits on the right. 

Expressed in account form, we have: 

Cash A. Brown 

$8,000.00 I $2,000.00 

Merchandise O. Bliss, Capital 

$2,000.00 I $8,000.00 

Note that the debits are equal in amount to the credits. 

As a result of business transactions the amounts of these 
three elements, viz., assets, liabilities, and capital, are con- 
stantly changing. The assets either increase or decrease, and the 
liabilities and capital likewise either increase or decrease. These 
changes should be recorded in the accounts by means of entries 
made in accordance with the rules for journalizing given on 
page 176 of Volume I. The reader should have these rules 
before him when studying the following paragraphs. 

Let us now assume that we purchase $1,000 worth of mer- 
chandise for cash. The twofold effect of this transaction, ex- 
pressed in account form, is as follows; 

Merchandise Cash 

$1,000.00 I $1,000.00 

Merchandise must be debited with $1,000 because the asset 
merchandise is increased by that amount. Cash must be credited 
with $1,000 because the asset cash is decreased by that amount. 


By debiting Merchandise we are recording an increase in assets; 
by crediting Cash we are recording a decrease in assets. 

Let us further assume that we purchase $2,000 worth of 
merchandise from H. Jenkins on account. This requires the 
following entry: 

Merchandise H. Jenkins 

^,000.00 I $2,000.00 

Merchandise must be debited with $2,000 because the asset 
merchandise is increased by that amount. H. Jenkins must be 
credited with $2,000, because we have incurred a liability to that 
extent. By debiting Merchandise we are recording an increase 
in assets; by crediting H. Jenkins we are recording an increase 
in liabilities. 

If we pay H. Jenkins $1,000 on account, the twofold eflfect, 
expressed in account form, is as follows: 

H. Jenkins Cash 

(1)... $1,000.00 I Bal... $2,000.00 I (1). . .$1,000.00 

Note that the numbers in parentheses in the above illustration 
indicate the double-entry made. The account of H. Jenkins 
must be debited to record the decrease in liabilities, and Cash 
account must be credited to record the decrease in the asset 

If we pay $10 for telephone services we have incurred an 
expense, and, since all expenses are borne by the proprietor, it 
follows that his account must be debited. The twofold effect 
of this transaction may be expressed in account form as follow a: 

O. Bliss, Capital Cash 

$10.00 I I >io-«> 



As a result of paying $10 for services received by the business, 
the capital invested by the proprietor has been decreased. This 
decrease in capital is recorded by debiting the proprietor's 
account and, since the payment of $10 has decreased the amount 
of the asset cash, it follows that the Cash account must be 

As explained in the text on page 59, expenses and income of 
a business, instead of being charged and credited directly to the 
Capital account, are more conveniently recorded in temporary 
accounts known as expense and income accounts. Thus, in 
recording the foregoing transactions in practice, the twofold 
effect expressed in account form would be as follows: 

Expense Cash 

$10.00 I $10.00 

The Expense account must be debited to record the temporary 
decrease in capital, and the Cash account must be credited to 
record the decrease in the asset cash. 

For the purpose of illustrating an item of income, let us 
assume that the ba::k allows us $20 interest on our bank bal- 
ance. The twofold effect of this transaction, expressed in terms 
of assets, liabilities, and capital, is an increase in the asset cash 
of $20 and a corresponding increase in capital of $20. As 
explained, the expenses and the income in practice are not 
debited and credited directly to the Capital account, but instead 
are debited and credited to temporary accounts known as ex- 
pense and income accounts. Therefore, the twofold effect of the 
foregoing transaction expressed in account form, as it would be 
recorded in practice, is as follows: 

Cash Interest Earned 

$20.00 I I $20.00 


We have now illustrated transactions which result in an in- 
crease and decrease in each of the three elements, viz., assets, 
liabilities, and capital. 

The Merchandise account is not a pure asset account as the 
reader may have been led to believe from the foregoing illus- 
trations and explanations. The treatment of this account is fully 
explained, however, on pages 80 and 81 of the text. The ulti- 
mate disposition of the temporary accounts, i.e., the expense and 
income accounts, is explained in the text on page 52. 

Classification of Ledger Accounts (Chapter VI) 

Though belonging to Part II, this chapter is included in this 
assignment of work because it rounds out the theory of debit 
and credit. Its contents require careful study. Section 7 should 
be read and reread until the principle involved in classification 
is thoroughly impressed on the mind. When once the purpose 
of the asset, liability, and proprietorship or capital accounts 
which appear on the balance sheet, as well as of the expense and 
income accounts which appear on the profit and loss statement, is 
clearly grasped, you will have no further difficulty in solving 
the problems of "when to debit" and **when to credit." 

From the student's point of view, the correct classification of 
business transactions under appropriate account titles is the first 
step in determining the correct debit and credit. From the book- 
keeper's point of view, the classification of accounts is necessary 
as a means of reducing the risk of error in posting to the ledger. 
From the aspect of management and financial control, the classi- 
fication aids in the preparation of financial statements and in- 
sures correctness of the groupings of accounts shown tliereon. 

In the study of this chapter the student is advised to look 
up the chapters referred to in the text and read the matter 
therein given which bears upon the particular point in Chapter 
VI. The bookkeeping in connection with recording of deferred 
and accrued items always presents a difficulty to the beginner. 
For further information see Volume IV, Chapters H and III. 


Assignment 3 

MucK the most responsible and intricate work of 
the accountant is that of closing the books prepara- 
tory to ascertaining the profit or loss made during a 
period, and the financial condition at the end of the 
period. The theory of the subject is covered in the 
two following chapters in broad outline, leaving for 
detailed discussion in Volume IV the difficulties and 
problems which arise when the attempt is made to 
determine profits. 

The Trial Balance (Chapter VII) 

No accounting theory is involved in the discussion in this 
chapter. The taking of a trial balance is a convenient method 
of saving clerical labor. It should, of course, be possible to 
insure the accuracy of the postings and account totals by 
checking and rechecking the figures, until positive assurance was 
obtained that the entries were correct as to both mathematical 
calculations and position; but to do this would entail more labor 
than to take a periodical trial balance. Assuming that post- 
ings and additions are carefully made, a trial balance agrees in 
nine cases out of ten. Methods of locating errors, when the two 
totals fail to agree, are discussed in Volume IV, Chapter XXXI. 
That chapter may well be read in connection with the present 

Determination of Profit or Loss (Chapter VIII) 

In this chapter is described the method of determining profit 
and loss under simple business conditions. When you thoroughly 
grasp the principles in this chapter, and have worked out the 
problems in Volume V which will serve to impress the theory 


on your mind, you will be beginning to acquire a mastery of the 
theory of accounts. 

After carefully studying the contents of this chapter, it is 
suggested that the student read the first three chapters in Vol- 
ume IV. With the knowledge already acquired, there is little 
or nothing that the reader cannot readily grasp in the opening 
chapters of the more advanced book, and this peep into the 
future will give a better grasp of the problem of closing the 
books for the purpose of determining the profit or loss for the 
period — the most important task that a bookkeeper can be called 
upon to perform. 

The last section in this chapter explains an exceedingly im- 
portant accounting principle, viz., that the profit or loss for the 
period, as shown in the profit and loss statement, must be ac- 
counted for by the difference between the capital at the beginning 
and at the end of the period, taking into consideration any draw- 
ings or further contributions of capital. A test of the thorough- 
ness of the student's work on the preceding chapters will be his 
ability to grasp why this is so. 

Be sure to work out the problems in the review questions and 
study the theory persistently until all points that at first are not 
quite clear, become clear and are firmly fixed in mind. 

Assignment 4 

The information in Chapters IX, X, and XI 
covers the technique or procedure in preparing state- 
ments. Further information relating to the closing 
entries will be found in Volume IV, Part I. The dis- 
cussion in the above chapters is hmited to broad prin- 


ciples which should be thoroughly mastered before 
important details are taken up later. 

Statement of Trading and Profit and Loss (Chapter IX) 
As an aid in acquiring correct technique, it is suggested that 
after studying the corrected statement on page 101, the student 
should attempt to draw up the statement in proper form from 
the data given in the trial balance on page 90. The practice 
work should be repeated until the procedure is fixed in mind. 
Sections 8, 9, and 10 contain explanations of accounting 
theory which it is important to understand so clearly that no 
doubt arises as to the method of applying this theory. There- 
fore, be persistent in the practice work suggested above. The 
repetition of this work three or four times at this stage will 
smooth away difficulties which otherwise would be sure to crop 
up later. In connection with the study of this chapter, a brief 
study may be made of the contents of Chapters XXII and 
XXIV, Volume IV, in which more advanced forms of state- 
ments are presented. 

Statement of Cash Receipts and Payments (Chapter X) 

The limitations of this type of statement should be carefully 
noted. In a small business the cash statement might furnish 
the kind of information most frequently required by the pro- 
prietor. Where the proprietor is in close contact with oper- 
ations and always **on the job,*' he may have a very shrewd idea 
of the value of his stock-in-trade at all times and require an 
inventory to be taken only at long intervals for purposes of 
verification. Under such conditions a periodical cash state- 
ment may meet all requirements between the times when the 
profit and loss statement is drawn up. 

The Balance Sheet (Chapter XI) 

To acquire the art of drawing up a statement, correct as to 
form aiid clearness of presentation, there is only one way — 



practice and yet more practice. Rules such as those given in 
§§3 and 4 of this chapter are useful as a guide but they can- 
not be remembered unless they are repeatedly utilized in prac- 
tice. Before taking up the practice work in Volume V which 
relates to this chapter, the student should draw up the corrected 
form of balance sheet given on page 126, taking the data from 
the incorrect form shown on pages 121 and 122. 

In connection with thic chapter and supplementary to the 
information contained therein, it is well for the reader to turn 
to Volume IV, Chapters XXI and XXIV, where more elaborate 
forms of balance sheet statements are presented. 

Assignment 5 

The contents of the two following chapters belong 
rather to the sphere of advanced accounting than to 
an elementary discussion of the subject. They are 
included in this volume for the sake of completeness 
thus furnishing the student with examples of all the 
financial statements that may be drawn up to show 
financial condition. 

Statement of Affairs — Realization and Liquidation State- 
ment (Chapters XII, XIII) 
These two chapters cover the procedure for the winding 
up of an insolvent business or the reorganization of an insolvent 
concern that requires more working capital. The work in this 
connection is of such a character that only the accountant of 
broad experience would be competent to handle it. If the aim 
of the student is to acquire a rapid working knowledge of book- 
keeping, he may with advantage limit his study of these chap- 
ters to a careful reading. 


To acquire a comprehensive knowledge of accounting prac- 
tice, the student must, of course, be able to prepare every kind of 
financial statement. If he submits himself to a state examina- 
tion for the purpose of testing his accounting knowledge, the 
examination paper is likely to contain one or more problems 
covering the procedure of liquidation or reorganization. There- 
fore, the ambitious student must sooner or later understand the 
procedure and principles covered in these two chapters. How- 
ever, more rapid progress will be made in essentials if attention 
is first concentrated on simpler or more elementary matters. 

In reading Chapter XII, it is suggested that the student 
assume he has been asked by a committee of unsecured creditors 
of the Jenkins Company (see page 137), a concern about to dis- 
solve, to prepare a statement that will show as nearly as possible 
the percentage of claim that each creditor may expect to receive, 
and also a statement that will show the loss to be borne by the 
unsecured creditors on forced dissolution of the business. Let 
it also be assumed that these statements are to be the basis for 
a decision, on the part of the creditors, whether or not they will 
vote for the dissolution of the business of the Jenkins Company. 

This is an example of the usual situation which gives rise 
to the preparation of a statement of affairs and a deficiency ac- 
count. The text not only illustrates and explains the technique 
of preparing these statements but also discussesT the legal phases 
that must be considered. The legal phases involved in the prepa- 
ration of a statement of affairs as well as the form of this state- 
ment should be studied carefully. 

Assignment 6 


In this assignment are considered the various 
kinds of statements which the bookkeeper who is 


capable of summarizing results might be called upon 
to prepare at regular intervals. In a large organiza- 
tion the head accountant would ordinarily prepare 
the balance sheet and profit and loss statement, call- 
ing upon the bookkeepers to prepare the necessary ex- 
hibits, schedules, or statements required to support 
the major statements. The bookkeeper in charge of 
the customers ledger would, for instance, prepare the 
schedule of accounts receivable; the clerk in charge 
of the sales journal would prepare the analytical in- 
formation relating to sales, and so on. 

The Use of Supporting Schedules (Chapter XIV) 

The preparation of statements involves a certain amount of 
statistical work^ and statistics, rightly used, are the basis of all 
intelligent business direction. Therefore, the compilation of 
these statistics affords the bookkeeeper a field in which he can 
reveal enterprise and judgment. In almost every business the 
accounting department from time to time is asked for informa- 
tion which can be had from the books only at the cost of much 
time and clerical labor. Had the same information been com- 
piled concurrently with the daily routine, in many cases only a 
fraction of the labor' expended would have been necessary. 

As a general rule it may be said that statistical information 
is of value only when the figures are presented in & comparative 
form, and are compiled to indicate the trend or tendency of 
business activities over a sufficiently long period of time. Such 
data is always of interest and may often be of great value to 
the management. Practically every concern which suddenly 
finds itself in financial difficulty -without having realized the 
direction in which it was drifting may be said to have neglected 
the information buried within its books. Or, if this information 
has been presented to the management in proper statement fonn, 


the significance of the data must have been wilfully ignored or 
not properly understood. No competent accountant will ever 
fail to furnish the management with the full statistical informa- 
tion required to show not only the financial condition and the 
profit or loss, but also the source of the profit or the cause of 
the loss and the reasons for changes in financial condition. To 
analyze such causes and to show tendencies is the final goal of 
all accounting viewed from the administration aspect. 

In the study of the chapter under review, particular atten- 
tion is called to § 3, in which a clear distinction is drawn to the 
different kinds of statements and the terminology that should be 
applied in each case. 

Assignment 7 

The five chapters included under this title discuss 
the theory and practice underlying the use of the 
journal in its simplest form. The book known as the 
^'journaF' was at one time the only book of original 
entry used. In it were entered all the business transac- 
tions, i.e., sales, purchases, cash receipts and pay- 
ments, as well as notes received and given, classified 
as to accounts and amounts to be debited or credited 
in the ledger. (See illustrations on page 171 in the 
text.) But when business began to be conducted on 
a large scale and transactions became more numerous 
and involved, thus making it impossible for one man 
to record all the transactions, it was found necessary 
to introduce special journals, such as the cash journal 


illustrated in simple form on page 191, and in a more 
developed form on pages 216 and 217. The purchase 
journal is illustrated in simple form on page 200, 
and in developed form on pages 234 and 235. The 
sales journal is likewise illustrated in simple form on 
page 208, and in developed form on pages 250 and 

The introduction o:^ special journals such as the 
cash journal, purchase journal, and sales journal 
made it possible to distribute the work of recording 
transactions. Thus, while one man was engaged in 
recording purchases in the purchase journal, another 
could be engaged in recording cash receipts or pay- 
ments in the cash journal. 

Furthermore, with the introduction of special 
journals the amount of mechanical labor formerly 
necessary in posting was greatly reduced. For ex- 
ample, when a separate book is kept for cash receipts 
and payments, the individual receipts and payments 
are no longer posted to the Cash account in the ledger 
as was done when only the journal was used. In- 
stead, at the end of each month, but one posting is 
made to the debit side of the Cash account in the 
ledger of the total cash received, and one posting to 
the credit side for the total cash paid. The same 
treatment holds true of postings made from other 
special journals, such as the purchase journal and 
the sales journal. 

These advantages of the use of special journals 
should be kept in mind in reading the sections on the 


technique of posting from special journals, as ex- 
plained in the chapters of Part III and in subsequent 
chapters in the text. 

The Journal (Chapter XV) 

In this chapter the theory of journalizing is discussed with- 
out regard to its practical business application to cash, purchase, 
or sales transactions. Bookkeeping begins with the journaliza- 
tion of every transaction, as illustrated on page 171. When a 
transaction is correctly journalized, the proper debit and credit 
postings present no difficulty. As practice work in this chapter, 
the student should read the transactions listed in § 2 and mentally 
journalize them as shown in § 4. When the mental work can be 
done rapidly and correctly, he will begin to get a grip on the 
theory of the subject. 

Illustrative Problems (Chapter XVI) 

The method of opening the books, as illustrated in §§ 1 
and 2, should not merely be studied but should be worked out 
as shown in the text. The transactions itemized in § 3 should 
be mentally journalized and compared with the solutions given 
on page 185. This mental work, when practicable, should 
always be repeated until the faculty is acquired of solving the 
problems without any hesitancy or doubt as to the correctness 
of the solutions. This sureness of touch is, of course, the aim 
and end of all practice work and is the characteristic that dis- 
tinguishes the man who knows from practical experience, from 
the man who has acquired a merely halting and therefore inade- 
quate theoretical knowledge. 

Sections 4, 5, and 6 contain important information as to 
accounting procedure which it is necessary to memorize. The 
theory which governs the recording of purchases and sales, and 
receipts and payments, is covered by the principles of double 
entry. Returns and allowances constitute transactions which 


Will puzzle the student who is new to the subject unless the 
information in § 6 is grasped. 

The practice work in the review questions should be care- 
fully done. 

The Cash Book (Chapter XVII) 

Only the general theory of the keeping of the cash book, 
with a description of the most essential procedure, is taken up 
in this chapter. In active procedure the form of the cash book, 
that is, the number of its columns and the purposes they serve, 
is determined by the use of controlling accounts. It is suggested 
that the student, after reading this chapter, give a cursory read- 
ing to Chapter XXIV which explains controlling accounts. By 
this means the relation of the one to the other will be more 
clearly seen. 

It should be borne in mind that the forms of books of orig- 
inal entry vary to meet individual needs and tastes, so that two 
cash journals that have exactly the same form are seldom found. 
The same holds true of all other books of original entry, with 
possibly one exception — the notes receivable and notes payable 
book. Most concerns use a standard book, although in many 
instances a special form is used. 

Purchase Records (Chapter XVIII) 

The same observation applies to the discussion of the pur- 
chase and sales journals as applies to the discussion of the cash 
book, viz., that the use of controlling accounts and subordinary 
ledgers determines the form and ruling of these journals. Here 
only the simple theory of their operations is taken up so far as 
this theory covers the relation of tlie journals to the ledger. A 
business buying or selling only one kind of merchandise would 
require only the simple forms of journals herein described. But 
such businesses are rare. In most cases it is desirable to dis- 
tinguish among different kinds of purchases and sales, and thi* 
requires a more complicated ruling of the journals. 


If the student thoroughly understands the operation of a 
simple cash book which represents the two sides of an account, 
no difficulty will be experienced in grasping the theory of the 
sales and purchase journals each of which represents only one 
side of an account. The cash book records both the inflow and 
outgo of cash. The purchase journal records the inflow of 
merchandise, and the sales journal the outgo of merchandise. 

In the study of Chapter XVIII, particular attention needs 
to be devoted to §§6, 7, and 8. The procedure here described is 
that of a business which buys merchandise for resale. Practice 
varies in different lines of business, and the accounts that may 
be opened on the books of one concern to determine the gross 
profit may differ from those of another. But in all cases the 
principle is the same. There are several methods of determining 
the gross profit, and the student must familiarize himself with 
them all. For the present it will be sufficient to grasp thor- 
oughly the procedure most commonly used. 

Sales Records (Chapter XIX) 

The information in this chapter corresponds in many ways 
to that given in the preceding chapter — with the difference, of 
course, that sales are credited whereas purchases are debited. 
Note in particular the information in § 6. The method of deter- 
mining the turnover of a concern's stock-in-trade is one of those 
elementary problems which every bookkeeper ought to be able to 
figure rapidly. Unless he has occasion to make the calcula- 
tion frequently, he is often at a loss how to do it. 

Assignment 8 

The four following chapters carry the discus- 
sion of the journal and its rulings a stage further. 


The more complicated forms of journals are taken 
up in Volume II. For an adequate understanding of 
the complex forms a thorough grounding is required 
in the theory of the simple journals and the oper- 
ation of the voucher system and controlling accounts. 

Miscellaneous Cash Matters (Chapter XX) 

Particular attention needs to be given to the illustrative 
form and entries on pages 216 and 217, and the comment on 
the nature of those entries. Much of the discussion in this chap- 
ter covers commercial usage and business practice with which 
the student must familiarize himself from beginning to end; 
otherwise he will often be at a loss in recording the kind of 
transactions to which the discussion refers. Note, for instance, 
the method of handling exchange as explained at the end of 
§ 2, and the method of handling exchanged checks as explained 
in §3. 

Sections 4 to 9 contain general information with which every 
cashier must be familiar if his cash book is to be properly kept. 

Section 11 takes up a matter which under complicated busi- 
ness conditions where transactions are numerous may present 
difficulties only second to those of taking a trial balance. 

Work out the method of reconcilement as shown in § 12, and 
when you feel certain that you have mastered the method, test 
your knowledge by trying to solve Problems 1 and 2 in Volume 
V without consulting the solution to these problems. 

After studying §§15 and 16, turn to Problems 1 to 3 in 
Volume V and try to solve them. Such practice work as this is 
a thorough test of your knowledge of the correct method of 
handling these cash details. 

Miscellaneous Purchase Matters (Chapter XXI) 

In studying the contents of this chapter pay particular 
attention to the relationship between the journal entry on page 


237 and the totals of the purchase journal on pages 234 and 
235. Note the difference between an expenditure which is 
passed through the purchase journal^ and an expenditure the 
payment of which is immediately credited to cash — such as the 
expenditures for insurance, rent, and other impersonal items 
shown on page 217. The review questions in Chapters XX and 
XXI contain much valuable practice work, which should be com- 
pleted, before proceeding further. 

The Voucher System (Chapter XXII) 

The theory of this chapter is contained in § 2, and the 
explanation of the theory is illustrated in the form on pages 
244 and 245. The student should carefully compare the voucher 
form with the purchase journal form and note the distinction 
between the two. Supplementary to the information given in 
§ 7, it may be explained that the voucher record is commonly 
employed by manufacturing concerns which either pay for their 
purchases promptly or which, because of the diversity of the 
sources of supply, prefer the voucher record system as a means 
of saving clerical labor. The large number of accounts that 
would have to be opened if the purchase ledger were used are 
thus eliminated. Further instructions of the voucher system are 
explained in Volume II of the Reading Guide. For the present 
the discussion in the chapter under review covers all the stu- 
dent's requirements. Problem 4 in Volume V will test your 
knowledge of the theory of the voucher system. 

Miscellaneous Sales Matters (Chapter XXIIJ) 

In many respects the information in this chapter corresponds 
with the information relating to purchases in Chapter XXI. 
The contents of the two chapters should be compared for the 
purpose of noting the points of similarity and divergence. The 
practice work required by the review questions should not be 


Assignment 9 


The operation of controlling accounts, like the 
principles of debit and credit, is one of those pivotal 
accounting points on which the student must concen- 
trate until complete mastery is obtained. 

Controlling Accounts (Chapter XXIV) 

In the study of the chapter under review, it is suggested 
that the theory of the matter be carefully read (§§ 1 to 7), after 
which the cash book on pages 288 and 289 be studied in the 
light of the explanation given in § 8. To impress the theory on 
the mind, the student should reproduce the cash book rulings 
from memory several times — as illustrated on pages 288 and 
289. The illustrative transactions on pages 285 and 286 should 
be entered in their proper columns without reference to the ex- 
ample, and the total figures arrived at in this way should be 
compared with the totals of the example to check the accuracy 
of the work. 

After the theory and practice in Chapter XXIV are thor- 
oughly mastered, it is advisable to study Chapters XVII and 
XVIII in Volume II, where more elaborate rulings of the cash 
book are shown. It will be found that the operation of con- 
trolling account cannot be mastered in one or two attempts, inas- 
much as, however clear the matter may seem for the time being, 
when the attempt is made to post the controlling totals to the 
ledger, the mind tends to become confused as to what to debit 
and what to credit. Practice, and practice alone can overcome 
the perplexities of the subject. 

One point that sometimes perplexes the beginner, when he 
first approaches controlling accounts and subsidiary ledgers, is 
the fact that each transaction seems to require three entries — 
two in the general ledger and one in the subsidiary ledger. It 


should be remembered, however, that the subsidiary ledger is 
merely the detail of the controlling account in the general ledger ; 
from one point of view the subsidiary ledger may be said to be 
used only for the purpose of recording important memoranda 
and is not an integral part of the bookkeeping records. The 
general ledger contains all information about the transactions of 
a business; a controlling account gives this information in con- 
densed form. So long, therefore, as the sum of the general 
ledger debit postings equals the sum of the credit postings 
therein, the books remain in balance regardless of the fact that 
there may be a number of subsidiary ledgers the entries to which 
are mostly debits or mostly credits. 

It may here be noted that in cost accounting controlling 
accounts and subsidiary ledgers are frequently used. Without 
this device it would be impossible to tie up the general ledger 
with the cost ledgers and records kept in the factory. For 
example, an account headed Stores, or several accounts headed 
with the names of the raw materials purchased, might be opened 
in the ledger and corresponding columns allotted thereto in the 
purchase journal or voucher record. The detail of the pur- 
chases is shown in the stores ledger kept in the factory, while 
only the totals of the purchases of stores or raw materials are 
shown in the general ledger, such totals being posted to the gen- 
eral ledger from the purchasing journal or voucher record at 
the close of each cost period. 

Review Question 5 is intended to test your knowledge of 
the theory of controlling accounts. 

Assignment 10 


The four chapters in this division of work furnish 
much general information about the nature of dis- 


counts and notes and discuss the method of their 
accounting. The recording of discounts and note 
transactions on the books is part of the bookkeeping 
procedure which is confusing to beginners until prac- 
tice smooths away the difficulties. 

Trade Discount and Cash Discount (Chapter XXV) 

Sections 1 to 10 of this chapter cover ordinary business 
practice, a knowledge of which the bookkeeper requires but 
which knowledge has no bearing on accounting theory. The 
explanation of the method of recording discounts on the books 
begins at § 11. From here on, the reader should study the text 
in the light of the illustration given on pages 288 and 289. 

Attention needs to be directed to the study of the illustrative 
transactions on pages 285 and 286. First practice their jour- 
nalization mentally until their entry in the cash book can be 
readily visualized. After this mental work the cash book rulings 
should be drawn from memory (as previously suggested), and 
entries in the cash book should be made, using the illustrative 
transactions as a basis. In studying the list of transactions on 
pages 285 and 286, the journalization of the items under the 
dates of September 3, 15, and 30, which items are note trans- 
actions, will be more clearly understood after the explanatory 
matter dealing with such notes has been covered in the following 

Problems 6 and 7 in Volume V furnish valuable practice 
work covering the information given in this chapter. 

Illustrative Cash Book Entries (Chapter XXVI) 

The practice work in this chapter will already have been 
covered. To acquire the requisite facility, however, in journaliz- 
ing transactions, the exercise may with advantage be repeated 
several times. 


Notes and Trade Acceptances (Chapter XXVII) 

Sections 1 to 8 of this chapter comprise preliminary in- 
formation, a knowledge of which is required for the correct 
recording of notes receivable and payable. The debiting and 
crediting of these items often appears complicated and much 
practice is needed before you will acquire the proper facility. 
The procedure in § § 9 and 1 1 should be carefully impressed on 
the mind, and the necessary practice may be obtained by men- 
tally journalizing the transactions given in Chapter XXVIII, 
page 307. 

Note Transactions Journalized (Chapter XXVIII) 

This chapter affords further practice in the use of control- 
ling accounts. After studying the columnar journal shown on 
page 309, try to reproduce the ruling and headings from memory 
until an accurate reproduction can be made. The illustrative 
entries on page 307 should then be entered in the skeleton form, 
and the totals compared with those given on page 309 as a check 
on the accuracy of the work. Without such practice as this 
it is impossible to master the theory of controlling accounts or 
acquire facility and accuracy in the recording of note trans- 

Assignment 11 


This assignment of work covers the isolated sub- 
ject of depreciation and a final chapter on the jour- 
nals illustrative of posting problems. 

Depreciation (Chapter XXIX) 

The discussion of depreciation in this chapter covers the 
knowledge required to handle the problem of depreciating or 


writing off the value of the plant and machinery belonging to a 
small manufacturing concern. Moreover, in every business, 
whether manufacturing or mercantile, provision must be made 
for bad debts, and the method of depreciating the accounts re- 
ceivable described in § 11 is one with which every bookkeeper 
is required to be familiar. 

A more detailed discussion of the accounting requirements 
for the handling of depreciation in a large manufacturing con- 
cern will be found in Volumes III and IV. For the present the 
student is concerned merely with the general principles of the 
subject given in this chapter. 

Problems 8 to 10 in Volume V furnish practice work in 
accounting for depreciation, and Problems 11 and 12 similar 
work in handling losses from bad debts. 

The Use of Subsidiary Books (Chapter XXX) 

This chapter is important and demands your concentrated 
attention. It is especially designed to test the thoroughness of 
the knowledge you have so far acquired. Suggestions as to 
the method of its study are given in the opening section. It is 
necessary, therefore, only to emphasize the value of the practice 
work afforded by this chapter as a test for any weak spots in 
theory and practice. If any are found, the preceding informa- 
tion should be reviewed until both theory and practice are so 
firmly fixed in mind that the transactions given on page 329 
can be posted and a trial balance drawn up without any mental 
hesitancy and with absolute accuracy. 

Attention is again drawn to the importance of following the 
precise form of the journal entries illustrated on pages 330 to 

After completing the practice work in this chapter, turn to 
Problem 13 in Volume V and try to solve it. The requirements 
of this problem will test the thoroughness of your knowledge of 
the theory of journalizing. 


Assignment 12 

In the three following chapters only those essen- 
tial points of difference are discussed which arise in 
the recording of partnership and corporation trans- 

Partnership Accounting (Chapters XXXI and XXXII) 

The method of opening the partnership books, as described 
in the opening sections of Chapter XXXI, involves no new ac- 
counting theory. In § 4 an illustration is given of an accounting 
problem which is of frequent occurrence. Such difficulties crop 
up to confront every bookkeeper, and a thorough mastery of 
accounting theory is required to handle them. The routine book- 
keeper is usually at a loss as to the correct procedure. But any- 
one who has a clear understanding of the theory of the subject 
as well as ordinary facility in practice will have no difficulty in 
working out the correct solution. 

Sections 7 to 1 1 need to be studied with unusual care because 
their theory is difficult to impress upon the memory. Most of 
the problems which are peculiar to partnership accounting have 
to do with the division of the partnership profits, and careful 
attention should be given to the principles on which this division 
is based. 

The problems which arise on the dissolution of a partnership 
are often perplexing. Considerable practice is necessary to 
acquire the knowledge and experience required to cope with these 
difficulties. The student will find such practice in working out 
Problems 14 to 22 in Volume V^ devoted to partnership trans- 

Corporation Accounting (Chapter XXXIII) 

The chief point of this chapter is to show wherein the 
accounting for a corporation differs from that for a partnership 


or sole proprietorship. The theory of tlie subject is covered in 
§§ 6 and 7 to which careful study should be devoted. In Volume 
IV the more complicated phases of corporation accounting arc 
discussed in detail. 

Problems 23 to 25 iti Volume V furnish practice work in 
handling entries relating to corporation accounts. 

Assignment 13 

The fundamental characteristics of the single- 
entry system of bookkeeping are taken up in the two 
chapters of this assignment. 

Single-Entry Bookkeeping (Chapters XXXIV and XXXV) 
The single-entry method is still commonly employed in the 
one-man business where the volume of transactions is insufficient 
to occupy the full time of a competent bookkeeper. As such a 
business grows^ the accountant is frequently called in to trans- 
form the single-entry method into a double-entry system. This 
phase of the work^ which is covered in the problems in Volume 
V, is one which every accountant should carefully study, and 
to handle it a knowledge of the theory of single entry is required 
— as given in these two chapters. 

Assignment 14 

These two chapters are really a resume of the 
theory of account keeping and are useful for the pur- 


pose of checking up the knowledge already acquired. 
They also serve the equally useful purpose of refer- 
ence when working out the problems in Volume V 
which relate to Volume I. 

Analysis of Debit and Credit Accounts (Chapters XXXVI 
If in the study of these two chapters the student finds that 
his knowledge on certain points is hazy, or that the operation of 
a particular account is other than he supposes, there is clearly a 
need of his going back to the earlier subject and obtaining a 
firmer grasp of its meaning. 

Volume II 
Constructive Accounting 


Assignment 1 

Constructive accounting is the application of the 
principles and methods of procedure, already ex- 
plained in Volume I, to the requirements of individual 
businesses. Chapters J to III give a swift, compre- 
hensive review of matters with which the student of 
constructive accounting must be familiar before he 
can profitably begin the special work of the subject. 
They should be read through attentively but do not 
call for detailed study. 

Introductory (Chapter I) 

The object here is to present a bird's-eye view of the gen- 
eral field of accounting in order to locate the special task of the 
constructive accountant. The tabulation form aids the student 
in definitely outlining the material. 

The Working Organization (Chapter II) 

From the beginning the student of constructive accounting 
should cultivate the habit of visualizing in definite form the 
organization scheme of the business with which he has to work. 
The facts and relationships sketched in Chapter II are familiar 
individually to most accountants. The effort to formulate them 
fully and correctly by means of diagrams is a good foundation 
for the work of this volume. 

The student will find it beneficial to draw additional dia- 
grams for himself of other businesses with which he is acquainted. 



Development of Records (Chapter III) 

The object here is to give a brief description of the various 
**books/* the tools with which accounting works, and of their 
development. It affords a useful review of Volume I from a 
slightly different angle. 

Assignment 2 

The chapters of this assignment present broadly 
the chief factors involved in the special work of con- 
structive accounting, showing the practical applica- 
tion of principles of accounting analysis to a succes- 
sion of individual cases. In brief form they give the 
result of much experience with cases of widely vary- 
ing nature. The student will find it profitable to 
review them from time to time as he works through 
the book. 

The student should observe the importance that is 
attached to tact and to common sense, in the methods 
of the constructive accountant. To lay out satisfac- 
torily a system of accounts requires not merely close 
attention to the special circumstances of the indi- 
vidual business concerned, but full allowance at all 
times for the human factors of its personnel. 

These chapters emphasize, in fact, the need of a 
competent knowledge of management by the account- 
ant who is to succeed in constructive work. 


The Survey (Chapter IV) 

This chapter and the following should be studied carefully, 
section by section. The matter presented is more or less familiar 
to most business men, but it is not always considered in any 
systematic view which embraces the problem of constructive 
accounting as a whole. 

The following items should be noted: 

§ 1. The three "steps'* of the accountant's investigation. 

3. The points to be considered in the planning of a 

system. These should be definitely memorized. 

8. The suggestion with regard to working papers — an 

instance of the practical character of the volume. 

Planning an Accounting System (Chapter V) 

The student should note that in this chapter a point that is 
especially stressed is the importance of caution, patience, and 
tact on the part of the accountant throughout his diagnosis of 
the business under examination. 

Note in § 1 the reference to chapters in Volume I which 
bear on the point in hand. One of the features of the present 
set of volumes is the convenience of such comparison and cross- 

Forms and Records (Chapter VI) 

The important principles of form construction explained in 
this chapter need thoughtful study. Once these are mastered 
and applied in a few cases, the task of committing to memory 
the more or less standard forms and records used in different 
kinds of business is greatly simplified. A knowledge of the 
information a specific form is intended to record should bring 
to mind the kind of record that is used. 

Loose-Leaf and Bound Records (Chapter VII) 

This chapter presents a concise summary of points relating 
to the physical form of records. In connection with this dis- 



cussion it might be well to read Chapter XXIX on mechanical 

Assignment 3 

The basis for all definite work in constructive 
accounting is given here in the five chapters which 
treat the subject of purchasing. They should receive 
careful and systematic studJ^ 

The accounting procedure in connection with pur- 
chases is outlined and discussed in Chapters XI and 
XII. Before this discussion can be profitably taken 
up, however, it is indispensable that the student 
obtain a comprehensive, well-arranged view of the 
organization of a purchasing department and its 
activities. This is presented in Chapters VIII, IX, 
and X. The remark with which the author closes 
his whole discussion. Chapter XII, § 8, is significant: 
"The system to be used for handling purchases de- 
pends entirely on the business under consideration. 
.... Each separate case must be determined by 
careful examination of its own distinct problems. 
Preference for one system over another depends upon 
such matters as strength of office force, quantity of 
invoices received, financial status, etc." 

In view of this fact, the description in Chapters 
VIII, IX, and X calls for careful study. The stu- 
dent should begin work in this assignment by reading 


through these three chapters, to get a view of the flow 
of operations. He should then take them up in detail 
to fix each step in mind before passing on to Chapters 
XI and XII. 

Purchasing Department Organization (Chapter VIII) 

A brief outline characterization of the function of the pur- 
chasing department in general is made. One portion of the 
chapter which should be carefully studied is the orderly, con- 
venient, and brief enumeration of purchasing department activi- 
ties in § 5. 

Purchasing Department Routine (Chapter IX) 

This is a long chapter which traces the purchasing procedure 
through its first stages until the order is placed. It should be 
not merely read through in connection with Chapters VIII and 
X, but studied, item by item. 

In this careful second reading note especially: 
§ 3. The steps of the purchasing routine. 
5, 6, and 7. The description of the purchase requisi: 

9. The description of the purchase order. 
10. The description of the purchase order register. 

Purchase Department Routine — Continued (Chapter X) 
This chapter traces the later stages of the purchasing proc- 
ess — the handling of the invoice for goods bought. In the 
student's careful second reading he should notice: 

1. The enumeration of the varieties of error, in connection 

with invoices, against which the purchasing depart- 
ment must continually guard. 

2. The description of the leading methods and devices for 

recording and checking invoices which are used in 
purchasing departments and with which the account- 


ant who has to build a system needs to be closely 

Purchase Records (Chapter XI) 

This chapter, together with Chapter XII, gives the detailed 
discussion of accounting procedure to which the preceding three 
chapters are introductory. The text should be worked through 
slowly, step by step. The object should not be merely to 
understand the meaning of forms and methods, but to realize 
plainly under what conditions they are used and how they 
operate. This requires a clearly differentiated notion of what 
each of the ten forms of purchase records is and the type of 
business to which it is suitable. To visualize definitely their 
various advantages and disadvantages, try to apply these forms 
for yourself to some business with which you are acquainted. 
Be sure to grasp the distinction between a purchase journal and 
a voucher register. In this connection it is well to refresh the 
memory with the theory of the subject by rereading Chapter 
XXII, Volume I. Do not fail to master the handy summary of 
the arguments for and against the voucher system in § 9. 

Purchase Records — Continued (Chapter XII) 

This is a short but important chapter, which discusses de- 
vices for making the purchase records more convenient and more 
accurate. Notice especially the methods of handling returned 
goods and allowances, and of correcting errors of computation, 
and the like, which are discovered after the regular entries have 
been made. 

Assignment 4 


The subject matter here is closely related to that 
of the last part of Assignment 3, Once the student 


has an orderly grasp of the flow of operations in the 
purchasing department, he should be able readily to 
add on the stores operations as a continuation of the 

Stores Systems (Chapter XIII) 

In the study of this chapter the first aim should be to obtain 

a full and orderly view of the operating activities in connection 

with stores, in which the accounting phenomena originate. The 

specific functions of the stores department are set forth in § 6. 

In his detailed study of the chapter the student should note: 

§ 1. The two different forms of stores organization. 

2. The definition applied to the term "stores." 

6. The enumeration of the four steps of the stores de- 

partment's activity. 

7. The space given to the discussion of the technique 

of receiving goods and to descriptions of the ma- 
terials received record. Observe here that the dis- 
cussion of receiving certain sorts of materials, 
"goods returned from customers/' is deferred to 
Chapter XVI, page 175, in connection with sales. 
8 to 11. The space given to full discussion of the stores 
ledger and its advantages, and of the process of 
installing it. Here observe the handling of dupli- 
cate sheets. Observe also that the stores ledger, 
aside from other functions, serves as a continuous 

Assignment 5 
The treatment of sales is, on the whole, like tliat 
of purchasing. The whole course of procedure rehit- 


ing to sales is assembled and presented in orderly 
form as a basis for the study of the accounting work 
involved. Without a clear grasp of the clerical 
routine through which sales orders pass in different 
types of business, the reason for the accounting rec- 
ords and for the method of their handling is unin- 

Sales matters relating to organization and oper- 
ation are less easily differentiated from accounting 
matters than in the case of purchasing. The student 
should therefore first read through all three chapters 
of the discussion before concentrating on study of the 

Sales Department Organization (Chapter XIV) 

Careful note should be made of the list of functions of the 
sales department, in § 2. 

As foundations for all further study, the student should 
obtain a definite conception of the three methods of retail sell- 
ing and of the difference in organization of the sales department 
which each method entails, as explained in § 4. Then he should 
visualize for himself with equal definiteness the differences in 
situation and methods between the retail business, the whole- 
sale — ^jobbing — business, and the mail-order business, as sketched 
in §§4 to 7. Finally he should study closely the detailed de- 
scription in § 8 of the highly developed organization that com- 
bines all three types. 

Sales Order Routine (Chapter XV) 

Chapter XV takes up in detail the first part of the work 
of recording and accounting for sales. It traces the handling 
by the sales department of the individual sales orders on which 
the accounting for sales is based. 



Note carefully •(§!) that whereas the sales order may 
originate in three different ways, the routine of handling it is 
practically the same for all of them. It is important to fix 
carefully in mind the successive steps of this routine. The stu- 
dent would do well to follow through the handling of sales 
orders in various businesses with which he is acquainted, com- 
paring the process with the description here given. 

Study closely in particular the detailed description in § 6 of 
the duplicate copies of the sales order and their disposition. 

Sales Records (Chapter XVI) 

This chapter traces the later steps in the handling of sales 
records. The matter presented is important. 

The student should observe that the chapter falls into three 
principal divisions, as follows: 

§§ 1 to 12. Methods of assembling the individual sales 
orders described in Chapter XV. 
13 and 14. Methods of recapitulations. 
15 to 24. Special phases of sales transactions and 
their treatment. 

In studying the first of these groups of sections, the stu- 
dent should note that the development of the separate sales 
books from the journal is closely parallel to the development of 
separate purchase books. He should clearly grasp the various 
methods of making out the original record (§§ 7 to 10), as well 
as the differences between the sales book of a wholesale con- 
cern and that of a retailer. 

In studying the special phases discussed in later sections, 
close attention should be given to the details of the technique 
described. The remarks on returned sales in § 15 should be 
compared with those in Chapter XIII. 

The subject of cash is taken up fully in the next assign- 
ment ; what is said here should be reviewed at that time. The 
student should differentiate clearly the treatment involved ia 


connection with sales on consignment^ sales on approval^ C. O. D. 
sales, instalment sales, and coupon books. 

After completing the study of the chapter, the student 
should reproduce from memory the special forms required in 
each case. A thorough knowledge of the problem involved and 
of the information which the records must supply will enable the 
student to reproduce the required records with accuracy and 

Assignment 6 

The four chapters here grouped together develop 
the simple theory and practice which underlie the use 
of the cash book as explained in Volume I, Chapters 
XVII, XX, and XXVI. The fundamental infor- 
mation in both volumes of necessity runs on parallel 
lines, but the reason for the use of distinct records and 
for the form which their development takes under 
varying conditions of business is fully taken up in 
this volume. The subject may be more profitably 
studied as a whole if the chapters referred to in Vol- 
ume I are reread in the light of the more detailed 
information given in this volume. 

General Cash Records (Chapter XVII) 

This chapter as a whole amplifies the discussion of the 
theory of the cash journal as presented in Volume I, Chapter 
XVII. Particular attention should be devoted to §§4 and 9. 
3rhe essentials of a cash system as explained in § 4 cover certain 



rules of procedure in handling cash. These rules should in- 
variably be followed if the clerical work is to be done with 
accuracy and dispatch; but in the business where trial balances 
seldom balance, where the bookkeeper spends hours in recon- 
ciling his bank balance, or where the cashier finds his cash fre- 
quently "short" or "over/' these essential rules of procedure are 
more often ignored than observed. Especially is this the case 
in the small business where to handle cash in the way described 
seems to many business men mere "red-tape." Everyday ac- 
counting experience, however, proves that it pays in time, 
trouble, and money to handle cash transactions in a methodical 
way such as that described in § 4. 

The differences in procedure caused by the different treat- 
ment of cash discounts described on page 198 are always a cause 
of mental confusion to the student especially when the books are 
to be closed and the cash journal columns are posted to the 
ledger. No one method is more generally employed than another, 
and commercial usage requires that the accountant be conversant 
with all three methods. To acquire equal facility in their use, 
practice work is necessary such as that furnished by the keep- 
ing of different sets of books. 

General Cash Records (Chapter XVIII) 

In the study of the practical and constructive side of ac- 
counting represented by the use of special forms and records 
designed for special purposes, there is only one way in which 
the design of a particular form and the method of its use or 
operation can be remembered. The form should be drawn from 
memory, and a number of entries should be made on the records 
sufficient to impress its ruling on the mind. For instance, in the 
study of this and other chapters where the rulings of the jour- 
nals and other forms are shown, the illustrative cash book entries 
on pages 285 and 286 of Volume I should be entered on all 
records designed for the recording of cash transactions. There- 
fore, the practice work on this and the preceding chapter should 


include the drawing of the forms shown on pages 199^ 202^ and 
208, and the entry of the above transactions on those forms, A 
comparison of the different forms and headings used for like 
transactions, for the purpose of noting their differences and the 
reason for these differences, is a valuable method of study. 

Further rules to insure accuracy in the handling of cash 
items, as given in § 6, should be noted. In reading the explana- 
tion of the development of a particular form of ruling, the rea- 
sons for the variations should be studied in conjunction with 
the scrutiny of the new type of record, and the reasons for the 
differences in the arrangement of the columns should be men- 
tally formulated. This kind of analytical reasoning coupled 
with the reproduction of the forms from memory will enable you 
to acquire a valuable mastery of the theory which governs the 
use of different accounting records. A good explanation of the 
use of the voucher check is given in § 7. Many bookkeepers and 
business men receive such checks in ordinary business practice 
without understanding the reason for their use. 

Petty Cash Records (Chapter XIX) 

This brief chapter is a development of § 15 in Chapter XX, 
Volume I. As practice work on this chapter, rule the petty 
cash books shown on page 219, enter a dozen or more fictitious or 
supposititious items on the form, total the columns and make the 
necessary journal entry. 

Miscellaneous Cash Records (Chapter XX) 

The cash journal illustrated and described in the opening 
sections of this chapter is suited to those business conditions 
where numerous cash payments are made for merchandise pur- 
chases which are departmentalized. Its advantages are that 
it gives a more detailed analysis of cash payments than is 
afforded by the use of any other type of cash book. Section 5 
should be closely studied in conjunction with Chapter XXII, 
§ 18. The remaining sections call for no special comment other 


than to draw attention to the fact that Forms 63, 64, and 66 arc 
merely illustrative of the use of special records for special 


Assignment 7 

The three chapters here grouped together, after 
summarizing the theory of the journal and the ledger 
as explained in detail in Volume I, carry the dis- 
cussion of the development of the journal and ledger 
entries through to their more compHcated forms. It 
is impossible, within the pages of a single book, to 
explain and illustrate all types of journals and 
ledgers as well as the variations from those types 
which are used in actual business practice. The ex- 
amples here given have been selected because they 
explain the general principles underlying the develop- 
ment of the more complicated forms, and because they 
are those most commonly met with in business ac- 

The Journal (Chapter XXI") 

The two opening sections of this chapter recapitulate in 
condensed form the information in Volume I, Chapter XV. The 
gist of the matter is contained in the chart of books of original 
entry (Form 57), which chart is worth study. Special attention 
should be paid to § 3 which makes clear the present-day func- 
tion of the general journal and the reason for its very limited 

As a business grows in size and its account classification 
extends, the mistake of posting to the wrong account is one that 


needs to be guarded against, especially when a number of book- 
keepers are employed who do their work largely in a mechanical 
fashion. The journal voucher is a simple modern device to facili- 
tate accurate posting, and a device which is rapidly growing in 
favor. It serves its purpose by telling the bookkeeper what 
accounts to debit and what to credit. Anything which does 
this is a journal voucher, no matter in what form it may appear. 
The form on page 235 is intended to illustrate general principles 
rather than the kind of record that is commonly used. 

Study carefully the theory of the use of journals of three 
or more columns as explained in §§ 6 and 7. The same prin- 
ciple applies to the use of a journal containing a dozen or more 
columns as applies to the use of one containing three columnst 
Every controlling account and subsidiary ledger requires its own 
column in the journal for the collection and classification of the 
transactions to be posted therein. 

As practice work on this chapter, it is suggested that the 
six-column journal shown on page 242 be reproduced from 
memory, as well as the cash, the purchases, and the sales jour- 
nals, and that the illustrative entries in Volume I, pages 329 to 
331, be entered in their respective journals and the totals pre- 
pared for posting to the ledger. 

The Ledger (Chapter XXII) 

No section of this chapter can be singled out as requiring 
more detailed study than any other. The contents as a whole 
should be slowly assimilated. The practice work in Review 
Questions 4 and 6 will serve to impress on the mind the reason 
for the particular entry. In studying the different rulings, try 
to think of types of business transactions which require each 
kind of ledger ruling for their most convenient handling. 

The discussion of the private ledger in § 18 will thoroughly 
test your knowledge of the theory of double entry. If you can 
grasp the explanation and visualize in your mind the method of 
opening and operating a private ledger, you may be assured 


that your accounting knowledge is thorougli and that you are 
building on a sure foundation. If you cannot, then the illustra- 
tion given below will make the matter clear to you. In studying 
the illustration, visualize the postings to the different accounts. 

General Ledger Trial Balance (After Closing)* 

Cash $ 3,550.00 

Special Deposits 5,000.00 

Investments 4,000.00 

Customers 17,340.00 

Inventory of Mdse 5,000.00 

Furniture and Fixtures. 1,500.00 

Plant and Equipment.. 10,000.00 

Patents 10,000.00 

Drawings 2,250.00 


Notes Payable $ 2,500.00 

Accounts Payable 11,^10.00 

Wages Payable 800.00 

Mortgage Payable 3^^)0.00 

Capital 40,500.00 


General Ledger Trial Balance (After Closing) f 

Cash $ 3,550.00 

Customers 17,340.00 

Furniture and Fixtures. 1,500.00 
Plant and Equipment.. 10,000.00 
Patents 10,000.00 


Notes Payable $ 2,500.00 

Accounts Payable 11,840.00 

Wages Payable 300.00 

Private Ledger Control 
Account 27,750.00 


Private Ledger Trial Balance (After Closing) 

Special Deposits $ 5,000.00 

Investments 4,000.00 

Inventory of Mdse 5,000.00 

Drawings 2,250.00 

General Ledger Control 
Account 27,750.00 


Mortgage Payable $ 3,500.00 

Capital 40,500.00 


* On the assumption that there is no private ledger, 
t On the assumption that a private ledger is kept. 



Classification of Accounts (Chapter XXIII) 

Sections 1 and 2 are introductory to the theory of the sub- 
ject in § 3. In the study of the examples of classification sys- 
tems from page 273 to the end of the chapter, you should memo- 
rize the classification shown on pages 273 to 276. This is much 
easier than at first appears. The main headings of assets and 
liabilities suggest the group headings of fixed, current, deferred, 
and so on; the group headings suggest the subdivisions; and the 
subdivisions indicate the titles of the accounts that fall within 
them. Half an hour's study and two or three attempts to re- 
produce the list should be sufficient to impress on the mind the 
names of the majority of the accounts and their classification. 
The more elaborate classifications beginning on page 277 
are presented for reference purposes, also for detailed study. 

After completing your reading of this chapter, turn to Vol- 
ume V, Problem 35, and work out the classification of the ac- 
counts shown in the trial balance in accordance with the prin- 
ciples laid down in this chapter. Then compare the result with 
the solution to the problem which presents an alternative method. 

Assignment 8 


As the subject under this heading is completely 
covered in Volume I, Chapters IX to XIV, and in 
Volume IV, Part IV, the discussion here is limited 
to the essential and elementary information required 
to complete the unity of this volume. 

Statements (Chapter XXIV) 

The important points in this chapter that have not been 
touched upon in Volume I and to which in consequence special 


attention should be devoted, are those in §§ 6 to 9. As examples 
of comparative, cumulative, and graphic statements will be found 
in Volumes III and IV, the present chapter requires little more 
than a careful reading, and the marking on the margin of the 
points to be memorized. 

Assignment 9 


Chapters XXV and XXVI in this assignment of 
work cover the method of accounting for expenditures 
under the three designated heads on the books of a 
concern which buys merchandise for resale. Chapter 
XXVII discusses a method of controlhng expense, 
which increases in its importance as a business grows 
in size. 

Expense (Chapter XXV) 

The accounting theory in this chapter is comparatively 
simple and summarizes the current practice of commercial houses. 
A more detailed discussion of various methods of accounting for 
expense will be found in Volume III. The attention of the 
student is drawn to one important point in Chapter XXV, 
namely, that the expenses of the purchasing department are 
added to the cost of the goods sold, whereas administrative and 
selling expense are treated as deductions from gross profits. 

Labor and Salaries (Chapter XXVI) 

The information in this chapter is included for the sake of 
completeness and for the benefit of those students who do not 
intend to make a special study of cost accounting. As cost 


accounting, however, is somewhat related to general accounting, 
this chapter should be read carefully. 

The Budget (Chapter XXVII) 

The information here relates to financial policy and does 
not concern the keeping of any special accounting records. The 
expenditures of preceding periods form the basis of the budget 
for the current period, due provision being made for changes in 
policy and operations. To the student or business man it is sug- 
gestive of means of controlling expenditures rather than de- 
scriptive of the concrete methods to be employed. The actual 
methods are, for obvious reasons, a problem which every business 
must solve in its own way. 

Assignment 10 

The special records and the office devices de- 
scribed in these two chapters are so frequently met 
with in ordinary business practice that a knowledge 
of their scope and use is information with which every 
accountant should be familiar. 

Special Records (Chapter XXVIII) 

Either a notes register or notes journal in one form or 
another is a part of the bookkeeping records in practically every 
business in which note transactions are at all numerous. Part of 
the practice work on this chapter should include the drawing of 
Forms 76 and 77 from memory, and the entry thereon of the 
illustrative transactions given in Volume 1, Chapter XXVIII, 

Study and compare the ruling of Form 78 with that of Form 
74 (page 258). The difference between the two forms is that 


the corporation stock ledger is a subsidiary book controlled by 
the Capital Stock account in the general ledger, whereas the 
corporation stock book serves as a journalizing record for the 
assembling of the totals to be posted to the ledger. Forms 79 
to 82 are records devised for journalizing purposes and they 
should be studied from this angle. Compile mentally the journal 
entry to be made for the posting of the data accumulated on 
these supplementary records. In studying these records it 
should never be overlooked that where any form serves as a 
record of original entry it fulfils the purposes of a journal from 
which entry may be made on the regular journal or, if postings 
are numerous, direct to the ledger. Forms 84 and 85 are in- 
tended to illustrate general principles and it is unnecessary to 
commit their special rulings to memory. In this connection it 
may be noted that it is a simple matter to reproduce any special 
form or devise a new form for a special purpose when the kind 
of information to be recorded and the purpose it is to fulfil arc 
known. , 

Mechanical Aids (Chapter XXIX) 

This chapter consists of general information and requires 
merely a careful reading. 

Assignment 11 

The three chapters discussed below cover the spe- 
cial points in retail, wholesale, branch, and mail- 
order accounting which necessitates the use either of 
distinctive books of original entry or of distinctive 
accounting methods. The operation of agency and 
branch accounting, while simple in theory, becomes 


complicated in practice because of the necessity of 
keeping two sets of records which must "tie up" or 
articulate with each other. 

Retail and Wholesale Accounting (Chapter XXX) 

For practice work on this chapter, construct the cash book 
sheet described in § 8, and the purchase journal and notes pay- 
able register in § 9. Enter on these records a number of sup- 
posititious transactions, total them, and journalize the totals 
for ledger entry purposes. 

Agencies and Branches (Chapter XXXI) 

This chapter calls for methodical and patient study. For 
practice work in the operation of agency and branch accounts, 
it is suggested that the accounts referred to be constructed and 
a number of imaginary transactions be journalized and posted 
therein. This will help to impress the procedure on the mind 
and serve as an introduction to the study of Problems 37 and 41 
in Volume V. These may be taken up as soon as the theory of 
the subject is mastered. 

Mail-Order Accounting (Chapter XXXII) 

The general procedure of mail-order accounting does not 
materially differ from ordinary accounting practice, the chief 
distinction lying in the ruling of the cash book as shown on page 
394. This form should be carefully studied and a mental analy- 
sis should be made of the reasons for the special records used. 

Assignment 12 

The three special systems in this group have dis- 
tinctive features of their own. One engaged in ordi- 


nary business may never have occasion to handle this 
particular kind of accounting, but a knowledge of 
the methods employed is required by the candidate 
for a C. P. A. examination. 

Professional Accounts (Chapter XXXIII) 

The distinctive features of most special systems of account- 
ing are seen in the ruling of the cash book and in the kinds of 
records kept as books of original entry. The careful study and 
memorization of these records will usually suffice to give the 
student a working knowledge of how to handle the particular 
type of accounting to which the records are applied. 

Estate Accounting (Chapter XXXIV) 

Estate accounting is a highly specialized branch. One pecu- 
liarity is the form of statement which the executor is required by 
law to furnish. The study of the form shown on page 411 in 
conjunction with the text will give the student an insight into 
the special features of this branch of accounting work. 

Stock Brokers* Accounts (Chapter XXXV) 

The distinctive features of this type of accounting are seen 
in the use of the blotter (Form 109) and in the operation of 
Long and Short accounts. This system of account-keeping 
seems complicated and puzzling until the nature of the trans- 
actions and the usages which govern them are clearly under- 
stood. Therefore, the explanation of the principles which govern 
stock exchange transactions should be studied carefully. 

Assignment 13 
Of the five remaining chapters of this book, the 
first three take up the distinctive features of certain 



special systems, a knowledge of which is requisite to 
round out the education of the accountant. Chap- 
ters XXXIX and XL serve as an introduction to, 
and a review of, the field of cost accounting, and ex- 
plain the difference between the cost accounting of a 
manufacturing business and the financial accounting 
of a trading concern which analyzes the cost of goods 
sold. The final chapter in the book needs careful 
study. The principles and methods involved in no 
way differ in their fundamentals from those explained 
in Volume III. 

Volume III 
Cost Accounting 


Assignment 1 

This volume requires from the reader a new point 
of view. The other volumes of the series dealing with 
general accounting draw their illustrations mainly 
from mercantile transactions. This volume on cost 
accounting is concerned more particularly with in- 
dustrial enterprises. 

Chapters I and II lay down the general principles 
of cost accounting, and indicate its place in modern 
business. They do not enter into the technique of 
the subject. 

Cost Accounting in Modern Business (Chapter I) 

This chapter can be studied section by section, inasmuch 
as an understanding of one section is not a prerequisite to the 
understanding of the others. 

Elements and Principles of Cost Accounting (Chaptbr II) 
Several classifications of costs are discussed in this chapter. 
Note the threefold classification given in § 1. The most im- 
portant point to be gained from the chapter is probably the 
relation between the classification of costs into direct and in- 
direct, and the accuracy of the cost figures. 

Note that expenses as indicated by the chart on page 21 
are numerous and are classified into two comprehensive groups. 
While the author mentions in this chapter the difficulty of dis- 
tributing expenses, you will not fully appreciate this point until 



you have concluded the reading of the later chapters which deal 
with expense distribution. 

Observe the need for prompt presentation and compilation 
of costs. This calls for a short cost period. 

Before leaving this chapter^ classify costs according to the 
different methods there discussed and give examples of each 
type. Do this after studying § 8 but do not refer to it when 
making your classifications. 

Assignment 2 

The function of this assignment is to present a 
well-rounded view of the mechanism with which cost 
accounting operates before taking up the detail of 
procedure. The student should first examine care- 
fully the table of contents for Parts I and II in order 
to get a proper perspective and an idea of the rela- 
tion of the two groups of chapters. Then Chapters 
III, IV, and V should be read straight through. 
After this first general reading, go back and study 
each chapter, section by section, noting what each 
successive step in the procedure contributes. These 
chapters should be read again after finishing Chapter 
XXIII, to make sure that he understands clearly 
the relation between the steps of the detail technique. 

Routine of Cost Accounting (Chapter III) 

This is a chapter of details from which emerges the impor- 
tant point that the detailed accounting practice varies in differ- 
ent plants, even in the same line of industry. 


Note the function of authorization and numbering of pro- 
duction and standing orders. Study the contents of the sample 
production order on page 32. A knowledge of what a form 
should contain is more important than a knowledge of its arrange- 
ment, since you will have to devise forms to fit the circumstances 
in each individual ''engagement" you undertake. 

Note the function and contents of the material requisition 
and time ticket. Study § 5 very carefully. Remember that costs 
other than prime costs are distributed first to departments and 
then to products passing through the departments. The details 
of such distribution through the medium of ''Expense Distribu- 
tion Sheets" will be explained in later chapters. Note at this 
time the contents of these sheets, the sources of entries therein, 
and who fills them out. Since all costs are entered and sum- 
marized on cost sheets in a jpb order factory, they should be 
studied with care. 

Cost Accounting Methods — Simple Products (Chapter IV) 
Summarize the steps involved in calculating the unit conver- 
sion cost. The job order and process methods may be used con- 
currently in a given plant as described in § 5. The foundry is a 
familiar illustration of the job cost system. 

Cost Accounting Methods — Compound Products (Chap- 
ter V) 

Chapter IV dealt with the job cost system of accounting a. 
applied to products which require only one class of raw ma- 
terial. A more complex procedure which is needed wlien more 
than one class of material is involved is discussed in Chapter V. 

Production orders not only authorize production but also 
serve sometimes as a collecting vehicle for costs applicable to 
the order. (See §§ 2 and 3.) 

Be able to describe the three copies of the combined produc- 
tion order and cost sheet (Form 8) and to list their maiii con- 


tents. Study the three purposes of coupon orders. Note also 
how production can be traced by means of these orders. 

Summarize the steps in scheduling production under the 
coupon order method of production (see § 5). Note particularly 
the function of the "Day's Work Sheet.'' 

Study the different reasons for charging leather to shoes 
at an average j^rice rather than at actual cost. Be sure to get 
the point that differences between actual and estimated cost 
must be traced and accounted for. Write out the technique of 
the "Loss and Gain on Estimate" account. Note also that these 
differences have a bearing on the problem of fixing a selling 
price and the problem of waste. 

In connection with § 7 you will find it profitable to set down 
the advantages and disadvantages of estimating systems in con- 
nection with various industries. . 

• In § 8 the main point is the reason for keeping separate 
costs for the component parts of a finished product. 

Assignment 3 


The chief purpose of this assignment is to em- 
phasize the point already touched in Chapter I, that 
any system of cost records must ''tie up" with the 
general records, and that the tie-up is accomplished 
by means of controlling accounts. It is absolutely 
impossible to control costs unless thi^ is done. The 
student should review in this connection Volume I, 
Chapter XXIV, and apply the principles there pre- 
sented to the new task now confronting him. 


The correlation of controlling accounts with sub- 
sidiary records is more difficult in connection with a 
cost system than in connection with a system of gen- 
eral accounts. For example, the tie-up of the Raw 
Materials controUing account — a cost account — with 
stock records is more difficult than the tie-up of 
Accounts Receivable — a commercial account — with 
the customers ledger. 

Financial and Cost Accounts (Chapter VI) 

Inasmuch as general ledger and cost accounts are operated 
concurrently, the relation between the two must now be clearly 
understood. The actual tie-up between general ledger and cost 
accounts is accomplished by controlling accounts, as here ex- 
plained. The place of perpetual inventories in tying up cost 
records with the general accounts is discussed in §§ 4 and 6. 

You should be able to explain in detail the arrangement and 
functions of the stores ledger, cost ledger, and stock ledger, 
since these are three of the most important records in any cost 
system. Since the cost ledger is really a file of current job 
sheets, a form of it does not appear here because it was dis- 
cussed in Chapter III. 

For practice work on this chapter, draw up three skeleton 
ledger accounts with hypothetical figures for the following con- 
trolling accounts: 

1. Stores 

2. Work in Process 

3. Finished Goods 

You should in no event proceed with your reading until you 
thoroughly understand the content and operation of the above 
accounts — and how they control the detailed cost records. 
Notice also that the amounts in tliese accounts are checked 


against physical inventories before the inventory figures to be 
entered in the balance sheet are determined upon. 

Entries to General Ledger Controlling Accounts (Chap- 
ter VII) 

In this chapter the detailed technique in connection with 
the operation of the general ledger controlling accounts is ex- 
plained. In some places the technique of the subsidiary cost 
records is discussed where such discussion assists in understand- 
ing the controlling accounts. 

Study particularly in § 1 the method of charging purchase 
to the Raw Material controlling accounts and stock records 
(subsidiary records). Notice how the agreement between these 
two classes of data is maintained, and that inward freight is 
charged to both of the above classes of records. 

After the Raw Material account the controlling account 
next opened and operated is that for work in process. The 
points to be studied in this connection are: 

1. The items that make up the account. 

2. The original sources from which these items come. 

3. How corresponding entries are made in subsidiary 


Observe that the items in each Work in Process account con- 
sist of: 

1. Inventories 

2. Materials 

3. Labor 

4. Overhead 

Material and labor can be charged directly to Work in Process 
accounts, but overhead is distributed to departments, work in 
process, and cost sheets through department overhead rates. 
The detailed technique of such distribution is discussed in later 


The next controlling account to be used is the Finished 
Goods account. Note how it is built up. Be sure to remember 
that sales of finished goods are credited to Finished Goods 
account at cost rather than sales price. 

Indirect Expense Account (Chapter VIII) 

Section I summarizes the steps in recording indirect expense. 
Since books are usually kept on an accrual basis, all expenses 
applicable to a current period must be recorded whether or not 
they have been paid in cash. Examples of such expenses dis- 
cussed in § 2 are depreciation, rent, insurance, and taxes. Ex- 
penses may be prepaid. These expenses are of two kinds (see 
§ 3). Study the method of booking such charges. 

Closing the Controlling Cost Accounts (Chapter IX) 

Study the journal entries which affect the controlling ac- 
counts. Note the points of divergence between the job order 
and process systems. Without reference to the text, draw up 
similar journal entries, using hypothetical figures. 

After this is done, balances appear in certain of these 
accounts. Be able to name these accounts. You should under- 
stand the reason for the absence of balances in the non-produc- 
tive department accounts, and the method of adjusting the bal- 
ances in the productive department accounts. 

Assignment 4 


This assignment discusses with some detail the 
first principal class of costs, namely, materials. It 
should be studied very closely. The records here de- 


scribed — the stock record in particular — constitute a 
portion of the basic records in a cost system. 

Accounting for stores cannot be done properly 
unless there is a proper stores organization and a 
proper lay-out for the stores department. It is an- 
other instance of the close relation of cost accounting 
and management of which the student should never 
lose sight in his work. 

To handle this assignment successfully it will be 
well to review not merely the discussion of elements 
of cost in Chapter II, but also the discussion of pur- 
chasing stores in Volume II, Chapters VIII to XIII. 

It may be said, however, that the accounting for 
direct materials, here treated, and for direct labor, 
treated in Assignment 6, will prove much easier to 
master than the accounting for burden to be dis- 
cussed further on. 

Stores and the Stores Department (Chapter X) 

This chapter is the beginning of a more detailed discussion 
of cost accounting. It considers the first big cost of a manu- 
factured product, namely, materials or stores. 

Stores Accounting and Records (Chapter XI) 

The last chapter emphasized the needs of stores-rooms and 
adequate stock records for the control of stores. This chapter 
deals with the accounting and records for stores. 

You should imderstand the reasons (presented in § 2) why 
close accuracy in stores accounting must be insisted on. The 
technique of stock-recording also is important. Do not proceed 
in your study until you have mastered it. Note that stock rec- 
ords usually show not only quantities but also values of stores 


receipts, issues, and balances (§ 3), although sometimes only 
quantities are shown. 

After studying § 10, close your book and write out the 
procedure of handling issued stores. 

The main points to remember in § 11 are: 

1. The technique of recording material returned to vendor. 

2. The two records made for material returned to stores- 

rooms from the factory, namely, stores returned 
memos and stores returned book. 

Make a list of the reasons for discrepancies between stores 
controlling accounts and stores records; and perpetual inven- 
tories and physical inventories. What accounting entries are 
made to adjust these discrepancies.^ 

Assignment 5 


The preceding assignment dealt with accounting 
for stores which might be apphed to any organization. 
This assignment treats of special problems which 
arise in accounting for materials pecuHar to certain 
types of industries. Almost as perplexing at times 
as the accounting for burden is the handling of these 
special problems discussed in Chapter XII. For 
example, the matter of by-product accounting pre- 
sents an extremely difficult point. 

The student should allow himself plenty of time 
to master this assignment, studying and digesting it 
through patient application to concrete instances. 


A thorough understanding of the matter pre- 
sented here will not only give you a ready command 
of the technicalities of stock-recording, but will also 
assist you materially in solving problems of a differ- 
ent sort. 

To get the full benefit of the discussion in Chap- 
ter XIII, you might well try your hand at working 
out a classification of stores for one or two industries 
with which you are familiar. 

Stores Problems (Chapter XII) 

Two points are emphasized by §2: (1) the three ways of 
pricing requisitions, and (2) the conditions under which each 
one of the three methods is applicable. Changes in the weight 
or volume of materials after purchase must be considered before 
charging material consumed. The methods of charging in such 
cases, noted in § 3, should be completely understood. 

Wastes of materials must also be recorded, and prevented if 
possible. In order to check unnecessary waste, standards of 
material consumption should be set. The importance of stand- 
ards not only of material consumption but also of labor and 
burden consumption cannot be exaggerated because the measure 
of current accomplishments can be determined in no other way. 

In § 5 note the function of the spoilage account, and the 
replacement order. Although there are various ways of treat- 
ing defective and spoiled material, such material is usually 
handled as an overhead item. 

Note that the accounting for scrap "depends on whether or 
not the scrap is of sufficient value to affect appreciably the cost 
of the product.'' 

The proper accounting for by-products depends primarily 
on the nature of the by-product and the proportion of its value 
to the main product. 


Classification of Stores (Chapter XIII) 

In § 1 note the reason for the cost accountant's interest in 
the subject of stores classification. Stores must be classified 
and symbolized in some way, if proper cost records are to be 
kept. The necessity for this and its advantages are discussed 
in §§ 2 and 3. 

After reading § 4, see whether you can outline the steps to 
be followed in constructing a symbol code. Be able to enumerate 
the main features of special codes, such as the "block" system 
and the Dewey decimal system, §§5 and 6. 

Assignment 6 

This assignment covers the second of the prin- 
cipal groups of cost items. In considering labor costs 
the student must give attention to the Ihiuman element 
involved. Most cost accountants attribute a large 
part of their success to their understanding of the 
human element in the problems they have had to work 

Any method of accounting for labor depends, to a 
great extent, on the method of wage payment. 
While in some cases it may not be the function of the 
cost accountant to select the method of wage payment 
to be followed in the organization, he should be fa- 
mihar with the various methods so as to account prop- 
erly for the costs involved. 

It is important to have accurate records for labor, 
not merely in order to determine labor costs, but also 


in order to distribute properly the cost of burden, 
when the method of distribution is by direct labor 
hours, by direct labor costs, or by machine hours. 

The three chapters of this group are very closely 
related; one record of the series here described serves 
as the basis for another. The student should keep this 
close relationship firmly in mind throughout his 
study. As already noted, the subject of direct labor 
costs — like that of direct material costs — is much 
simpler than the subject of indirect costs to be taken 
up later. Nevertheless, the subject requires close and 
patient attention, and the student should allow him- 
self plenty of time for his work. 

Recording the Cost of Labor (Chapter XIV) 

The first important point for you to note is the dual pur- 
pose of labor records (see § 2). Note in a general way the 
method of arriving at labor costs for units of production. 

Notice the function of the time card for "in and out" time, 
viz., to record the time the worker enters and leaves the factory. 
Keep in mind that this record does not show any labor costs 
although under a process system it furnishes the basis (time) 
for the calculation of wages. 

Since the pay-roll is such an important labor record, it 
should be prepared in analyzed form, i.e., it should show labor 
costs classified into direct and indirect labor by departments. 

Study carefully the journal entry which summarizes the 
labor costs for the period (§7). 

Time and Pay Records (Chapter XV) 

Two chief cost records are discussed in this chapter, viz., 
time cards and pay-roll records. The illustrative forms should 


be studied with two things in mind: (1) their technical use, and 
(2) their advantages and disadvantages. 

Wage System (Chapter XVI) 

The following are the chief points that should be grasped in 
this chapter: 

1. Method of calculating labor costs under the different 

methods of wage payment. 

2. Where each system is applicable; and where non- 


3. The main points of difference among the various 


Assignment 7 

The next three assignments deal with the most 
perplexing problem of cost accounting — the record- 
ing and distribution of indirect expense. 

To master these assignments the chapters should 
be read again and again. The best plan would be for 
the student first to review Chapter VIII, and then to 
read Assignments 7, 8, and 9 straight through. After 
that he should try to outline rather broadly — with- 
out consulting the book — the main steps involved in 
the calculation and application of indirect expense. 
When this outline is completely mastered, the student 
should begin with Assignment 7 and study each point 
slowly and carefully. Great effort must be expended 


to get a clear understanding of all the records dealing 
with indirect expense, or burden. 

Assignment 7 discusses the original records for 
indirect expense. The student will remember that 
the matter here presented was referred to incidentally 
in Volumes I and II, but was not fully treated. The 
work here, therefore, is a distinctly new development 
in the study. The intrinsic difficulty of the subject 
requires your utmost alertness and attentiveness of 

Chapter XVII serves as a general introduction 
which should be studied and digested by itself. After 
that the items to be entered in the original records are 
grouped in three main divisions which are covered 
respectively in Chapters XVIII, XIX, and XX. 
After finishing his detailed study of Chapter XIX, 
the student should test his understanding of the sub- 
ject thus far, by trying to draw up a schedule of fixed 
charges in connection with a business with which he is 

General Considerations of Expense (Chapter XVII) 

No feature of cost accounting is more difficult than the 
handling of indirect expense^ so you will have to read and reread 
the chapters in this part in order to understand them fully. 
Chapters XXI to XXIII should be studied with particular care. 

Do not by any means proceed with the reading of Chapter 
XVII beyond the first paragraph until you clearly understand 
the meaning of indirect expense (burden or overhead) and how 
it differs from prime cost. It may be necessary to refresh your 
memory by reading again Chapter II. 


Note in § 1 the reasons for lack of uniformity in handling 

Study Form 32 — showing the classification of expense ac- 

Before reading § 2, be sure that you can summarize the 
steps involved in the distribution of expense. You will not 
completely understand these until you have concluded tlie read- 
ing of Part VI, but at this point you should at least have in mind 
the steps referred to above. Keep these in mind as you read 
this part of the book, particularly the last three chapters. 

Be able to classify expense and to mention the records on 
which the different classifications are first entered. Make a 
list of the classes of invoices entered in the purchase journal 
analysis. Note the analytical function of the subsidiary expense 
ledger and its importance as an aid to administration. 

Note the examples and treatment of functional expense 
accounts. Note the function of the plant ledger. What is a 
controlling account? The subject of depreciation touched on 
in this chapter is discussed later in Chapter XX and more fully 
in Volume IV. 

Study § 8 very carefully. Then put aside the book and make 
a list of the classes of expense, and the original factory docu- 
ments where expenses are entered. Be sure that you under- 
stand the significance of the term "departmentalization of ex- 
pense." Summarize the three aims of expense distribution. 

Indirect Labor and Supplies (Chapter XVIII) 

The chief point to get in § 1 is that indirect factory activities 

cannot be charged direct to goods or orders. Note the medium 

for charging these activities, viz., standing orders. 

The next point to get in this chapter is the function of the 

standing order time ticket (§3) and tlie circumstances under 

which it is used. 

Study the example (Form 34) of the numbering of sUnding 

orders. Note the dual advantage of such numbering. Be sure 


that you understand how charges are made to standing orders. 
Make a list of the advantages of a numerical arrangement of 

Fixed Charges — Rent, Taxes, Interest, Etc. (Chapter XIX) 
Note the reason for terming certain expenses *'fixed charges.** 
The next point to understand clearly is the reason for using 
different mechanisms to distribute indirect labor and supplies, 
and fixed charges. Study the mechanism for the latter as 
indicated by Form 35. 

Make a sample journal entry illustrating a current charge 
for a fixed charge. Note that the basis for distributing fixed 
charges to the different departments usually varies. 

Depreciation (Chapter XX) 

The chief points to be gained from a reading of the first 
three sections are : ( 1 ) an understanding of the nature of depre- 
ciation and obsolescence, and the differences between the two; 
and (2) a realization of the necessity for recording both of 
these items in the accounts. 

Note that the depreciation depends on a number of variable 
causes. The problem of depreciation is closely bound up with 
the problem of valuation. This is the reason for the author's 
point that the cost accountant, as such, has not had the technical 
training to enable him to measure depreciation accurately. 

Assignment 8 

After the indirect expenses have been entered on 
the original records, the next few steps involved in 
handUng them are: 


1. To decide what method of distribution 

should be used. 

2. To distribute the indirect expenses in ac- 

cordance with the method chosen. 

In deciding upon the method of distributing indirect 
expense, the student will need to consider carefully 
the circumstances under which the different methods 

This requires, of course, a thorough knowledge of 
the methods in general use, namely: the productive 
hour method; the percentage of Jabor method; and 
the machine-rate method. The other methods men- 
tioned in the chapter are used only to a limited degree. 

The distributing medium for the second step is the 
expense distribution sheet. The method of adjusting 
differences between actual indirect expenses incurred 
and the application of indirect expenses to the prod- 
uct by means of burden rates should receive special 

This assignment requires even more time to mas- 
ter than the preceding. It is probably the most diffi- 
cult one in the whole volume and should recefve most 
serious and concentrated attention. 

After working through each chapter, the student 
should look back and try to summarize the steps in 
each section without referring to the book. 

Expense Distribution (Chapter XXI) 

This and the succeeding two chapters have to do with the 
most difficult feature of cost accounting — the distribution of 


indirect expense. Hence they must be studied — not simply- 
read — with great care. 

Note the four sources of entries for expenses. Observe 

1. That expense is departmentalized. 

2. That all expenses are collected ultimately in productive 

department accounts. 

3. That expense is applied to product passing through 

the department by means of a predetermined rate. 

Be sure that you understand how expenses of non-productive 
departments are prorated over productive departments. Ex- 
amples of such expense are: (1) general and administrative, 
(2) stores, and (3) power. Observe that the distribution in- 
volves (1) the consideration of the most equitable basis under 
the circumstances, and (2) the technique of distribution. Do not 
continue your study until you fully grasp the foregoing points. 

Note the basis and technique of distributing stores expense 
directly to jobs, rather than to productive departments and then 
to jobs. (For further details, see Chapter XXIV.) 

Observe in §§ 7 and 8 that the treatment of expense under 
the job order and process methods varies somewhat. 

Note the advantage of opening expense accounts on the 
ledger for non-productive departments, and the reason for an 
expense account for each operating department under the job 
order method. 

The treatment of differences between department expense 
taken from the distribution sheet and department burden applied 
to orders is explained in Chapter XXII. 

Expense Distribution Over Product (Chapter XXII) 

The reason for averaging expenses under the process method 
and the necessity for burden rates under the job order system 
should be clearly understood before you read the details of this 


Make a list of the six bases for burden rates. Two of these 
are of limited application. List also the four general methods of 
determining and distributing overhead rates. Note the reasons 
for the prevalency of the percentage of labor metliod. Be sure 
you understand the principle upon which this method is based. 
Study the example which illustrates the technique of this 

Make a list of the conditions that should exist in a plant 
where the percentage of labor method is applicable. Study the 
technique and the conditions under which tlie sold-hour method 
is applicable. Do the same for material and prime cost methods. 
Note the reasons for overhead adjustments. Study the tech- 
nique of the methods of handling overhead adjustments and the 
reasons. Note the circumstances under which each method is 

Assignment 9 

Machine-hour rates, which were briefly mentioned 
in the preceding assignment, are here given detailed 
treatment. The use of machine-hour rates is the most 
highly specialized method of distributing indirect ex- 
pense. It is chiefly applicable when the large majority 
of the operations of a business are machine opera- 
tions, particularly automatic machines. 

Make a list of the steps involved in the use of this 
method. One special feature of the burden distribu- 
tion peculiar to this plan is the use of supplementary 
rates in connection with idle machine time. It is im- 
portant to grasp the significance of the division of tlie 


plant into production centers as a prerequisite to the 
installation of the method. 

The student should allow plenty of time for this 
assignment. After completing it he should once 
more read over Assignments 7, 8, and 9. 

Machine-Hour Rates (Chapter XXIII) 

This chapter deals with a highly specialized method of 
burden distribution, which, however, is the same in broad out- 
line as the other distributing methods already discussed. 

Three chief points are made in § 1 : 

1. The circumstances suitable to the use of machine rates. 

2. The meaning of production center. 

3. The determination of overhead for each production 


Make an outline of the steps involved in computing the ma- 
chine rate. Study the bases and technique of distributing items 
such as building expense or rent, power, depreciation, insurance, 
taxes, tools, repairs, administrative, and sundry expenses to pro- 
duction centers. Study with care the example which shows the 
calculation of the hourly rate for six machines. 

Three chief points are made in the rest of this chapter: 

1. Account content. 

2. Use of machine expense account. 

3. Reasons for the accuracy of machine rates as a method 

of distributing expenses. 

Assignment 10 

Reference has been made in Chapter I, §§ 10 and 
11, and in Chapters IV and V, to the three main 



types of cost systems. The next three assignments 
take them up in detail. 

The first two systems — the job order system and 
the process system — are often operated concurrently 
in the same plant. The student should note the rea- 
sons for this, as stated in Chapters XXIV and XXV. 

This assignment and the next one require plenty 
of time for digesting, inasmuch as they constitute an 
actual working outline by which the cost accountant 
is to be guided in handling a specific engagement. 
While the forms and records here described cannot 
be applied in their entirety to evel*y business, their 
main features are of general application. Merely 
reading these assignments will not carry the student 
very far toward practical command of the informa- 
tion. He should try to see the concrete application 
of the forms and records to some plant known to him. 

Of this group of assignments, the first one should 
receive the fullest consideration, inasmuch as the job 
order cost system is probably the most widely used. 
It is the individual job order around which the costs, 
shown on cost sheets, are assembled, although sum- 
maries are made of the costs of various jobs. Par- 
ticular attention should be given to the journal en- 
tries which build up the ledger accounts necessary in 
the operation of this system. 

Production-Center Job Order Cost System (Chapter XXIV) 

This volume up to the present part has dealt with general 
and specific cost accounting technique in job order and procces* 


systems, with occasional references to special industries. Each 
chapter in Part VII is a sustained elaboration of some specific 

This chapter treats chiefly of the machine-rate method of 
distributing burden in a job order cost system. The general 
principles of machines rates were laid down in the preceding 

In § 2 note the meaning of the term "production center'* 
and the relation of production centers to the machine-rate 
method of distributing burden. 

Study particularly Form 41. The function of the stock list 
should be clearly understood since its use reduces considerably 
the amount of clerical work.' 

With respect to cost of material, labor, and expense, study 
the following points: 

1. Records 

2. Number of records made out 

3. Persons who make records 

4. Use and disposition of records 

Study carefully the chart of cost accounts (Form 43). 
After studying the journal entries and the accounts to which 
they lead, see whether you can frame similar journal entries in 
the proper chronological order and can trace the relations be- 
tween items in the ledger accounts. 

Assignment 11 

The second main type of cost systems, known as 
the process system, is discussed here, with particular 
reference to clay products. 


In reading this assignment the student should not 
spend too much time in trying to remember the con- 
tent and uses of the forms and records described, to 
the neglect of the understanding of the principles and 
the sahent features of process systems generally. 

The main point of difference between the process 
system and the job order system, which should be 
clearly grasped, is that in the job order system the 
product goes through in well-defined lots, the costs 
being kept for each lot, while in the process system 
costs are kept by batches for the different processes 
and operations. In other words, the unit for the 
compilation of costs in the two systems is the job and 
the process respectively. In fact, it is the unit idea 
that differentiates cost accounting from general or 
commercial accounting. 

Process Cost System — Clay Products (Chapter XXV) 

The first main point to get in this chapter is the principle of 
segregating costs under the process system. Then note the 
function and use of department accounts, time slips, brick-setting 
report, and other records, especially the cost ledger at the end of 
the chapter. The foregoing records concern the kinds and quan- 
tities of brick produced. 

Assignment 12 

No student of cost accounting should fail to 
understand the main features and the technique of an 


estimated cost system. Such a system has a very 
wide range of use. Even in the job order and process 
systems a certain amount of cost estimating is done; 
for example, in the predetermination of departmental 
burden rates. Cost estimates of any kind, however, 
must always be checked against actual costs, so as to 
bring the books into harmony with the facts, and to 
aid in making more correct estimates for the future. 
In this assignment particular attention should be 
given to the journal entries and the skeleton ledger 

Estimated Costs (Chapter XXVI) 

Three types of cost systems are discussed in this volume — 
job order, process, and estimating. The former two have been 
discussed in connection with the application of cost principles. 
The estimating system has been touched on in §§6 and 7 of 
Chapter V, and the estimating of material has been described 
in parts of Chapter XII, particularly § 8. Read these sections 
before studying this chapter. 

In §§ 1, 2, 3, 4, and 12, study the nature, merits, limitations, 
and principles of the estimating system. 

Note in § 5 the importance of standards in controlling 

The technique of calculating and journalizing the following 
should be clearly understood: 

1. Opening inventory 

2. Current transactions 

3. Closing inventory 

4. Cost of goods sold 

5. Adjustments 

6. General ledger account 


Assignment 13 

The student has now traversed the whole field of 
the theory and technique of cost accounting. These 
final chapters offer additional material of a more con- 
crete nature by which he may see the actual working 
in specific instances of the principles already set 

The study of these chapters will reinforce the 
point already urged, that the planning and installa- 
tion of a cost system in any plant must always be pre- 
ceded by a careful study of the operations of the 

The content of this assignment may appear at 
first diflScult, but it will be found on close reading to 
be relatively simple. Two types of systems are in- 
volved, the job order, and the process system. 

Textile Costs — Manufacture of Yarn (Chapter XXVII) 
Study §§2 to 5^ which deal with the operations in a textile 

mill, so that you can better understand their accounting technique. 
Textile costs are explained with slight reference to forma 

but with detailed reference to certain accounts. The content and 

operation of these accounts and tables should be understood: 

1. Materials and Supplies 

2. Waste 

3. Stock in Process in Dye House 

4. Mixes in Process 
6. Cost of Mixes 

6. Yarn in Process 

7. Conversion Cost 


Weaving and Knitting (Chapter XXVIII) 

This chapter continues the discussion of textile costs, par- 
ticularly the cost of weaving cloth and knitting fabrics. The 
chief points to be gained are a knowledge of the content and 
disposition of the following accounts: 

1. Weaving 

2. Knitting 

3. Wet and Dry Finishing 

4. Finished Cloth 

In operating the foregoing accounts two chief problems 
arise, namely, the apportionment over the different styles of: 

1. The cost of weaving during the period. 

2. The cost of production of the wet and dry finishing 


Textile Cost — General Expense (Chapter XXIX) 

The preceding chapter discussed the costs of operating de- 
partments. This chapter deals with expense accounts which are 
distributed to departments. With respect to these expense ac- 
counts study the following points : 

1. Content. 

2. Disposition of shipping expense, which you will note 

differs from disposition of other expense accounts. 

3. Schedules of distribution when given, particularly the 

basis of distribution. 

Assignment 14 

The final chapter differs from most of the others 
of the volmne, in that it is concerned with the form 

BUSINESS ACCOUNTING^-yotl/MKlHr; I'; :• ; ..99^ 

of presentation, whereas the other chapters were con- 
cerned primarily with the calculation and compilation 
of cost data. 

Cost data is practically valueless unless so pre- 
sented that it admits of ready interpretation and com- 
parison. It must be usable. Inasmuch as the impres- 
sions which we register most vividly come through 
the sense of sight, graphic presentation is particularly 
helpful. By this means executives, without having to 
wade through huge columns of figures, are able to 
grasp the significance of the history of their enter- 
prise as reflected in the cost data, and can thus con- 
centrate upon the formulation of policies. 

Use of Graphic Charts (Chapter XXX) 

The author fittingly closes his book with a discussion of 
graphic charts as an aid to executives. The chief point in § 1 
is the advantage of graphs as a method of succinctly presenting 
cost data. 

With respect to '^difference'' and ratio charts, note the fol- 
lowing points: 

1. Function 

2. Content 

3. Deductions to be drawn 
4}, Limitations 

5. Method of preparation 

6. Use 

7. Illustrations 


Volume IV 
Advanced and Analytical Accounting 


Assignment 1 

The three chapters in this assignment cover those 
special problems which are likely to arise when the 
books are closed. Here the subject is treated in 
much greater detail than in Volume I, Chapters VII 
to IX and Chapter XXX. Special consideration 
is given to the various methods of handling deferred 
and accrued items. 

The Scope of Advanced Accounting (Chapter I) 

This chapter contains a bird's-eye view of those phases of 
accounting work which are usually supervised by the head 
accountant who is in charge of the routine work done by the 
bookkeepers of a large organization. The chapter as a whole 
gives the reader some conception of the nature of the problems 
to be discussed in following chapters. Special attention is 
called to § 3, which summarizes the difference between ordinary 
accounting and accurate accounting. 

Deferred Debits and Credits (Chapters II and III) 

The mental confusion that is often caused by the different 
significations of the terms "deferred" and "accrued," depending 
upon which side of the balance sheet they refer to, may be 
cleared up by the careful study of §§ 1, 2, 8, and 9, Chapter II. 
In general it may be said that these two chapters cover ordinary 
bookkeeping procedure with which the accountant sliould be 
familiar. With the exception of the sections noted above, the 



theory and principles involved have been fully explained in 
Volume I, Chapter VIII; §§ 5 to 7. 

Assignment 2 

This assignment covers some of the most debata- 
ble questions and problems that arise in the whole 
field of accountancy. Most of these problems have a 
legal aspect to which careful attention should be 
given. The method of approaching the profits of a 
corporation is circumscribed by both legal rulings and 
correct accounting procedure, and the general tenor 
of the information in this assignment is to acquaint 
the student with both aspects of the subject. 

Profit Determination (Chapter IV) 

The definitions in this chapter need careful study. The 
discussion involves much important accounting theory, a knowl- 
edge of which is fundamental to the drawing up of a profit and 
loss statement for a manufacturing concern. No particular part 
of the chapter can be singled out as containing more vital infor- 
mation than any other. Every section needs close attention, 
and the summary of the principles at the end of the chapter is 
well worth memorizing. 

Corporate Dividends (Chapters V and VI) 

Most of the theory in Chapter V is based on legal rulings 
with which the accountant is expected to be familiar. Section 
4 discusses a matter which is more or less debated. Further 
information incidental thereto is given in many of the chapters 


which follow. Chapter V covers the theoretical aspect of the 
subject, and Chapter VI the practical accounting work. If the 
theory in Chapter V is thoroughly mastered, no difficulty will be 
experienced in applying this theory in practice. Practice work 
on the problems in Volume V will gradually enable the student 
to acquire facility in journalizing the entries to be made on the 

Surplus (Chapter VII) 

When the theory of profit determination has been mastered, 
no difficulty will be experienced in grasping the theory of sur- 
plus and Surplus account. As a means of testing the thorough- 
ness of the student*s knowledge, attention is again called to 
the utility of the review questions at the end of each chapter. 
The answers to these questions should not only be mentally 
formulated but should be actually written and then compared 
with the discussion in the text. Especially valuable are the 
questions calling for a certain amount of practice work such as 
Review Question 6 (page 94) and Review Question 2 (page 
103). If the student can set up the Surplus account in the 
prescribed and correct form as here instructed, he may be as- 
sumed to possess a thorough working knowledge of the theory 
in this chapter. 

Reserves and Funds (Chapter VIII) 

In no other respect, perhaps, does accounting practice differ 
so as it does in the treatment of reserves. It is suggested that 
the reader study the theory in the present chapter closely, in 
order to become thoroughly conversant with the thread of uni- 
formity that runs through these divergences in practice. How- 
ever practice may differ, the theory remains the same and a 
thorough grasp of principles will insure correct methods of 
recording data in the accounts on the books. As an aid to the 
memorizing of theory, it is suggested that at the second or third 
reading the student should work out the examples in the text 


without reference to the solution. Thus, on page 116 two bal- 
ance sheets are shown, the second being a solution to the problem 
propounded in the first. The student should work out this solu- 
tion for himself and then compare with the text. 

Valuable practice work covering the information given in the 
first part of this volume will be furnished by working through 
Problems 46 and 47 of Volume V, 

Assignment 3 

This group of chapters covers the procedure in 
recording deahngs in bonds and the method of com- 
puting an annuity for the purpose of creating a sink- 
ing fund. Under compKcated conditions this phase 
of accounting work is usually handled by a man who 
is a specialist in his line. The information in the three 
following chapters is sufficient to give the reader 
a thorough working knowledge covering ordinary 
transactions in bonds and sinking funds. 

Bonds and Accounting for Bonds (Chapters IX and X) 

Most business men know something about bonds and are 
conversant with the ordinary commercial methods of determining 
their value. The attention of the student who does not possess 
this knowledge is directed to the study of § 4, Chapter IX. 
This information is fundamental to the correct recording of 
bond values on the books. 

Sections 5 to 7, Chapter IX, present some puzzling features 
of bond interest^ the mastery of which will demand concentrated 


application supplemented by the practice work afforded by the 
problems in Volume V. Preliminary to this more difficult prac- 
tice, it is suggested that the table on page 131 be set up from 
the data given on page 129. The accountancy work in connec- 
tion with the recording of bond orders and issues on the books 
calls for no special comment, and a careful study of the text is 
all that is required to obtain a working knowledge of the sub- 

Sinking Funds and Annuities (Chapter XI) 

To the reader whose mind has not a natural mathematical 
bent, the mastery of the theory of annuity computations will 
prove to be the most difficult of arithmetical problems met with 
in accounting work. Attention in particular is drawn to the 
difference between the amount of an annuity and the present 
worth of an annuity. The crux of this difficult subject lies here 
(see §§5 and 6). To distinguish clearly between the two 
methods of calculation, it is suggested that the illustrative ex- 
amples in both sections be worked out several times until the 
difference between the two methods is clearly fixed in the mind 
of the student. 

While in actual practice the occasion for computing annui- 
ties may rarely arise, every student who aspires to be an account- 
ant should be capable of solving these elementary problems of 
the mathematics of investment. 

Do not try to master the contents of this chapter rapidly. 
Be prepared to experience some mental confusion at first. This 
will gradually vanish after the illustrative examples are repeat- 
edly worked out and one by one each detail is fixed in mind. 
Also go over the series of questions and write answers to them, 
not once, but several times. 

As advanced practice work on the difficult subject of annui- 
ties and the method of their computation and accounting, the 
reader should study and work over problems 48 to 53. 


Assignment 4 

The two chapters in this assignment contain in- 
formation of a more advanced character than that 
given in Volumes I and II. They cover the require- 
ments of a thorough working knowledge of the sub- 
jects applicable to all ordinary business and account- 
ing practice. 

Depreciation — Rates and Accounting (Chapters XII and 

As further practice in the computation of annuities, the 
readers should work out the problem given in the second para- 
graph of § 9, Chapter XII, and from the data of the problem 
construct the table shown on page 176. The other methods of 
calculating the depreciation charge present no difficulty. 

To acquire facility in the journalization of depreciation 
charges, it is suggested that after a careful study of the illus- 
trative problem in § 6, Chapter XIII, the transactions be jour- 
nalized and posted to their ledger accounts, the student then 
comparing his work with the ledger entries in § 7. It cannot be 
emphasized too frequently that this sort of practice work is 
essential if theory is to be mastered. 

Problems 8, 9, 10, and 54 take up the more difficult entries 
that arise in handling the depreciation factor and are to be 
studied after the more simple practice work has been mastered. 

Assignment 5 

The special features of corporation accounting 
which relate to issuing and recording shares of stock 


are here covered in sufficient detail to furnish a work- 
ing knowledge of the procedure in opening the books 
of a corporation. 

Capital Stock Issues (Chapter XIV) 

Before beginning the study of this chapter, turn back to 
first principles and refresh the memory by rereading Chapter 
XXXIII of Volume I. 

Practice varies in the recording of stock issues. The jour- 
nal entries here given to illustrate the procedure are those which 
conform to the theory of accounts; that is, in every case there 
is a reason why the entries should be made in the form in which 
they are made. When this reason is formulated in the student's 
mind, the particular journal entry will naturally suggest itself 
to him. 

Where illustrations are given, as in § 2, the student should 
cover up the journal entries given below the illustration and 
write them out for himself. This practice, repeated two or 
three times, will give him a complete mastery of the contents of 
this chapter. 

Premiums and Discounts (Chapter XV) 

The same observations apply to the study of this chapter as 
apply to the preceding cne. For example, work out the journal 
entries in §§ 4 to 7, and 9 in the way previously suggested, and 
repeat the practice until the required entries can be made with- 
out hesitancy. Go over the review questions in both chapters 
and do not take up the next assignment until all questions can be 
answered fully and correctly. 

Problems 55 to 57 of Volume V cover most phases of the 
theory of premium and discount taken up in this part of 
Volume IV and they should be worked out in conjunction with 
a very careful study of the different phases of the theory 
embodied in this assignment. 


Assignment 6 


The two chapters deahng with the valuation of 
current and fixed assets cover many important points 
of theory and procedure, a knowledge of which is 
necessary for a correct statement of asset values at 
the close of a fiscal period. 

Current Assets (Chapter XVI) 

The principles which govern the valuation of accounts receiv- 
able and inventories are fundamental to sound accounting, and 
particular attention should be paid to the theory of the subject. 
If this is clearly understood and remembered, the correct book- 
keeping procedure will suggest itself. The arguments for and 
against a given method of procedure and the conditions under 
which one of two possible courses is preferable should be noted. 

Fixed Assets (Chapter XVII) 

The correct valuation of fixed assets depends first upon the 
principles explained in this chapter, and second upon the ade- 
quacy and truth of the depreciation policy. When machinery 
and equipment represent a big investment, the accountant's work 
will be limited to recording on the books the valuations of the 
fixed assets as determined by the depreciation ratio in use. 

Assignment 7 

The points taken up in this assignment of three 
chapters cover further phases of the principles and 


problems of valuation, including the subject of fire 
loss adjustments. 

Liabilities (Chapter XVIII) 

The information in this chapter is of a simple character and 
no difficulty will be experienced in mastering the points of theory 
involved. The accounting procedure illustrated in §§ 4 to 7 is 
self-explanatory, and suggests itself when the theory which 
governs the recording of liabilities on the books has been nias- 

•Intangible Assets (Chapter XIX) 

Study the theory of this chapter carefully. In the valuation 
of the intangible assets the point of view of the management of 
a business is not always that of the accountant. It is the duty 
of the accountant, so far as he is permitted to do so, to state 
the values of the assets on the books at a figure which cannot 
be criticized on the score of exaggeration. To determine this 
figure he must be thoroughly conversant with the principles 
which govern the valuation of assets. Therefore, give ample 
time to the study of Chapters XVI, XVII, and XIX, and do not 
consider that you have assimilated their contents until answers 
to the review questions come readily to mind. 

Fire Loss Adjustments (Chapter XX) 

After studying this chapter until its theory is mastered, work 
out the journal entries from the data given in § 9, and construct 
the accounts to which these entries are posted. This practice 
work, repeated two or three times, will fix in mind the general 
procedure in adjusting fire losses and other types of losses that 
are found on the books. 

• Problems 54 to 56 of Volume V furnish practice work on 
the chapters in this assignment. 


Assignment 8 

The four chapters in this group discuss the dif- 
ferent forms of the financial statements and the rea- 
sons for variations. 

The Balance Sheet (Chapter XXI) 

The accounting procedure in this chapter, so far as concerns 
the form of presentation, is that which has the sanction of gen- 
eral adoption and that which is recommended by the Federal 
Reserve Board. When opportunity offers, study the balance 
sheets printed in the financial papers or issued from time to time 
as part of the prospectuses of corporations. Try to criticize the 
contents of such a balance sheet; that is, reason out for your- 
self in what respects it fails to give information which you or 
an investor would like to know; or in what respects the figures 
show a sound financial condition or the reverse; and so on. 

The Profit and Loss Statement (Chapter XXII) 

The same observations apply to this chapter as to Chap- 
ter XXI. In working out those problems in Volume V which 
involve drawing up the financial statements, construct these 
statements according to the methods described in these chapters. 
In this way you will acquire facility in following the correct 
procedure. The proper method of compiling statements so as 
to present the information in a professionally correct form is 
wholly a matter of practice, combined with an understanding 
of the reasons for the adoption of a particular form. 

Manufacturing and Mercantile Statements (Chapters 

To commit to memory the procedure in these two chapters 
without a certain amount of practice work is impossible. To this 


end it is suggested that the .trial balances be reconstructed from 
the financial statements, and then the attempt be made to draw 
up the statements in the form given. This work will need to be 
repeated several times before accuracy is attained. 

Assignment 9 

The following chapter is an elaboration of the 
practical work connected with the formulation of a 
statement of affairs and deficiency statement, the 
theory of which is covered in Volume I, Chapters 
XII and XIII respectively. 

Statement of Affairs and Deficiency Statement (Chap- 
ter XXV) 

If, as suggested in the study of Chapters XII and XIII in 
Volume I, the student has left the detailed study of these two 
chapters until ready for more advanced work in connection with 
statement preparation, the time has now arrived when the matter 
may be taken up. The theory of the subject is simple. To im- 
press the procedure on the mind is difficult, though well worth 
the time required. Therefore, from the data given in the state- 
ments in this chapter, reconstruct the trial balance and with 
this as a guide try to compile a statement of affairs and a de- 
ficiency statement in the form illustrated in Volume I and al«0 
in the form shown in this chapter. 

Problems 26 to 28 deal specifically with the accounting re- 
quired in drawing up a statement of affairs and deficiency state- 
ment. They furnish the advanced practice work required for a 
thorough grasp of the subject. 


Assignment 10 

These chapters form a composite group covering 
the subject of consohdations. While relatively sim- 
ple in theory, the practical application of the theory 
of consolidations often taxes the analytical power and 
knowledge of the accountant to the utmost. 

Methods of Combinations (Chapter XXVI) 

Sections 1 to 6 contain preliminary information. The 
theory begins in § 7. The illustrative examples in the later sec- 
tions should be carefully studied. 

Holding Company Balance Sheet (Chapter XXVII) 

From the illustrative data given in this chapter, work out 
the balance sheets showing the effect of different methods of 
treatment, and then compare your work with the text. You can- 
not remember the theory of the subject without practice work of 
this kind. 

Consolidated Balance Sheet (Chapter XXVIII) 

After carefully studying this chapter, work out the com- 
bined balance sheet of the two subcompanies and the consoli- 
dated balance sheet of the three companies from the data given 
at the beginning of § 2. Do the same practice work in connec- 
tion with §§7 and 10, after studying the theory to be applied. 
This work is essential as a preliminary practice to the solution 
of the consolidation problems given in Volume V. 

Problems 79 to 88 cover the preparation of consolidation 
statements and at the same time furnish many examples of the 
kind of difficulties which are likely to confront the accountant 
and the solution of which will test his powers of reasoning and 
analysis to the utmost. 


Assignment 11 

The three chapters in this assignment suggest 
methods of testing the accuracy and completeness of 
the books of account and of locating errors when 
known to exist. 

Classification and Detection of Errors (Chapters XXIX 


The information in these two chapters is based squarely on 
the theory of accounts, and its relation to the practical side of 
the accountant's work is such as to make it of especial interest. 
Chapter XXIX contains mostly preliminary information which 
should be thoroughly understood. Chapter XXX contains sev- 
eral practical expedients which should be worked out with pencil 
and paper until the method is memorized. 

Location of Errors (Chapter XXXI) 

The information in this chapter has a very practical bearing 
upon the taking of a trial balance and the work of the book- 
keeper in general. To memorize the rules and suggestions here 
given, and to acquire facility in their use, they should be referred 
to as occasion requires when practical work is being done on a 
set of books. From the data given in § 6, work out the solution 
to the problem and compare with the result shown in § 7. 

Assignment 12 

The two final chapters in this vohime show how 
the executive or owner of the business can assist tlie 


accountant in maintaining correct accounts. In addi- 
tion, the proper method of rectifying errors on the 
books is briefly described in this assignment. 

Verification of Assets (Chapter XXXII) 

This chapter covers that part of the work of a professional 
auditor which the executive or owner of a business may from 
time to time do for himself, merely as an ordinary business 
precaution or safeguard. 

Correction of Errors (Chapter XXXIII) 

The theory and examples in this chapter cover a matter 
which always presents difficulties to the student and which 
seldom is properly handled in actual business practice. Book- 
keepers and accountants, however methodical in their work, are 
liable, like other workers, to make mistakes. How to handle 
the problems and difficulties which arise when mistakes are made 
is a matter with which every accountant should be familiar. 

For practice work on Chapters XXIX to XXXIII, take up 
Problems 90 to 93 of Volume V. 

Volume V 
Illustrative Accounting Problems 


The grouping of material into assignments fol- 
lowed in Volumes I to IV, obviously cannot be ap- 
plied to Volume V, which is made up entirely of 
problems. It may be noted, further, that the prob- 
lems have been arranged, so far as possible, to follow 
the order of the subjects in the preceding volumes, 
though, as many of the problems cover more than one 
phase of accounting theory, this arrangement is not 
always practicable. The selection of the problems 
has been made with a view to testing the student's 
mastery of theory, at the same time furnishing him 
with examples of the kind of difficult accounting 
problems that might be met with in actual business 
practice, and the kind of problems he would be re- 
quired to solve if he presented himself for examina- 
tion before a board of C. P. A. examiners or before 
the examiners of the American Institute of Account- 

In studying each problem, the student should 
read its terms slowly and as many times as necessary 
until he thoroughly understands what is meant and 
what is required. Even a trained accountant could 
not grasp the method of fulfilling the requirements 
of many of these problems at the first or even the sec- 
ond reading, so the beginner need not hope to pene- 



trate their meaning at the first, second, or even third 
attempt. When the data on which the problem is 
based are understood and the requirements are 
grasped, turn to the points illustrated at the end of 
the problem, after which look up the passages in the 
text of Volumes I to IV which discuss the theory in- 
volved in the solution of the problem under consid- 

Having reviewed the theory and practice appli- 
cable to a given case, try to solve the problem in your 
own way without reference to the solution. This will 
require hard thinking, in some cases very hard think- 
ing, and j^ou will be tempted to shirk the necessary 
brain cudgelling by turning to the solution. Do not 
take this easy road out of your perplexities. Study 
the theory and the terms of the problem again and 
again until light begins to dawn and then 'make a 
stab" at the solution. Some of the problems are so 
complex and difiicult that you are bound to flounder, 
and on referring to the solution you will have to work 
back to the terms of the problem to understand the 
method whereby the problem should be solved. 

Having made the attempt and noted your mis- 
takes and their cause, leave the problem for a time 
and return to it again when you have wholly or 
partly forgotten the method of its solution. At your 
second attempt follow the same procedure and re- 
peat until you can solve each problem correctly and 
readily. By such practice work as this you will 
gradually develop your analytical and reasoning 


powers and master the theory and practice of ac- 

Often the chief difficulty of a problem lies in one 
or more transactions which are purposely included 
because of their complexity or unusual character, or 
because the terms in which they are stated are am- 
biguous and may be interpreted in different ways. 
The complex transactions become simple under an 
adequate amount of mental perspiration. The data 
which are capable of different interpretations should 
be handled in different ways showing all possible 
solutions. After a thorough grasp of a problem as a 
whole is obtained and the general lines of its solution 
have been mentally formulated, you should concen- 
trate on the transactions which are specially difficult 
until you reach a decision as to how they ought to be 
handled. To help you in this work, a number of sug- 
gestions are given covering the problems which can 
be solved by the study of Volume I and a few chap- 
ters in Volume IV as indicated in the 'Toints Illus- 
trated" found at the end of each problem. After 
acquiring the ''knack" of attacking a problem in the 
right way, the student is left to his own resources 
when solving the problems bearing on Volumes II 
to IV, 

Problem: 1 

This problem is hardly worthy of the name because its solu- 
tion should present no difficulty. All that is required is to fol- 
low exactly the same procedure as indicated in Volume I, Chap- 
ter XX, § 12, and the correct answer wUl be determined. 


Problem 2 

The length of this problem makes the solution seem more 
difficult than it actually is. Length in itself is not necessarily a 
cause of complexity, as every problem can be attacked piece- 
meal and be effectually overcome if its difficulties are concen- 
trated on one by one in methodical fashion. 

The "snag" in this problem is obviously contained in the 
paragraph preceding the last one of the explanatory matter, 
where it is stated that fraud is suspected on the part of the 
cashier. To determine whether or not there has been any fraud, 
what is the first requirement? Find out how much has actually 
been deposited in the bank and how much should have been 
deposited. The amount which should have been deposited is 
likely to be a larger amount than that actually deposited, so we 
take this first. This amount consists of collections from cus- 
tomers plus any cash on hand not yet deposited. We must not, 
however, take the footing of cash collections as correct. If 
fraud is suspected, the footings are the first points to verify. 
Attacking the problem in this way, it is found that there is an 
actual shortage in deposits of $114.88. 

The next point to determine is whether the disbursements 
entered on the cash book equal the .checks paid by the bank plus 
the checks outstanding. If you will figure this out for yourself, 
you will find that the total bank disbursements (including out- 
standing checks) are $10.36 in excess of the disbursements 
entered on the cash book. 

Having determined these two shortages, the next step is to 
figure the true cash book balance. This is readily done by de- 
ducting the corrected disbursements from the corrected receipts. 
If, now, the bank balance plus cash in hand is deducted from 
the cash book balance, the resulting figure should give the net 
amount of the shortage as stated above. 

The method of presenting the above data as well as the bank 
reconciliation statement should be carefully noted when studying 
the solution, after which you should go over the problem again 



and again until you can reproduce the three sUtements in cor- 
rect form. 

Problem 3 

Following the procedure explained in Volume I, Chapter 
XX^ the entries required to record the petty cash disbursemenU 
are made in the same way as any other cash disbursement. The 
crux of the problem lies in the method of reducing the fund by 
$200. Here it is necessary to reason out the simplest and clearest 
way of recording the reduction. 

It is advisable to draw the check for the total disbursements 
and then deposit $200, because this simplifies the bookkeeping. 
If a check for $262.50 were drawn, a journal entry would be 
required to complete the charges to the expense accounts in- 
volved. The use of such a journal entry would be somewhat 
confusing. It would be possible to journalize the total payments, 
charging the expense accounts and crediting Petty Cash account, 
and then to draw a check for $262.50, charging it to the Petty 
Cash account; this would reduce that account by $200. Such 
procedure is not advisable because it differs from the usual prac- 
tice of making no entries in the Petty Cash account for disburse- 
ments. It would also require an explanation in the cash book 
covering the $262.50 check, which might not be readily under- 
standable. The simplest way of handling the transaction is to 
draw a check in the usual way to reimburse the fund for the 
payments made, and then to deposit to the credit of the fund the 
$200 by which the fund is reduced. 

Problem 4 

The point with this problem, as with the last, is whether or 
not to use a journal entry for the purpose of closing the indi- 
vidual creditors' accounts and entering them on the voucher 

A journal entry could be used to open the voucher system, 
whereby the old accounts would be debited and the total credited 


to Vouchers Payable. This would not be as convenient as the 
method suggested in the solution^ because it would require the 
use of another book, namely, the journal, and because it would 
involve posting to the Vouchers Payable account from the jour- 
nal as well as from the voucher register. If by any chance all 
of these vouchers were not paid before the end of the first 
month in which the voucher system was installed, the balance of 
the Vouchers Payable account would not agree with the open or 
unpaid items listed in the voucher register. 

Problem 5 

A journal .entry is required in this case because a new 
account (Accounts Receivable) is to be opened in the general 
ledger and the customers' accounts are to be closed. After 
posting the journal entry to the general ledger, the accounts with 
customers would be opened in the new ledger and the balances 
would be entered on the debit side of the respective accounts. 
The postings to the debit accounts in the customers or sales 
ledger can conveniently be made from the journal entry; each 
customer's balance, therefore, as shown in the journal entry 
would be posted twice, once as a credit in the general ledger 
and once as a debit in the sales or customers subsidiary ledger. 
Both folios should be noted in the journal opposite each item. 

If it were desired to open an adjustment account in the sales 
ledger, as explained in Volume I, Chapter XXIV, the total, 
$716.14, should be credited to it from the above journal entry. 
It is suggested that the reader review the arguments in favor of 
and against adjustment accounts as given in Chapter XXIV. 

Note the use of the terms "customers'' and "sales" ledger. 
Another name given this ledger is "accounts receivable" ledger. 
All three terms are commonly employed. 

Problem 6 

As it is stated in the problem that neither of the items has 
been entered on the books, the first step is to make the necessary 


journal entries. The difficulty of making these entries lies in 
the adjustment to be made by a remittance of stamjis. ThU 
adjustment is obviously required to maintain the equilibrium of 
the journal entries. 

Where one person or business is both a debtor and a creditor, 
as in this solution, it is generally better to have two accounts 
for him, one in the customers ledger and one in the creditors 
ledger. A notation on each account referring to the other should 
prevent any failure to offset one balance against the other. 
Furthermore, if the debit and credit transactions are combined 
into one account, the result will be a deduction of asset from 
liability, or vice versa, which in general is contrary to account- 
ing principles. 

Problem 7 

At the first and even second reading this problem may seem 
puzzling, but if split up into its component transactions most of 
its difficulties vanish. Each paragraph requires its own jour- 
nal entry. The first entry is a sale; therefore credit Sales 
account and debit the customer's account. The second trans- 
action is a note and cash transaction — cash and a note arc 
received in settlement of the customer's indebtedness. The 
third transaction involves a receipt of cash, and expense of bank 
discount, and an offsetting credit to Notes Receivable Discounted. 
By analyzing the problem in this way, its solution reduces itself 
to the recording of every-day kind of cash and note transactions. 

Problem 8 

Before taking up this problem, it is necessary to turn to 
Volume IV, Chapter VII, and study the methods of adjusUng 
Surplus account. Most of the capital adjustments made on the 
books of a corporation and applicable to prior periods affect 
this account. A knowledge of its operations is required to solve 
other problems, which, apart from this matter, illustrate the 
principles set forth in Volume I. 


If the theory of surplus adjustments is mastered^ the solu- 
tion of the problem reduces itself to the balancing of the journal 
entries^ with a debit or credit to Surplus as the case requires. 

Problem 9 

This problem will probably perplex you for a while, but its 
difficulties dissolve under the operation of taking the required 
entries one by one. The first entry must record the last annual 
reserve for depreciation. The second entry must show the sale 
of the old machine. The loss resulting from the sale of the 
machine must be a charge to the reserve created to cover such 
losses. As, however, the reserve is in excess of the actual loss 
due to replacement, the amount of the excess should be restored 
to Surplus from which it was originally taken. The final entry 
is to set up on the books the asset value of the new machinery. 

Problem 10 

The first paragraph in the explanation of this problem has 
no bearing on the solution, as the requirements of the problem do 
not ask for the setting up of either the Depreciation on Delivery 
Equipment or the Delivery Equipment account. All that is 
required are the journal entries making the proper adjustment. 

The first transaction is clearly a loss, and the difference 
between the reserve and the cost of the deceased animal is a 
charge to Surplus. 

The second transaction is more preplexing. As the differ- 
ence between the cost of the horse and the price at which it was 
sold ($100) has been charged to the Reserve account, while the 
depreciation provided for the horse has been only 10% for 
three years on its purchase price, it is evident that more has 
been charged to the Reserve account than has actually been 
credited or accumulated therein. This error calls for a charge 
to Surplus and a credit to the Reserve account in order to bring 
the reserve to its proper figure. 


Problem 11 

The entries required to record the facts given in the fir«t 
two paragraphs are routine entries which you should be able to 
prepare without any difficulty. The third paragraph requircji an 
answer to the following question: What is the amount of the 
loss on this account to be charged to the Reserve account and 
written off the customer's account? 

The final entry, as your study of the preceding problems 
will make clear to you, represents a profit, in that the loss 
already charged to Surplus must be canceled. 

Problems 12 

This problem is one of only moderate difficulty. The first 
error to be rectified is the inclusion in the inventory of the two 
lathes charged to the Essex Machine Company. This amount 
must obviously be deducted from the inventory account; to what 
account should it be charged? The clerical errors can be 
corrected by reducing the asset value of the inventory by the 
net overcharge. 

Regarding the L. P. Fuller transaction, note that the assumed 
loss was charged to Profit and Loss, not to the Reserve. 

Problem 13 

This problem can readily be solved if it is attacked piece- 
meal. The first requirement should present no difficulty if care 
is taken to set up the returns, allowances, discounts, etc., on the 
correct side of the account. The journal entry to close out the 
Merchandise account and to set up separate accounts instead 
requires the journalization of both sides of the old account 

The profit on sales is the gross profit — a simple matter to 
determine if the explanation in the text is followed. 

In closing the accounts into a Trading account, remember 
that Sales and Purchases accounts must show their net figures, 
and so the accounts opened to record the returns and allow- 


ances must first be closed into Sales and Purchases accounts 
before these accounts can be closed into Trading account. Care- 
ful study of the points illustrated by the problem should enable 
you to solve it correctly without reference to the solution given. 

Peoblem 14 

Note carefully the requirements here. They do not ask for 
journal entries or the setting up of an account. Therefore^ the 
solution may be presented in the form of a brief explanation. 

The interest charged to B and C is clearly a profit to be 
divided among the three partners in the way designated. One 
solution is worked on the basis on which the partners ought to 
have contributed. An alternative method is to base the solution 
on the actual total capital contributed, viz., $185,000, instead of 
$200,000. Try to solve the problem both ways. 

Problem 15 

The difficulties of this problem are simplified by careful 
consideration of its terms and requirements. The net profit to 
be divided refers to the division of the net income resulting from 
interest on the partners* drawings in excess of salaries, reduced 
by the interest on capital. To give effect to the interest on capi- 
tal clause requires one entry, i.e., the setting up of an Interest 
on Capital account, at the same time crediting each partner's 
capital account with his interest. The Interest on Capital 
account must then be credited with the interest on the partner's 
drawings, with which each partner's current or drawing account 
is charged. The balance of the Interest account then represents 
the remaining income to be divided between the partners as 
stated in the problem. The distribution of this should be shown 
in a way to make clear the net increase or decrease in each 
partner's capital account as the case may be. It should be 
observed that partners' capital accounts are not required in the 


Problem 16 

This problem is constructed on the same lines as the preced- 
ing one, and if its terms are carefully read you should be able to 
solve it. Pay particular attention to the method you use for 
determining the interest on each partner's drawings. 

The problem is ambiguous in that there is no certainty con- 
cerning the amount which B withdrew. In the solution it is 
assumed that he drew $2,500 each quarter. However, it would 
seem fairly reasonable to assume that his total drawings for the 
year were $2,500. Ambiguities of this sort are regrettable in 
C. P. A. problems, and yet they are so often found in actual 
practice that their appearance in such problems may provide a 
farther test of the candidate's qualifications for practice. 

Problem 17 

The working of this problem on partnership dissolution 
presents little difficulty, though the form in which the require- 
ments are to be fulfilled may not seem clear at the first reading. 
The first step should be the preparation of a balance sheet to 
disclose the loss and at the same time to furnish the balances of 
all the accounts required for the solution. The solution may 
be presented in the form of a running comment which explains 
the division of the remaining cash balance after the trade cred- 
itors' claims have been settled. 

Problem 18 

The solution of this problem follows the same general lines 
as the solution of Problem 17. Having drawn up the balance 
sheet, a comparison of the assets available for distribution with 
the balances in the capital accounts discloses the loss (to be 
borne by each partner in his profit -and loss sharing ratio). 

Problems 19 to 21 

These three problems furnish further practice work in part- 
nership accounting. As the comments which accompany their 


solution are explanatory of the difficulties involved, no further 
comment is here required. 

Problem 22 

The number of transactions involved and the lengthy require- 
ments make this problem seem difficult, but it can be worked 
out step by step on straightforward lines. The text covering 
the various points illustrated should be reviewed as work pro- 
gresses, both to insure correct procedure and to refresh the 
memory on any doubtful points. 

In solving the problem, take up first the prepaid and accrued 
items, giving full explanation for each journal entry. In your 
solution prepare a working sheet based on the procedure de- 
scribed in Volume I, Chapter VIII, and compare it with the 
working sheet shown in the solution. 

Problem 23 

In the organization of a corporation to acquire a business 
formerly conducted by a partnership or a sole proprietor, the 
cash of the old business as a rule is not taken over by the new 

The solution is based on the assumption that the partnership 
books are to be discarded and a new set of books opened for the 
corporation. When the partners in a business become the prin- 
cipal stockholders in a new corporation formed to take it over, 
it is advisable, though not necessary, to open a new set of books. 
Entries could be made bringing onto the books only the new 
accounts and closing out the capital accounts of the partners. 

In this problem, if the accounts were to be continued in the 
books of the former partnership, the only entry necessary would 
be as follows: 

Good- Will $25,000.00 

Smith, Capital $ 10,000.00 

Jones, Capital 10,000.00 

Clark, Capital 5,000.00 



Smith, Capital 70,000.00 

Jones, Capital 70,000.00 

Clark, Capital 35,000.00 

Capital Stock 175/)00.00 


Problem 24 

When subscriptions to capital stock are taken, to be paid for 
later, the stock certificates are usually not is.sued until the sub- 
scriptions have been paid. In that event no credit can rightly 
be made to the Capital Stock account until payment for the stock 
has been received. This necessitates the opening of two tem- 
porary accounts to record the subscriptions receivable and the 
amount of the subscribed capital stock — as illustrated by this 

Problem 25 

By *'book value" in this problem is meant the net worth of 
each share of common stock. The problem illustrates the fuunda- 
mental accounting principle that the net worth or capital of a 
business is the excess of its assets over its liabilities. It also 
illustrates the fact that this essential nature of capital is as true 
of the corporation as of any other form of business organization. 

Problems 26 to 30 

The chief requirement for the solving of this and the next 
four problems is a thorough grasp of the procedure in drawing 
up a statement of affairs, a deficiency account, and a statement 
of realization and liquidation. A thorough knowledge of this 
technique and procedure can be acquired only by working over 
a number of problems until the correct methods come readily 
to mind. 

In this kind of problem it is particularly important that the 
terms of the problem should be carefully read and understood 
by the student. 


Problems 31 to 34 

These problems on single-entry methods furnish valuable 
practice work in fundamental principles and should be given 
very careful study. As the comments in the *Toints Illus- 
trated*' sufficiently cover each solution, no further explanation 
is required. 

The problems discussed up to this point are based on the 
theory of accounts covered in Volume I and, as you will have 
discovered, they cannot be solved without a thorough knowledge 
of the principles and procedure explained therein. You should 
continue to work over them until you are able to draw up the 
correct solutions in the forms given in Volume V without re- 
ferring to these for help or even suggestions. This practice 
work is essential as a means of clearing up any doubts about 
the correct method of procedure, and is a means of fixing in the 
mind imperfectly memorized points of theory. Not until you 
have made your ground firm behind you are you ready to pass 
on to the remaining problems, the solutions of which require a 
knowledge of the contents of Volumes I to IV. 

In your attack upon the remaining problems you are left to 
your own resources. You will find that problems of unusual 
difficulty which contain complicated or ambiguous transactions 
have attached to them a sufficient amount of explanatory com- 
ment to indicate the correct method of solution — assuming, of 
course, a thorough knowledge of the theory and procedure in- 
volved. You should by now have acquired the knack of attack- 
ing their difficulties in the right way — that is, one by one with 
intense concentration, waiting for light to break in on the mind 
both as to the nature of the transaction and the method of re- 
cording it, 

General Index to 
Business Accounting Set 


In addition to its primary purpose of providing 
a complete course of study for the man whose ambi- 
tion it is to become an accountant, a further practical 
use to which ''Business Accounting" may be put is 
that of a work of reference. The five volumes con- 
stitute a storehouse or encyclopaedia of accounting 
information from which the business man, the book- 
keeper, and the accountant can pick and choose the 
particular information they are in search of to solve 
an accounting difficulty or problem. 

The use of the volumes in this way will be facili- 
tated by searching for the desired information, not in 
one or more of the separate indexes found at the end 
of each volume, but in the general or main index 
which follows at the end of this guide. The separate 
indexes serve the purpose of quick and ready refer- 
ence to a matter which the reader knows to be dis- 
cussed in a particular volume. The general index is 
for the use of the reader who wishes to review all the 
information on a given subject or for the business 
man who desires to look up accepted practice on a 
particular point. 

The man who is not a professional accountant, 
however extended and thorough his knowledge, of 
the accounting field, has continual need of such a gen- 
eral view of the subject as these volumes present, to 
confirm his recollection of an item or to deteruune a 



puzzling application. Such a reader will naturally 
turn first to the general index in this volume to trace 
connections and cross-references. 

Without this reference aid, the reader who is 
studying business accounting as a whole, or is in 
search of the best method of solving an accounting 
problem, would be compelled to consult the indexes 
of several of its volumes if he wished to exhaust the 
information contained in its pages on a given subject. 
With a general index, however, he can compare the 
information in one volume with that in another; he 
can look up rapidly and with precision the informa- 
tion he is in search of; he can find in one place and 
in one index reference by volume and page to the par- 
ticular subject he wishes to study or refer to. 

Few men carry in their recollection the full detail 
of matters with which they are not working daily. 
Yet not many business men have acquired the habit of 
immediate recourse to the index of a book which will 
give them the accounting or any other kind of infor- 
mation they may need. In this respect the mental 
attitude of the business man is unlike that of the pro- 
fessional man. The professional man is compelled 
to master the existing body of knowledge relating to 
his profession, and in consequence he is trained to 
have prompt recourse to books when in need of in- 
formation. The business man has learned primarily 
in the school of experience. As the knowledge to be 
acquired from books, though exceedingly helpful, is 
not among the first requisites for success in a busi- 


ness career, the business man does not always know 
to what extent books can help him. Moreover, even 
when he feels the need of consulting books, he often 
does not know the quickest way to obtain the informa- 
tion he desires. 

The purpose of an index is, of course, to enable 
the reader of a particular book to find the page or 
pages on which appears the information he is in search 
of and which he knows to be or which may be assumed 
to be in the book. The method of finding this in- 
formation is too well known to require any explana- 
tion. Attention, however, may be drawn to the utility 
of cross-references as means of directing the search 
if the reader wants to exhaust a given subject. In 
cases where certain specific information forms a part 
of a whole subject and it is desired to study the re- 
lationship of the part to the whole, a cross-reference 
will usually be found indicating the direction in whicli 
the search is to be made. For instance, in looking up 
a point relating to the transactions of a holding com- 
pany, on referring to ''Holding Company" the cross- 
reference is found ''See also 'Combinations and Con- 
solidations' " ; under "Coinsurance Clause" appears 
the cross-reference "See also 'Fire Insurance, Ad- 
justment'"; under "Administrative Expense*' ap- 
pears the cross-reference "See also Xabor, Indirect,' 
'Non-productive Departments' " ; and so on. In each 
of the above examples the reference is from the part to 
the whole, so that if the study of the part fails to fur- 
nish the explanation sought for, the reader's attention 


is directed to a larger and more comprehensive field 
of information. 

In the same way, one subject which is closely 
allied to another subject may often be profitably re- 
ferred to as a means of throwing further light on a 
difficult point or matter. For example, in the study 
of reserves an allied subject is that of sinking funds 
and so a cross-reference is found under both heads 
connecting one subject with another. 

In the use of the general index two points in par- 
ticular need to be stated: 

1. All references to problems are page numbers 

and are treated in the same manner as 
references to forms, i.e., they are indented 
beyond the margin of other headings and 
in this way are distinguished from ordi- 
nary text matter. 

2. Cost accounting items have not in all cases 

been distinguished as such in the general 
index, but are to be inferred in all in- 
stances of reference to Volume III, which 
is entirely on the subject of cost ac- 


(All references are to pages. Roman numerals indicate volumtt) 

Abstract of Stores Ledger, II, 143^ 144 
Acceptances, Trade, I, 304, 305 
Accident Insurance, III, 238 
Accommodation Indorsement, IV, 248 
Account, (See also "Accounts," "Accounting," 
"Controlling accounts," "Ledger") 
Forms, I, 43 
Books of (See "Books of account") 
Capital, I, 67 
Cost of sales. III, 357 

Illustrated, III, 320, 360 
Debits and credits defined, I, 17, -ft, 176 
Deficiency, I, 140, 141; IV, 319, 326 
Illustrative statements, I, 140; IV, 32Q 
Problem, V, 61 
Defined, I, 17 
Field of service, II, 265-267 

Example, II, 265, 266 
Form of, I, 42-44 

Forms, I, 43 
Mixed, I, 79-83 
Adjustingf I, 80-83 
Example and treatment of, I, 80-83 
Nominal, I, 59, 60 
Personal, I, 58, 59 
riant and sundry assets, I, 371 

Problems, V, 170, 202, 277, 281 
Profit and loss (See "Profit and loss ac- 
Real, I, 58, 59 
Surplus (See "Surplus") 
Work in process. III, 79, 83 
Entries, III, 83 
Illustrated, III, 85, 90 
Journal entry illustrated, III, 107 
Process method. III. 90. 
Production-center system, illustrated, III, 

Textile costs, III, 369-376, 380-389 

Defined, I, 5, 16, 17; II, 3 
Functions of, classified, I, 5 


Defined. I. 10 

Duties of, I, 6, 7, 16 

Functions of, I, 7-10, 18 
Auditing, I, 0, 10 
Clear reports and statemrata. I. f 
Planning and adapUnff lystema, I, 7 
Recording financial history qI 

Special investigaliona, I, 0, 10 

Professional, I, IS 

Public,.ccrlified, I, IS, 14 

Training of, I. 12 

Accounting. (See also "Account,- 
Advanced. I. 8, 9; IV, 5-11 
Auditing, I. 9, 10 

Distinguished from elemenUry. IV. S 
Scope of, IV. S-n 
Analytical. II. 6 
Branches and chain alorts (8m **BrBack 

Branches of. II, 5-8 
Cash discount. I. 375-00 
Club (See "Cluba") 
Defined. I. 7 
Function of, II, 7 
Corporation (Sec "CocporaUoa**) 
Cost (See "Coat ac<x>untinf ") 
Dealing with— 
Persons. II, iS 
Progression or retrogrcaMon. 

Property. II, tS 
Defined. II, 8 
Expense diatribution. II. 468 
Functions of. II. \i 
Estate (See "Estate accountiac") 
Inspective, II. 

Methods, modernisatioa ol. I. 5-5 
Operative, II. 6 
Partnership (Sec "Parlncrabip'*) 




Accounting — Conlinued 

Place of, in organization, II, 4 

Plant (See "Plant") 

Presentation of figures in statements, ^I, 

8, 153 
Professional (See "Professional accounts") 
Records. (See "Records") 

Stores, III, 122-141 (See also "Stores") 

Elaborate, not desirable, II, 53 

Establishing, II, 266 

Mechanical, II, 173-175 

Necessity for proper, II, 5 

Officials and employees, co-operation of, 
II, '44 

Organization plan, II, 43 

Planning and installing, I, 7; II, 32-51 
(See also "Business, survey of," "Busi- 
ness, planning accounting system for") 

SuperHsion, Mathews, George, quoted, 
Terms used in, I, 16-26 

Account, I, 17 

Accountancy, I, 16, 17 

Accountant, I, 16 

Assets, I, 20 

Bookkeeper, I, 16 

Books of account, I, 10, 23 

Capital, I, 22 

Corporation, I, 19 

Credit, I, 17 

Debit, I, 17 

Liabilities, I, 21 

Partnership, I, 18 

Proprietorship, sole, I, 18 

Statement, I, 25 * 
Theory and practice, II, S 

Accounts, (See also "Account," "Accounting," 

Adjusting (See "Adjustments") 
Agency, II, 373, 374 
Analysis of, I, 399-425 

Credit accounts, I, 415-425 

Debit accounts, I, 399-414 
Asset, I, 65 

Depreciation, I, 317-321 
Attorneys' (See "Professional accounts") 
Auditing, II, 6 
Balancing, I, 44 
Charts, II, 45; III, 20 

Form, III, 19, 20 

Accounts — Continued 

Classification, I, 57-69, 259, 399-425; 
II, 264-286 
Problems, V, 100, 215, 362 
Aid to correct bookkeeping, I, 62-64 
Aid to preparation of statements, I, 64, 65 
Branches and chain stores, II, 379, 380 
Chronological record, II, 269 
Correct, importance of, I, 57 
Credit accounts, I, 415-425 
Debit accounts, I, 399-414 
Grouping to facilitate statement prepara- 
tion, II, 284-286 
Groups, variations in size of, II, ^69 
Ledger arrangement, II, 270 
Manufacturing or trading company, II, 

Methods of, II, 267-269 
Name and purpose of account both con- 
sidered, II, 269, 270 
Numeric system, II, 268, 271, 277-283 
Personal accounts, II, 267 
Process cost system. III, 131, 328 
Retail business, II, 268 
Subdivisions, I, 60-62 
Closing (See "Entries, closing") 
Controlling (See "Controlling accounts") 
Credit, analysis of, I, 415-425 
Creditors', mail-order business, II, 392 
Debit, analysis of, I, 399-414 
Departmentalization of. III, 5, 7, 22 
Details to be recorded, II, 266 

Working balance sheets, II, 266 
Estimated cost system. III, 354-361 
Expense, indirect, I, 68, 69, 236; III, 95-105, 
212, 217, 221, 223, 234-242, 268, 310 
(See also "Expense") 
Fixed charges. III, 234-242 (See also "Fixed 

Income, I, 67 
Inventory, III, 79 
Journal entries (See "Journal") 
Liability, I, 66 

Numbering, II, 268, 271, 277-283 
Decimal system, II, 271, 280-283 
Universal system, II, 271, 277-279 
Offsetting entries, I, 64 
Opening entries, I, 180, 263, 339-343, 367, 
370; II, 233, 234 (See also "Entries, 
Forms, I, 181, 339, 340, 367, 368 



Accounts — Continued 
Payable. I, 113, 267 

Analysis of, I, 415, 416 
Personal, II, 268 

Posting (See "Ledger, posting to") 
Process cost system. III, 86-97, 269, 271, 
328, 343-347 
Classification, III, 328 
Closing accounts, III, 106-108 
Illustrated, III, 343-347 
Forms, III, 344, 346 
Production-center system. III, 310-327 
Chart, III, 310 

Form, III, 312, 313 
Illustrated accounts, III, 319-326 
Receivable, I, 109, 266 

Problems, V, 19, 21, 70, 231 
Analysis of, I, 402 
Assignment of, IV, 221 
Assignment of, special register, IV, 222 
Losses on, as closing problem, IV, 13 
Schedule of, I, 157, 158 
Uncollectible, I, 326, 327 

Problem, V, 19 
Valuation of. IV, 218 

Problem, V, 70 
Verification, IV, 426 
Suspense, IV, 22, 27 

Problem, V, 137 
Textile costs. III, 366-401 (See also under 

"Textile costs") 
Use of, illustrated, I, 41, 42 
Verification of, IV, 418 
"Accrual Basis" as Compared with "Cash 

Basis," IV, 19, 20 
Accruals, (See also "Deferred credits," 
"Deferred debits") 
Accrued interest distinguished from interest 
accrued, IV, 13 
Accumulation Envelope, Hotel Guest 
Charges, II, 439, 440 
Form, II, 440 
Adding Machine^ II, 350 
Additions, Expenditures on, Capital 

Charges, IV, 47 
Adjustments, (See also "Entries, adjusting") 
Problems, V, 125, 132, 180, 271, 343 
Advanced accounting, scope of, IV, 3-1 1 
Between actual and applied expense. III, 
212, 282-285, 295 
Flat percentage charge. III. 284 

AojCHTMBNTs— ConhntM^ 

Between actual and applied mmM 


Production-center lyitem. III. tM 

Reserve account. III. MS 
Between actual and eatimatcd raata. III. SS) 
Capital or surplui. achedak of. I. IM. I« 
Capital, partnership. I. S48-SM 

Problem. V. 116. 183. 187 
Corporate dividends. IV. 55-M 
Deferreff credits. IV, ««-S< 

Problems. V, 125. \3i. 1S7. 180 
Deferred debits. IV. 12-23 

Problems. V. 125. 132. 187. 180 
Fire loss (Sec "Fire loss adjustmrnU'*) 
Intercompany. IV. 365. 366 
Inventory (See "Inventory") 
Mercantile budneaa, illustrative atJiteaenl, 

IV. 815 
Profit determination. IV. 33-54 
Reserves and funds. IV. 104-118 
Sinking fund. IV. 160 
Stores, II, 143; III. 189 
Surplus, I, 159; IV. 95-103 

Problems, V, 15, 16. 18. 21. IM. ISt, IS7. 
148, 180, 266, 271. 284. 312 
Administrative Expense. I. 69; II. 29A; III. 

18. 98, 102, 168, 172. 187. 213. 220. Ml 

(See also generally "Labor, iodirect," 

"Non-productive departments") 
Account illustrated. 

Textile costs. III. 896. 397 
Account, process system. III. 166. 344 

Form. III. 344 
On distribuUon sheet. lO. 224. tSS, M0 
Production-center system. III. 291 

Account illustrated. III. 321 
Standing expense. orders. III. 2M 
Sub-departments. III. 265 
Administrator, II. 404 (See •ko **Cat«t« 


Department. II. 154 

Sales department, relation to, II. IM 
Expense. I. 65. 98. 113. 119; II. 468; UI. 

217. 220; IV. 14. 27 
Good- will value of. IV. 18. 254 
Mail-order busineas. II. 393 
Agencies. II. 373 

Accounts of. II. 373. 374 
Home office, accounts with. II. 374 
Agent's Orocb Bu.\nk. II. 391 



Agbeement, Pabtnebship, II, 17 
Aids, Mechanical, II, 3,49-359 
Automatic register, II, Z5(i, 357 
Billing machine, II, 169-171, 352 
Calculating machine, II, S50-S52 
Cash register, II, 358 
Essential requirements of, II, 349 
Importance of, II, 349, 350 
Numbering ma hine, II, 358 
Photographing machine, II, 357 
Prevention of errors, IV, 380-381 
Slide rule, II, 355 
Stamp affix'jr, II, 357 
Tabulating machine, II, 353-355 
Time recorder, II, 307-309, 358; III. 176, 179 
Typewriter, II, 356 
A LA Cabte Dinivg Room, Checking Sys- 
tem, II, 433-435 
Allowable Deductions Recobd, II, 848 

Form, II, 347 
Allowance Joubnal, II, 386 

Form, II, 337 
Discount (See "Discounts") 
Purchase rebates and, account, analysis of, 

I, 434 
Returns and. 
Analysis sheet of allowances, II, 126 

Form, II, 125 
Journal entries, I, 184 
Refund ticket, II, 225 

Form, II, 226 
Register, II, 125 
Form, II, 125 
Sales, I, 99 

Rebates and allowances account, analysis 
of, I, 411 
Alterations ob Additions, 

Expenditures on, capital charges, IV, 47, 61, 
Alternate Sales System fob a Small Con- 
cern, II, 172 
Form, II, 172 
Amebican Institute of Accountants, I, 14 
Amebican Plan, Hotel, II.. 432 

Bonds, IV, 128, 135 

Problems, V, 146, 148 
Debt, IV, 153 

Sinking fund method compared with, IV, 
153, 154 

Analysis, (See also "Accounts, classification," 

Credit accounts, I, 415-425 
Debit accounts, I. 399-414 
Expense, indirect (See ' £xpeD<ie, distribu 

Pay-roll (See "Pay-roll") 
Anai-ysis Sheets, 
Allowances, II, 126 

Form, II, 120 
Textile costs (See under "Textile costs") 
Annuity, IV, 144-154 (See also "Sinking 
Amount of, IV, 146-148, 151-158 
Computation of. 

Problems, V, 146, 165, 166 
Comjx)und discount, IV, 149, 153 
Compound interest, IV, 144-146, 153 
Nature of problem, IV, 9 
Principle based on, IV, 144 
Future worth, IV, 146-148, 151, 153 
Present worth. IV, 148-151, 153 

Problem, V, 146 
Rents of, IV, 146 
Applied Rates of Expense Distbibution, 
III, 212, 271-285 (See also under "Ex- 
pense, distribution over product") 
Adjustment between actual and. III, 212, 
282-285, 295 
Appraisal (See "Valuation") 

Fixed assets, IV, 96 
Land values, I, 325; IV. 231 
Abticles of Partnership, II, 13 
Articulation Statement, Defined, IV, 413 
Assembly Products, III, 66 
Asset and Liability Method of Determin- 
ing Profit or Loss, I, 392, 393; IV, 52 
Accounts. I, 65 
Appreciation, IV, 96 

Problems, V, 66, 70 
Arrangement on balance sheet, IV, 281 
Ascertaining, method of, I, 46 
Book value, I, 132, 133, 138 
Current, I, 65; IV, 215-229 
Accounts receivable, assignment of, IV, 

Accounts receivable, valuation of, IV, 218 
Bad debts, accounting for, IV, 219 



Assets — Continued 
Current — Continued 

Bad debts, reserve for, IV, 216 

Basis of valuation of, IV, 44, 45 

Classification, IV, 215 
Problem, V, 319 

Defined, IV, 215 

Merchandise inventory, IV, 222 

Merchandise inventory, insurance of, IV, 
227, 228 

Merchandise inventory, pricing of, IV, 224 

Nature of, IV, 215 

Stock-in-trade, IV, 223, 227 

Stocks and bonds as, IV, 334, 335 
Deferred expense, I, 65 
Defined, I, 20, 21 

Depreciation, I, 315; IV, 12 (See also "De- 
Disposition of. 

Losses, I, 35 

Payments, I, 35 

Withdrawals, I, 35 
Estate accounting for, II, 405-407 
Existence of, verification of, IV, 419 
Fixed, I, 62, 65; IV, 230-238 

Basis of valuation of, IV, 44, 45 

Buildings, IV, 234-237 

Changes in valuation of, IV, 96 

Land, IV, 231-234 

Machinery and equipment, IV, 237, 238 

Nature of, IV, 230 

Reserve for depreciation on, IV, 115 

Sale of, I, 112 

Securities owned for purposes of control, 
IV, 335 

Valuation, effect of depreciation on, IV, 49 

Verification of, IV, 428 
Floating (See subheading "Current, "above) 
Intangible, I, 393, 394; IV, 250-264 

Copyrights, IV, 261 

Franchises, IV, 263 

Good-will, IV, 250-257 

Nature of, IV, 250 

Patents, IV, 257-260 

Royalties, IV, 262 

Trade-marks, IV, 260 

Trade secrets. IV, 261 
Liquidation, I, 146-148 
Plant (See "Plant") 
Recording, illustrated, I, 62, 63 
Replacement of (See "Repairs and re- 

AsBcn— CorUin tud 

Revaluation, relation to Burplttt. IV. 1 
Single-entry bookkeeping (Sm 

ing. singles itry *) 
Sources of. I, S4, 35 
Creditors, I. S4, 35 
Profits. I, 31. 34. 35 
Proprietor. I, 34. S5 
Surplus from sale of. IV. M 
Tangible and intangible, ^n f fa-e a try. t. 

393. 394 
Valuation of, IV. 7, 41-~45. 168. tlS^fiO 
Problems, V. 15. 16. 18 
Data, sources of, IV, 45 
Insolvency. I. 132. 138; IV. SW 
Kinds of, IV. 42. 43 

Knowledge required by aecottntABt lor, 
IV, 7 
Verification of. 

Existence of asset, IV, 419 
Importance of, IV, 417 
Ledger account, IV, 418 

Accounting for, IV, 239 

Problem, V. 207 
Definition and treatment. IV. tS8 
Distinguished from depreciation, IV, t9# 
Reserve for, IV, 115 
Assets and Liabilities. STATKMB!rr or. I, 
46-49 (See also "Balance abect.'* 
Forms, I. 46-49 
Problem. V, 336 
Assignees (See "Receiveri") 
Attorneys' Accounts (See "Proliwi nn a l 

Auditing, I, 9, 10; II. 6; IV. S 

Necessity for, I, 74 
Auditor, Functions or, I, 10 
Automatic RsaisTrJi. II. S5<l. 357 
Automobile Factor r. 
Inventory sheet. III. 121 
Form. III. 120 
Averages. Theory or. 

Applied to accrued liabtUtica. IV. H 
Applied to keeping books oo cask 
IV. 20 


Bad Debts (See "Debta, b^d") 

Account, I, 44 



Balance — Continued 
Interest on, I, 111 
Reconciliation of, I. 225-227; IV, 425 

Problems, V, 3, 4 
Verification of, IV, 425 
In hand and on deposit, I, 108 
Trial, locating differences in, IV, 405-410 
Balance Division of Stores Ledgeb, II, 

142, 143 
Balance Sheet, I, 58, 59, 102, 116-128; H, 
289; IV, 279-293 (See also"Statements") 
Account form, I, 117; IV, 285 

Forms, I, 118, 337; IV, 286, 287 
Accounts, II, 264 

Arrangement of content, I, 117-123; IV, 
Assets, I, 117-119; IV, 281 
Capital, I, 117-120; IV, 283 
Liabilities, I, 117-120; IV, 282 
Purpose to be served, factor in, IV, 281 
Comparative, IV, 288 

Problem, V, 253 
Condensed form, IV, 285 
Form, IV, 286, 287 
Problem, V, 395 
Consolidated, IV, 353-375 

Problems, V, 277, 304, 312, 319, 328 
Advances to subsidiaries, IV, 373 
Complications, suggestions for avoiding, 

IV, 356-358 
Good-will, IV, 361 

Problems, V, 202, 277, 328 
Illustrative statements, IV, 354-356 
Income tax regulation, IV, 353 
Investment accounts, substitution of 

assets and liabilities for, IV, 356, 358 
Liabilities and deficit of a subsidiary, IV, 

Method of consolidation, IV, 354 
Minority interest of subsidiaries, IV, 372, 

Premiums, IV, 361 
Problems, V, 300, 328 

Profits of subsidiaries prior to consolida- 
tion, IV, 359-360 

Purpose, IV, 353 

Surplus adjustments, I, 159; IV, 95-103 
Problems, V, 284, 312 

Surplus and dividends of subsidiaries, IV, 

Balance Sheet — Continued 
Consolidated — Continued 

Surplus of subsidiaries, IV, 361, 363 

Problem, V, 304 
Surplus of subsidiaries, when stock only 
partly acquired, IV, 363 

Contingent liabilities, I, 120; IV, 288 
Corrected, I, 126 

Form, I, 126 
Date of, I, 122 
Deferred charges, I, 118, 119 
Deficit, showing of, I, 119; IV, 284 

Problems, V, 271, 304 
Defined, I, 116; IV, 279 
Depreciation reserve, I, 318 

Problem, V, 271 
V Dividends, cumulative, unpaid, IV, 291 
Entry of inventory accounts. III, 79 
Federal Reserve Board form, IV, 287 

Form, IV, 288, 289 
Form of, IV, 280 

English, reverse of American, IV, 280 
Holding company, IV, 340-352 (See also 
subheading "Consolidated," above) 

Compared with consolidated balance 
sheet, IV, 340 

Complications, IV, 343, 344 

Illustrative statements, IV, 341, 342, 

Method of showing investments in the 
subsidiaries, IV, 347 

Methods of presentation compared, IV, 

Necessity for consolidated balance sheet, 
IV, 343 

Objection to, IV, 350 
Illustrative form, IV, 285-287 
Importance of, IV, 279 
Inadequacy of, for insolvents, I, 130, 131 
Incorrect form of, I, 121 

Form, I, 121, 122 
Ledger balances, correct showing of, IV, 291 

Contingent, I, 120; IV, 288 

Notes receivable discounted, IV, 288 

Showing of, I, 117-120; IV, 282 
Manufacturing company, illustrative state- 
ment, IV, 304 
Mercantile business, illustrative statement, 

IV, 311 




Balance Sheet — Continued 

Notes due from or payable to proprietors or 

corporation officials, IV, 291 
Purpose of, I, 110; IV, 281 
Real and personal accounts, I, 58, 59 
Receiver's, I, 143, 149 

Form, I, 151 ■ 

Report form, I, 117; IV, 286 
Forms, I, 103, 118, 119 
Problem, V, 45 
Representing insolvency, example of, 1, 134, 
Form, I, 134, 135 
Reserves, showing of, IV, 284 
Special points, IV, 288 
Stock brokerage, II, 428-431 
Tie-up with income statement, IV, 292 

Problems, V, 132, 221, 336 
Treasury stock on, IV, 208 
Problems, V, 152, 277 

Account, charge for, I, 223 

Interest on, I, 111, 220 
Reconciliation of, I, 225-227; IV, 425 

Problems, V, 3, 4 
Verification of, IV, 425 
Columns in cash book, I, 228 
Depositors ledger, II, 253 

Form, II, 252 
Statement, I, 224, 225 

Form, I, 224 
Stock, IV, 200 

Creation of, IV, 96 

Distinguished from undivided profits, FV, 
97, 98 
Transfers, recording, I, 228, 229 
Bankers' Investments in Corporate 

Stocks, IV, 334 

Accounts and reports of trustees, IV, 322 
Appraisal of property, 1, 132; IV, 322 
Deficiency statement, I, 140, 141; IV, 319. 
326 I 

Problems, V, 61, 66, 70 
Priority of debts, IV, 323 
Realization and Hquidation statement, I, 
142-152 (See also "Realization and liqui- 
dation statement") 
Form, I, 145 
Referees in, IV. 321 

Bankroptct— ConlmiMrf 

Statement of affairs, I. ItO-Ul; IV. tU. N* 

(See also "Statement ol tJUinT) 
Trustees in. 

Problems. V, 78, 83 
Appointment and duties. I. I4f ; IV. tit 
Betterments. PBoriTii ExrnrDKO Poa. «• 

Basis or Dividcnm. IV, 91 
Bill or Material, III. 135. 304 

Form. III. 135. 304 
Billing Machine, ll, 100-171. 8M 
Department store work. If. 170. 171 
Invoices, making. II. 169. 55i 
Bills or Exchange. I, 295 
Bin Tag. III. 132 

Form. III. 133 
Block System or CLABSincATioN, HI. IM 

Attorney's office. II. 390. 397 

Form, II, 397 
Stock broker's. II. 420-423, 
Forms, II. 421 
Boiler Insurance, III. 238 
Bond Dividends. IV, 74, 92 
Bond Tables, Use of, IV, 9 
Bonds, (See also "Securities") 
Account, analysis of, I. 418 
Accounting for. IV, 132-142 
Investment, IV, 132-139 
Issues, IV, 139-142 

Problems. V, 140. 140. 148. 152. !«• 
Accumulation defined. IV. 129 
AmortizaUon. IV. 128-131. 135 

Problems, V. 146. 148 
As current assets of certain corporalioM. 

IV, 334. 333 
Brokerage on, IV. 123 
Classification of, IV, 122 
Corporate. IV, 121 
Coupon. IV. 122. 123 
Defined. IV, 121 
Denomination of. IV, 122 
Discount. IV, 9. 124. 137, 141 

Problems. V. 152. 100. 215. 177 
Account, analysis of. I. 407 
Accounting for. IV. 137. 138. 141 
Distinguished from notes, IV, It* 
Distinguished from real MUto hamd aad 

mortgage. IV. 121 
Interest (See "Interest") 
Investment value, rakulatton ol. IV, ISf- 



B ONDS — Continued 
Investments in. 

Balance sheet treatment of, IV, SS5 
Journal entries, IV, 136 
Problem, V, 148 

Discount, IV, 141 
Entries in books, IV, 139, 140 
Interest, IV, 140 
Premium, IV, 141 
Owned, account, analysis of, I, 404 
Par value, IV, 123 

Premium, IV, 9, 124, 125, 134, 135, 141 
Problems, V, 148, 300 
Account, analysis of, I, 419 
Accounting for, IV, 135 
Price, IV, 123, 124 

Factors determining, IV, 124 
"Market value," IV, 124 
Profit and loss on sales, IV, 138 
Real estate distinguished from corporate, 

IV, 121 
Redeemable at face value, IV, 124 
Registered, IV, 122 
Sale of, profit and loss on, IV, 138 
Schedule of investment, I, 159 
Security for, IV, 122 
Sinking fund, to provide for retirement of 

(See "Sinking fund") 
Term, IV, 122 
Trust deed securing, provisions of, FV, 155, 

Trustee, IV, 121, 157 
Unissued, IV, 140 
Value, computing, IV, 124-126 

Investment value method, IV, 132-139 
Bonus On Total Purchases, I, 277 
Bonus Stock, IV, 209 
Bonus System or Wage Payment, II, 305; 

m, 204 
Book of Original Entry (See "Books of 

Book Value, I, 132, 133, 138 
Defined, 1, 16 

Duties of, interlocking accountant's duties, 
I, 6, 7, 16 

Double-entry, I, 38-45 
Cost accounting, II, 461 

Bookkeeping — Continued 
Double-entry — Continued 
Purposes of, I, 79 
Value of, I. 175 
What must be shown, I, 38 
When should be used, I, 38 
Kinds of, I, 38 

Machine (See "Billing machine") 
Records, primary purposes of, I, 24 
Relation to advanced accounting, IV, 3 
Single-entry, I, 38, 377-395 
Cash book, I, 382-384 

Form, I, 383 
Day-book, I, 378-381 (See abo "Day- 
Form, I, 379 
Fundamental characteristic, I, 377 
Inadequacy of, I, 394 
Ledger, I, 381, 382 

Form, I, 382 
Ledger accounts, insufficiency of, I, 385 
Profit and loss, methods and formulas for 

determining, I, 389-394 
Statement of condition, I, 385-389 

Forms, I, 387, 388 
Summary of changes of assets and liabili- 
ties, I, 389 
Form, I, 389 
Tangible and intangible assets, I, 393, 394 
When may be used, I, 38 
Books of Account, (See also "Records") 

Entering items in, II, 58 
Figures in, arrangement of, 11, 57 
Use and number of, II, 57, 58 
Defined, I, 16 
Grouping, II, 36, 37 
List of, U, 35, 36 

Original entry, I, 39, 40; II, 7, 27-29, 46, 47. 
231, 232, 247 

Form, II, 231 
Defined, I, 39 
Development of, II, 27-29 
Entering business transaction, example, 

I, 40 
Errors occurring in, I, 73, 74 
Form of, II, 47 
Functions of, II, 46, 47 
Purposes of, II, 232 
Subsequent entry, II, 7 (See also "Ledger") 



Branch Stores, II, 374-388 

Problems, V, 106, 108, 119, 140. 253 
Accounting system for, II, 377-388 
Accounts of, methods of keeping, II, 375 
Books and records, II, 380-388 

Forms, II, 382-388 
Classification of accounts, II, 378, 379 
^ Home office accounts with, II, 376 
Ledger accounts, arrangement of, II, 379, 

Shipments between, II, 377 
Breakfast-Food Factory, III, 42 
Brick Manufacturing Plant, III, 46, 50, 
87, 328-348 (See also under "Process cost 

Brokerage on Bonds, IV, 123 

Brokers' Investments in Corporate 

Stocks, IV, 334 
Budget, II, 316-333 
» Approval of, II, 322 
Defined, II, 316 
Estimate of — 
Costs, II, 321 
Expenditures, II, 321, 322 
Needs of business as a whole, II, 322, 323 
Revenue, II, 320, 321 
Importance of. 
General, II, 317 

To organization officials in lesser capac- 
ities, II, 318 
To the executive, II, 317, 318 
Institutional, illustrated, II, 325-327 
Lump sum, II, 316, 317 
Modifications, II, 322 
Plan, basis of, II, 323 
Preparation of, II, 318-320 

Points to be considered, II, 319 
Schedule, II, 323, 324 

Form, II, 324 
Segregated, II, 316 

Trading business, illustrated, II, 327-333 
Building and Construction Companies, 
Stocks of other corp)orations received on 
payment for services, IV, 334 
Building Expense, III, 230, 237 

Analysis, I, 409 

Production-center system. III, 289, 319 
Textile costs, III, 395 
Maintenance (See also "Repairs and re- 

Bdildino ExpttTtnt—ConHntud 
Maintenance — ConHnutd 

Chargeable to capitaJ. when. IV. «7 fi 

236, 237 * * 

Depreciation and, IV. 167 
Buildings (Src "Plunl") 
Burden (See "Expeate") 
And proprietor, relationaliip brt»««a | 

19, 20 
Control, types of, II, l«, is (8w nh rt 
Corporation. II, IS, 18 (See aim "Corpors. 

Partnership, II. IS. 17 (See alw **Pkrta«7. 

Proprietorship. II. IS 
Cost of doing, II, 304 
Information, recording, I. 24, fS 
Mail-order (See "Mail-order") 
Manufacturing (See "Manufactariag tn- 

Object of. II. 364 
Operation of. 
Accounting. II, 11, 12 (See alM **Acco«uit. 

Financing, II, 11, 12 
Fundamental divisions of. II. 10 

Form. II. 1 1 
Office administration. II, II, li 
Producing, II. 10 
Selling. II. 10 
Organization. II. ^2S (See abo **OfaBit». 

Planning accounting system for. II. 9i-41, 
2S6 (See also subheading "Stayry of.'* 
Installation, time for. II. 48 
Ledger accounts, II, 46 (See a!ao "Lm!- 

Officials and employee*, co-oprralion of, 

Organization plan. II. iS 
Outlining plan. II. 42 
Records of original entry, II, 46. 47 (9*« 
also "Books uf account. oHcinaJ r«try") 
Subsidiary and auxiliary rrcurtK II. 

47. 48 
Supervision, provision for. II. 30 
Retail (S<*e "Retail organisation") 
Rules for office routine. II, 49. 30 



B usiNESS — Continued 

Statement of a going, I, 47-49 
Survey of, II, 32-41 
Accounts in use, II, 38 
Books in use, II, 35, 36 
Character of business, II, 33 
Object of, II, 32, 33 
Preliminary considerations, II, 32 
Records, grouping, II, 36-38 
Specific cases, II, 39 

Trading and manufacturing records, com- 
paring, II, 34, 35 
Working papers, II, 40, 41 
Trading (See "Trading business") 

Analysis of a, I, 39 
Changes in, recording, I, 49 
Factors involved in, I, 39 
First entry of, I, 39 
Wholesale, II, 152-154, 268, 363-372 
Classification methods, II, 268 
Combined with retail, II, 152-154 
Cost accounting for (See "Cost accounting 

for trading enterprise") 
Sales book, II, 171 
Business Corporations Law, II, 20 
Business Executives (See "Executives, busi- 
By-Froducts, III, 147 

Calculating Machine, II, 350-352 
Listing, II, 352 
Non-listing, II, 351 

Purchasing, points to observe in, II, 352 
Candy Factory, Cost System, III, 13 
Capital, I, 28-36; IV, 283 
Account, I, 67 

Closing drawing account into, I, 100, 101 
Closing profit and loss into, I, 83-86 
Partnership adjustments, I, 348-350 
Problems, V, 116, 183, 187 
Accountant's point of view of, 1, 30 
Accounting definition of, I, 22, 28 
Additions to, I, 35, 36, 112 
Adjustments, schedule of, I, 159, 160 
An accountability, not a liability, I, 120; 

IV, 283 
Ascertaining, method of, I, 46 
Balance sheet presentation of, IV, 283 

Capital — Continued 
Changes in. 

Adjustments of, I, 159, 160 
Causes of, I, 35, 36 
Example of, I, 36 
Factors of, I, 389 
Summary of, I, 34-36 
Contributions, single-entry statements, 1,31, 
32, 112, 390-392 
Problem, V, 90 
Decrease in, single-entry statements, I, 332 

Problem, V, 97 
Deductions from, I, 35, 36 
Dividends not to be paid from, IV, 57 
Economic definition of, I, 29, 30 

As related to profits, IV, 61 
Compared with revenue expenditures, IV, 
45-49, 61, 97, 235-237 
Problem, V, 132 
Defined, IV, 46 

Maintenance — repairs, renewals, and re- 
placements, IV, 47 (See also "Repairs 
and renewals") 
Expenses, IV, 296, 297 (See also subheading 

"Expenditures," above) 
Income and expense, I, 99 
Incorrectly defined, I, 33 
Nature of, I, 120 
Net worth, I, 29 
Problem, V, 61 
Or deficit, determining, I, 46-52 
Method of, I, 46, 47 
Subsequent facts, recording, I, 49-51 
Partnership (See "Partnership") 
Profit, IV, 34, 35 
Profit balance retained as, IV, 95 
Withdrawals of (See "Withdrawals") 
Working, I, 124 
"Capital" Assets (See "Assets, fixed") 
Capital Stock (See "Stock, capital") 
Card Ledger, I, 260 
Card System, Law Offices, Laying out 

Daily Work, II, 397, 398 
Cards, II, 66, 67 
Index, II, 67 
Job, II, 307, 309 
Time (See "Time card") 

Analysis of, I, 401 



C ASH — Contin ued 
Account — Continued 
Receiver's, I, 149 
Form, I, 150 
Accountability, retail organization, II, 36ff 

Balance, I, 194, 195 
Testing, I, 195 
Verifying, I, 225-227 
Book (See "Cash book," below) 
Carrier system, distribution of expense of, 

II, 467, 468 
Defined, from accounting viewpoint, II, 190 
Attorney's, II, 401 
By check, II, 192 

Identification of payments, I, 193, 194 
Journal entry, I, 183, 184 
Petty cash, II, 192, 217 
Proof of payment, I, 193, 194 
Record, hotel, II, 441 

Form, II, 442 
Register, mail-order house, II, 393 

Form, II, 394 
Statement of, I, 104-115 (See also "State- 
ments, receipts and payments") 
Discounts (See "Discounts, cash") 
Distribution sheet, II, 226, 227 

Form, II, 227 
Dividends, IV, 72, 82, 83 
Journal (See "Cash book," below) 
Memorandum for goods returned, II, 225 

Form, II, 226 , 

Methods of handling accounts, IV, 19 

Problem, V, 7 
Account, analysis of, I, 401 
Book, I, 231; II, 218-220 

Form, n, 219 
Defined, I, 191, 229 
Distinction between cash and petty cash, 

I, 191 
Fixed fund and account, II, 217, 218 
Imprest system, I, 229-231; II, 192, 217 
Items of similar kind, handling, II, 221 
Vouchers, II, 220, 221 
Form, II, 220 
Purchases, I, 113; II, 122 
Realization and liquidation statement, 1, 147 
(See also "Realization and liquidation 

Cahu— Continued 

Recapitulation record. II, fn 
Form. II. 211 

Receipts and paym-nt*. 
Separate Inxik for. I, 100 
Statement of. I. 10*-l|3 (See •'» •'Suir. 
ments, receipt* and p«yuj.nwi > 
Receipts. dfpf)sit of. J, 193; I.'. 1 >J 
Receipts register. U, 206-iOO 
Form, II. 208 
Hotels. II, 440 
Form, II, 4^\ 
Mail-6rder house, II, 393 

Form, II, 394 
Reasons for use of, II. 407 
Use of two or more at sanM line. II. t07. 

Records, II. 18^230 
Development of. II. 191 
General, II, 189-210 

Forms. II. 193. 199. 80«. 205. 108, til. 
213, 214 
Miscellaneous, II, 222-230 
Forms, II, 224. 22r»-229 
Petty cash. II, 217-221 

Forms, II, 219. 220 
Separate, reasons for, II. 189-191 
Refund ticket, II, 223 

Form, II. 226 
Register, II. 177, 21.^ 358 
Report, daily. II. 227, 228 

Form. II. 228 
Sales (See "Sales, cash") 
System, essentials of. II. \99 
Verification. IV, 421-425 (See »!» **Vrnfie». 
Bank balance. IV. 425 
Cash in hand. IV. 421 
Payments. IV. 423 * 

Receipts, IV, 422 
Cash Book, I, 188-197. 215 217. S8t-»4: 
II. 26, 27, 190-200 
Accepted as evidence in ct»urt«, II. *7 
Arrangement of entries, I. 189. IBO 
Balance, reconciliatiun with bank 
I, 225-227 
Problems. V. 3. 4 
Entry in cash book. I. 2t6. NT 

Form. I. 227 

Method. I. 226 

Bank columns. I. 228 



Cash Book — Continued 
Charitable institution, II, 204-206 

Form, II, 205 
Closing, I, 195-197 

Columnar, I, 215-217, 284, 328; II, 196, 197 
Forms, I, 216, 217, 288, 289, 330, 331 
Chain stores, II, 381 
Forms, II, 385 
Controlling accounts in, II, 200 

Form, II, 199 
Dates, entering, I, 192 
Development of, II, 28, 29 
Discount colunm, I, 215-217, 279, 280; II, 
Forms, II, 199 
Entries, I, 284-293; II, 195, 196 
Footings, I, 192 
Function of, II, 190 
General, for mercantile concern, II, 201-204 

Form, II, 202 
Headings, I, 284, 285 
Modern, development of, I, 215 
Not a ledger account, II, 194 
Petty cash, I, 231; II, 218-220 
Form, II, 219 
Chain stores, II, 381 

Form, II, 386 
Posting from, II, 218, 220 
Posting to ledger, I, 196, 291-293 
Private, II, 228 
Form, II, 229 
Receipts and payments, separate books for, 

I, 190 
Ruling of, I, 284, 285; II, 261 
Simple, I, 191; II, 193 

Forms, I, 191; II, 193 
Single-entry bookkeeping, I, 382-384 

Form, I, 383 
Treated as ledger account, I, 190 
Where no creditors ledger is kept, II, 122 
Form, II, 121 
Castings, III, 50 
Catalogue File, II, 76 
Catalogue, Stores, III, 161 
Cement Manufacture, III, 88, 92 
Certified Public Accountants, I, 13, 14 
Chain Stores (See "Branch stores") 
Charge Slip, Hotel Guest, II, 438, 439 

Form, II, 439 
Charges (See "Costs") 
Chabqes, Deferred (See "Deferred debits") 

Charitable Institution, 
Cash book, II, 204-206 

Form, II, 205 
Pledge record, II, 841 
Form, II, 341 

Accounts, III, 20 

Forms, III, 20, 21 
Production-center system. III, 310 
Form, III, 312, 313 
Elements of selling price. III, 25 

Form, III, 25 
Expense accounts, III, 212 

Forms, III, 19, 20, 214-216 
Production-center system. III, 310 
Form, III, 312, 313 
Graphic, III, 405-418; IV, 399-401 
Advantages, III, 405 
Comparison of expenses, IV, 401 

Form, IV, 400 
Difference, III, 406-409 

Forms, III, 408, 416 
Pay-roll, III, 191 

Forms, III, 192, 193 
Plotted from statements. III, 414, 415 
Ratio, III, 406, 410-418 
Forms, III, 413, 418 
Production-center system, HI, 303 
Form, III, 303 
Accounts, III, 310 
Form, III, 312, 313 
Value of, II, 295 

Canceled, I, 241 
Exchange Charges, I, 218, 219 
Exchanged, I, 219, 220 
Method of entry on bdbks, I, 193, 194 
Proof of payment, I, 193 
Register, II, 209-211 
Form, II, 208 
Functions of, II, 210 
Separate for each bank, II, 210 
Void, I, 223 

Voucher (See "Voucher") 
Check-marking Corrections, IV, 434-436 

System of check-marks, IV, 435 
Checking or Proving Figures, III, 96 
Church Pledge Record, II, 341 

Form, II, 3il 
Accounts (See "Accounts, classification") 
Expense, indirect. Ill, 213 



Classification — Continued 
Invoices, indirect expense. III, 217 
Subsidiary ledger, III, 218 
Form, III, 219 
Labor, III, 166-168 
Labor, indirect. III, 221 
Material requisitions. III, 131, 136 
Parts, III, 305 
' Standing expense orders. III, 229-232, 267 
Numerical system. III, 229-232, 267 
Form, III, 230 
Stores, III, 122, 138, 153-162 (See also 
"Stores, classification") 
Clay Products (See "Process cost system, 

brickmaking plant") 
Clayton Act of 1914, IV, 333 
Cleaning Factory, III, 221, 226 
Clearance Sheet, II, 417 

Form, II, 418 
Clearing House, 

Stock exchange, II, 416, 417 
Ticket, II, 416 
Clock Card, II, 306-309; III, 167, 168, 176 

Form, III, 181 
Closing Entries (See "Entries, closing") 
Closing Factory, III, 42 

Piece-work time record. III, 185 
Form, III, 186 

Cloth Manufacture (See "Textile costs" 
Clubs, II, 446-452 

Accounting for, character of, II, 446 

Classification of, II, 446-448 
Closing, II, 452 
House, II, 450, 452 
Dues, II, 449 
Fees, initiation, II, 449 
Life membership, II, 449 
Membership ledger, II, 452 

Forms, II, 451 
Records required, II, 253, 448 
Subscriptions, special, II, 452 
Unprofitable activities, II, 449, 450 
C. O. D., 

Register, II, 391, 392 
Sales, I, 110, 254; II, 181-183 
Route ledger, II, 183 

Form, II, 182 

Route sheet, II, 181 

Form, II, 182 

CoiNsuRANcc Clauss, IV. i6»-tn (8m alM 

"Fire loss adjustmenU'*) 
Apportionment of liability. IV, tTO 
Defined. IV. 260 
Object of, IV, 269 
CoiNSUBia, IV, 269 ' 

Collection Accouim, Attcmimbt'a. II. 40t 
Columns; Ruunos and. II. 5^M (Sec a.'«D 

"Journal, columnar") 
Combinations and CoNsouDA-noim, 

Problems, IV, S67-S71: V. «W. m, tSI. 
284, 288. 293. SCO. 304. SI 2. 910. HS 
By lease of property. IV. S32, S37 

Difficulty of valuing leaw. IV. 337 
By purchase of property. IV, 332. 336, 337 
Account illustrated. IV, 33«, 337 
Distinguished from boldiog compuqr, IV, 
Causes leading to, IV, 330 
Consolidation, IV, 339 
Dividends (See "Dividends") 
Growth and development of. IV, SSO 
Holding company, 333-352 (See also **Iiol4|. 

ing company") 
Methods of, IV, 830-330 
Pools and gentlemen's agreements, IV, SSI 
Special points, IV, 371-375 
Trusts, IV, 381 

Working capital provided by subsultanei^ 
IV, 371 
Combined Process and Ohokb Mbtboo cm 

Cost-Finding. III. 48 
Commercial Accounting Distinct moM 

Cost Accounting, III, 4 

Merchant's consignment register. 11, *U. 

Salesmen's. II, 340. 341 
Community Associations, fob Combixatkmv 

of Corporations, IV. 331 
Comparative Statement or PnoriT A>f» 
Loss, II, 294; IV. 300 
Federal Reserve Board form. IV. SCO 
Form. IV. 300. 301 
Comparison or Costs at Vabiocs rKStooa, 

III. 66 
Compensating Eiuioiis. I. 73 
Competition, Ignorant, Dub to Ij«co««crr 

Cost Calculation, III. 6 
Composite Life Mbtmoo, DwrmmnAywm 
Rates. IV. 177. 178 
Problem, V. 168 



Compound DiscotiNT, IV, 149, 153 

Rule for finding, IV, 153 
Compound Interest, IV, 144-146, 153 (See 
also "Annuity") 
Rule for finding, IV, 153 
Compound Interest Tables, Use of, IV, 9 
Compound Products, III, 54-69 

Form, III, 57, 59 
Consignee, Sales Book for, II, 180 

Form, II, 176 

Register, II, 345, 348 
Sales on, II, 177-179 

Sales book for consignee, II, 180 
Form, II, 176 
Consolidated Balance Sheet (See "Balance 

sheet, consolidated") 
Consolidated Income Statement, 
Eliminations, IV, 365 
Intercompany adjustments, IV, 3C5, 366 
Intercompany profits, treatment of, IV, 366 
Consolidation (See "Combinations and con- 
Construction Work, II, 313, 314; IV, 36 
Anticipation of profits, IV, 36 
Employment record, II, 313 
Local conditions to be observed, II, 313 
Recording workmen's time, methods of, II, 
Constructive Accounting, I, 7 

Accounting procedure for, II, 183-185 
Column in sales book, II, 183 

Form, II, 184 
Sale of, I, 253 
Contingencies, Reserve for (See "Re- 
Contingent Liabilities (See "Liabilities, 

Contract, (See also "Contractors, building") 
Cost sheet, II, 454 

Form, II, 455 
Filing, II, 454 
Numbering, II, 454 
Profit and loss, II, 459 

Estimated profits, II, 459 
Register, II, 454 

Payment sheet, II, 454 

Form, II, 455 
Payments, II, 458 
Register, II, 454 

Contractors, Bttildinq, H, 453-460 (See also 

Charges to owners, periodical, II, 458, 459 
Labor, accounting for, II, 457, 458 

Accounting procedure for, II, 457 

Requisitions, II, 457 

Preparation of, II, 457 

Voucher, II, 458 
Records required, II, 453 
Subcontractors, II, 453 
Voucher register, II, 455-457 

Form, II, 456 
Controlling Accounts, 

Problems, V, 9, 10, 11, 106, 119. 372 
Advantages of, I, 260-262; II, 30; III, 77 
Balances, III, 108 
Checking figures, III, 96 
Closing, illustrated, III, 106-109 

Process cost system. III, 106-109 
Depreciation reserve, IV, 184 

Form, IV, 183 
Entries, I, 265, 267; III, 81-97 
Expense, indirect (See "Expense accounts") 
Finished goods. III, 79 

Entries, III, 85 

Illustrated, III, 86 

Journal entry illustrated. III, 108 

Process method. III, 91 

Production-center system, illustrated. III, 
Finished parts. III, 86 
Function of, I, 259 
Ledger made self-balancing, I, 243 
Manufacturing enterprise, II, 465 

Form, U, 464 
Material, III, 79, 81, 122 

Entries. Ill, 81 

Estimated cost system, illustrated. III, 

Illustrated, 111, 83 

Journal entries, illustrated. III, 106 

Process cost system, III, 86 

Textile costs, lU, 367, 368 
Opening, I, 262-264 

Journal entry, I, 263 

Illustrated, III, 95 

Journal entry, illustrated, III, 107 

Process cost system. III, 88 



Controlling Accounts — Continued 
Pay-roll — Continued 

Production-center system, III, 323 

Textile costs, III, 400 
Plant, IV, 181, 184 

Form, IV, 182 ^ 

Posting, I, 263, 264; II, 200 

Labor-saving devices, I, 264 
Principle, extension of, I, 270 
Process cost system. III, 86-95, 345 
Production-center system, III, 310-327 

Chart, III, 310 
Form, III, 312, 313 

Illustrated accounts, III, 319-326 
Proving balance, I, 244 
Stores (See subheading "Material," above) 
Subsidiary ledger, posting to, I, 265, 267 
Supplies, III, 122 

Journal entries, illustrated. III, 106 

Process cost system. III, 88 
With debtors and creditors, II, 200 

Form, II, 199 
Work in process. III, 79, 83 

Entries, III, 83 

Illustrated, III. 85, 90 

Journal entry illustrated, III, 107 

Process method, III, 90 

Textile costs, UI, 369-376. 380-389 
Conversion Costs, III, 88, 92 
Accounts, III, 93 
Distributed over yarn cost, textile mill. III, 

Statement, III, 93 
Co-operation Methods, for Combination 

OF Corporations, IV, 331 
Copper Smelter, III, 42 
Copyrights, IV, 261 

Corporate Control, II, 18, 10 (See also 

Form, II, 19 

Books and records, II, 20 

Features of, special, I, 362 

Opening entries, I, 367, 370; II, «S3, 234 

Procedure, I, 367-371 
Board of directors, II, 18 
Bonds (See "Bonds") 
Committees, II, 18, 19 


Consolidation (See aUo *'CombiiutioM aad 


Problems. IV, S67-S71; V. »«. f77. tSl. 
281. 288. 293. SOO. 804. Sit. Sl». 8« 

Causes which lead to. IV, 890 

Combination by, IV. 390 

Special points. IV. 971-975 

Working capital provided by subaidiarNs, 
IV. 871 
Defined. I. 19. ^i 
Dividends (See "Dividends") 
General manager. II. 18 
Holding company. IV. 939-992 

Advances to subsidiaries. IV, 849, 979 

Balance sheet. IV, 940-95« (See also 
"Balance sheet") 

Consolidated income tUtement, IV, 96^ 

Distinguished from combination by p«tr- 
chase. IV. 339 

Formation of. IV, 999 

Income, chief source of, IV, 930 

Not illegal per se. IV. 994 

Profit and loss statement, IV, 940 

Purpose of, IV, 335 

"Restraining" trade, IV, 999 

Statements, IV. 340 
Problem, V. 300 

Statutes permitting formation, IV. 999 

Working capital provided by sub«diarirs. 
IV. 371 
Investment in stock of other corporations, 

IV, 334 
Law governing, II. 20 
Legal requirements, I. 962-9<V4 

Capital, withdrawals of, I. 962, 9«9 

Profit and loss. I. 364 
Notes, IV, 121 

Short-term. IV. 122 
Organization and management, II. 18 

Form. II. 19 
Organization expenses. 
Problems. V. 207. 804 

Capitalization. IV. 17 

When to write of!. IV. 17 
Profits (See "Profits") 
Promoting uncertain bustneat veolurf. I, 

Protection of creditors, Iccal. I. 9*t-ti4 
Scrip. IV. 74. 75. 85 

Journal entries, illustrated. IV. M 



CoBPOBATiON — Continued 
Stock (See "Stock, capiul") 
Stockholders (See "Stockholders") 

Problems. V, 221, 228, 231, 249, 293, 304 
Advances to, IV, 343, 373 
Dividends declared upon acquisition of 

stock by holding company, IV, 372 
Liabilities and deficit, IV, 373 
Minority interests of, IV, 372, 373 
Profits of, prior to consolidation, IV, 359, 
Problem, V, 293 
Surplus, as premium, IV, 858 
Surplus, treatment of, IV, 361, 372 

Problems, V, 304 
Surplus, treatment of, when stock only 

partly acquired, IV, 363 
Working capital provided by, IV, 371 


Accounting (See "Cost accounting," below) 
Conversion (See under "Costs") 
Goods sold, I, 96 

Problems, V, 127, 130 

Account, III, 357-360 

Analysis of, I, 161 

Illustrative statement, IV, 308 

Information necessary, I, 161 

Method of ascertaining, I, 90, C7, 201-204 

Schedule of, I, 161 
Inventory at, II, 145 
Ledger (See "Ledger, cost") 
Percentages based on, compared v.ith selling 

price basis, II, 293 
Prime, III, 16 
Production, ratio of selling expense to, II 

Sheets (See "Cost sheets," below) I 
Summary, III, 347 

Form, m, 348 

Problem, V, 347 
Total, m, 16, 25 
Cost Accounting, (See also Vol. II, 461-465) 
Bicycle costs. 

Problem, V, 380 
Breakfast-food factory, in, 42 
Brick manufacture, HI, 46, 50, 87 

Illustrated system, HI, 328-348 
Candy factory. III, 13 
Clothing factory. III. 43, 186 
Form, m, 186 

Cost Accounting — Continued 

Combined job order and process system, 

III, 48 (See also "Textile costs") 
Compound products. III, 54-69 
Copper smelter, III, 42 
Definition, III, 3 
Distinct from commercial, III, 4 
Efficiency, standards laid down by, III, 5, 7 
Estimated cost system, III, 63-65, 349-362 
Flouring mill, III, 43 
Foundries, III, 50, 147, 261 

Form, III, 51 
Functions of, III, 5-11 
Hat factory. III, 55 

Form, III, 57 
Ice factory, III, 12 
Illustrated systems, III, 301-401 
Importance of, I, 11; III, 3 
Inventories, perpetual, maintained by, II. 

Job order system. III, 13, 41, 47-52 

Job cards, II, 307, 309 

Production-center, III, 98 

Production-center, illustrated, electrical 
goods, III, 301-327 

Records, III, 29 

Textile costs, illustrated. III, 363-401 
Lumber company. 

Problem, V, 377 
Multiple partw products. III, 66 
"Needle" industries, HI, 65 
Paper mill, HI, 43 
Patterns, III, 52 
Perplexities of. III, 13 
Printing plant, HI, 33, 42, 182 

Form, III, 32 

Problem, V, 386 
Process cost system. III, 12, 43-49, 86-95 

Brick manufacturing, III, 46, 50, 87 

Brick manufacturing, illustrated. III, 328- 

Textile costs, illustrated, HI, 363 
Profits of different lines indicated by, HI, 

Service, unit costs of. 

Problem, V, 367 
Shoe factory. Ill, 58, 63 

Form, HI, 59, 60 
Shows profit and loss, IH, 4 
Silk-throwing mill, 

Problems, V, 351, 353, 355, 357 



Cost Accounting — Continued 
Simple prod-ucts, III, 41-53 
Stock products, III, 48 
Tradins: enterprise (See "Cost accounting 

for trading enterprise," below) 
Textile costs (See "Textile costs") 
Twine factory. III, 42 
Uniform system, III, 12 
When necessary. III, 11 
Woven fabric, costs of. 

Problem, V, 347 
Yarn spinning. III, 46, 47 (See also "Textile 

Cost Accounting for Trading Enterprise, 

II, 466-477; III, 25, 74 
Cost of sales schedule, II, 475 
Direct charges, II, 466 
Inventory, opening, II, 471 
Overhead, distribution of, II, 467-470 

Accounting department, II, 468 

Advertising, II, 468 

Dehvery expense, II, 468 

Departmentalization method, II, 467 

Depreciation, II, 475 

Educational department, II, 469 

Elevator, II, 469 

Employment bureau, II, 470 

Fixed charges, II, 475 

Floor space, basis of, II, 467 

General expense, II, 470 

Heat, II, 473, 474 

Insurance on furniture and fixtures, II, 475 

Insurance on stock, II, 470 

Liability insurance, II, 470 

Light, II, 473, 474 

Power, II, 473, 474 

Rental expense, II, 471 

Service, special, expense, II, 469 

Supplies department, II, 469 

Telephone, II, 468 

Window dressing, II, 469 
Pay-roll analysis, II, 475 
Profit on sales, analysis of, II, 476-477 

Form, II, 476 
Purchases, analysis, II, 475 
Sales, net, II, 475 
Cost Accounts (See also "Accounts") 

Relation between general ledger and, III, 73 
Cost Distribution, Manufacturing, Proc- 
ess System, HI, 92 
Cost-finding (See "Cost accounting") 

Cost Ledobb (See 'Xedgw. eoet** -Coet 


Cost or Goods Sold Accotnrr, III. M7 

Illustrated. III. SM. 900 
Cost of SALia, II, 144 

Distribution of, U, 475 
Cost Period, Short, III. |0. W 

Coinciding with pay-ron period. III. tS 
Cost Records, III. 29 (See dso "Records") 
Cost Sheets, III, 30, 88, 55. 76 (See dUo 
"Ledger, cost") 
Forms, III, 39. 57 
Contract. II, 454 
Form, II. 455 
Material recorded on. III. 131 

Proof of, III, 132 
Production-center system. HI, 808 

Form. Ill, 309 
Record of stores issued. Ill, 138 
Requisitions posted to. III. 300 
Cost Summary, 

Process cost system, HI, 847 
Form, III, 348 
Problem, V, 347 
Costs (See also "Cost accounting") 

Comparison of, at various periods. HI. 66 
Conversion. III. 88. 92 
Accounts, III, 93 
Distributed over yam cost, textile wUH, 

III. 376 
Statement of. III. 93 
Departmentalization of all. process cost ^jr»> 

tern. Ill, 95 
Estimated (See "Estimated cost ^jrsteoB") 
Estimated material. III. OS 
Labor (See also "Labor") 
Direct, III. 18 
Indirect, III. 18 
Making and selling, chart. HI. 25 
Material (See also "Material") 
Direct. lU, 17 

Indirect. Ill, 17 (See also •^upplks") 
Prices fixed by. Ill, 5. 6 
Cotton Mill, 111. 43, 91 
Spinning, lU, 40. 47 (See also Textile 
Production report, weekly. III. 44, 45 
Form. 111. 45 
Coupon Books. 11. 187 
Coupon Productiom Okobs. III. 58 
Form, UI. 59. 00 




Department, sales orders, approving, II, 157 
Memorandum, II, 127, 128 

Form, II, 128 
Requisition, II, 141, 142 ' 
Sales on, II, 163 

Accounts, nuul-order business, II, 392 
Status of, in liquidation proceedings, I, 146 

Deferred (See "Deferred credits") 
Defined, I, 17, 41, 176 
Cross-indexing, II, 27 
Cdmulation of Statistics, II, 294| 295 
Assets, I, 65 
Liabilities, I, 66 

Arrangement of, II, 268 
Loose-leaf ledger, II, 340 
Order register, II, 340, 341 
Form, 11, 339 
Bill, II, 338 
Form, II, 339 
Cut Sheet Journal, II, 245 
Form, II, 244 


Dat-Book, I, 378-381; II, 26, 27 
Form, I, 379 
Accepted as evidence in courts, II, 27 
Development of, II, 27 
Entries, I, 380 

Transactions included in, I, 380 
Posting to ledger, methods of, I, 381, 382 

Form, I, 382 
Requirements for, I, 378 
Ruling and form, I, 379 
Day-Rate Method of Wage Payment, III, 
Disadvantages of, 195-197 
Debit Memorandum, II, 127 

Form, n, 127 

Deferred (See "Deferred debits") 
Defined, I, 17, 41, 176 

Amortization of, compared with sinking fund 

method of payment, IV, 153, 154 

Account, analysis of, I, 41? , 

Accounting for, IV, 219 

Debts — Continued 
Bad — Continued 
Balance sheet, treatment on, I, 326, 327 

Problem. V, 202 
Computation of probable loss from, IV, 

Income tax requirements, IV, 220 
Provision for, I, 326. 327 

Problem, V, 19 
Relation between losses and sales, IV, 216 
Reserve account, analysis of, I, 420 
Reserve for, I, 326, 327; IV, 105, 115, 216 

Problems, V, 19, 21, 228 
Valuation of accounts receivable, IV, 218 
Estate, accounting for, II, 407 
Priority of, in bankruptcy proceedings, IV,. 
Decimal System op Numbering Accounts,. 

II, 271 
Decimal System of Stores Classification,. 

m, 156 
Defective Work, III, 146 

Credits, III, 98, 101, 217; IV, 26-32 

Problems, V, 106. 108, 119, 152, 215, 2.53 
Discount on bonds, IV, 137, 141 
Expenses accrued, IV, 27 
Income, deferred, I, 66; IV, 30-32 
Liabilities accrued, IV, 26 
Taxes accrued, IV, 29 
Debits, I, 63, 65, 98. 113, 119; III, 98, lOI, 
217; IV, 12-25 
Problems, V, 125, 132, 137, 152. 180, 
202, 215, 277, 304 
Accounts, cash methods of handling, IV, 

Accrued interest vs. interest accrued, IV, 

Adjusting entries, IV, 15-17 
Advertising, IV, 18 
Dividends receivable, IV, 24 
Income accrued, IV, 19-24 (See also "In- 
come, accrued") 
Insurance. IV, 14-17 
Interest (See "Interest") 
Organization expenses, IV, 17 
Prepaid expenses, IV, 12-19 (See also sub- 
heading "Charges," above) 
Profits as affected by manner of treat- 
ment, IV, 14 
Royalties, IV, 18 
Expense (See subheading "Charges," above) 



Deferred — Continued 

Liabilities (See subheading "Credits," 
Deficiency Account, 1, 140, 141; IV, 319, 826 
Problems, V, 61, 66, 70 
Illustrative statements, I, 140; IV, 329 

Ascertaining, method of, I, 46 
Defined, I, 33, 34 

Showing of, on balance sheet, 1, 119; IV, 284 
Problems, V, 271, 304 

Accounting, II, 12, 468 
Administrative (See "Administrative ex- 
Advertising, II, 154 
Credit, II, 157 
Distribution of indirect expense over (See 

Educational, expense, distribution of, II, 469 
Financial, II, 12 

Non-productive, III, 102, 268 (See also 

"Administrative expense," "Building 

expense," "Power plant expense," 

"Stores department expense") 

Distribution of indirect expense. III, 99, 

103, 107, 257-270 
Sub-departments, III, 265-268 
Office (See "Administrative expense") 
Power plant (See "Power plant expense") 
Process cost system (See "Process cost 


Expense, indirect. III, 212 

Expense, indirect, account illustrated, 

III, 104 
Expense, indirect, distribution over. III, 

99, 103, 104 
Functions of, II, 10 
Purchasing (See "Purchasing department") 
Sales (See "Sales department") 
Service (See subheading "Non-productive," 


Account, illustrated, textile costs. III, 393 
Chart, graphic. III, 417 

Form, III, 418 
Checking goods in, II, 160 
Expense, III, 393 
Tickets. II, 159, 160 
Stores (See "Stores") 

Dzp x&Tussm—ConHnMti 


Non-productive, II, 10, It; HI. 

Productive (machine groups). III. fit, 
287. 301 (See alio **M«rliine mU 
method of distributing expca« evar 
Supplies, expense, distribution ol, II, 4M 
Traffic. II. 154. 155 
Departmental CLAaAtncATioii or Svosn. 

Process system. Ill, ISl 
Departmentalization or Aooomm, III, 

5. 7. 22 
Departmentalizatiom or Exrzsnz, II. 467 
Departure Recoro, Hotel. Gcann, 11. 4iS 

Charged back, I, 22« 
Interest on, I, 220 
Depreciation, I, 815-8«7; 11. 475; HI. M. 

100, 244-252; IV. 185-188 (See nlw gracr- 

ally "Fixed charges") 
Accounting covering, I, 817-819; III. ttS; 

IV, 179-188 
Actual and estimated vary, IV, 99. 100 
Adjusting entries, IV, 185-188 

Problems, V, 15, 18, 18. 19. «1, 215 
Appraisal method, IV. 168 

Disadvantages of, IV, 168 
Assets subject to, I, 315 
Auxiliary equipment. III. 248 

Account, analysis of, I, 41f 

Reserve account, analysis of. I. 419 
Causes of, I, 315, 318 

Obsolescence, I, 315. 818 

Time, lapse of, I. 815 

Wear and tear. I. 815 
Charge for, wrongly shown. IV. 108 
Defined. I, 315 
Distribution of charge in trading < 

II. 475 
Effect on profits, IV, 49 
Problem. V, 182 

Legal recognition, IV, 8S 
Effect on valuation. IV. 49 
Fire loss adjustment, IV, il74 
Fluctuations, I. 828 
Franchises. IV. 263. 284 
Good-will. IV. 255 
Journal entry. I. 818; HI. 107 
Kinds of. I. 316. 817 
Leaseholds, IV. 167 



Depbecxation — Continued 

Machinery and equipment. III, 290; IV, 237 
Manufacturing business, IV, 40 
Obsolescence, III, 245 
Original cost values, in arriving at gross 

profits, IV, 35 
Patents, IV. 258 

Physical and functional, I, 316, 317 
Principles and policies, IV, 165 
Prior periods, accounting covering, IV, 98, 99 

Problem. V, 180 
Production-center ^system. III, 290 
Purpose of, IV, 50 

Rates, determination of, 1, 321-325; III, 247; 
IV, 169- 178 
Composite rate, IV, 169, 177 

Problem. V, 168 
Fixed percentage of diminishing value 
method, I, 322-324; IV, 173, 174 
Problem, V, 168 
Fixed proportion methods, IV, 170-172 

Problems, V, 16, 18, 168 
Service method, IV, 172 
Sinking-fund method, I. 324. 325; IV, 

Straight-line method, I, 322; IV, 171 

Problem. V, 168 
Working hours method, IV, 172 
Repairs and renewals not compensation for, 
IV, 167 
Exception, IV, 167 
Reserve for (See "Reserves," "Sinking 

Schedule, III, 224, 234, 249, 253 
Form, III, 250, 251 
Sub-departments, III, 266 
Textile costs. III, 397, 398 
Stock-in-trade, IV, 223 
Reserve for, IV, 115 
Values, estimation of, IV, 168 

Precautions, IV, 168, 169 
Wasting of assets distinguished from, IV, 239 
Designing Forms, II, 56, 57 
Dewey Decimal System of Classification, 

III, 156 
Diagrams, Value of, II, 295 
Diamond Register, II, 342 

Forms, II, 343 
Dickinson, A. Lowes, Quoted, 
Maintenance expenditures, IV. 47 
Profit and loss sUtement, IV, 298, 299 

Dickinson, A. Lowes, QvoTED^Continued 
Profits of subsidiaries prior to consolidation, 

IV, 360 
Reserves, secret, arguments for and against, 
IV, 113 
Difference Charts, III, 406-409 

Forms, III, 408, 416 
Differential Piece-Rate Method of Wage 

Payment, II, 305; III, 200 
Direct Expense, III, 18 
Direct Labor, III, 18 (See also "Labor," 
Chart, graphic. III. 407HH7 
Forms. Ill, 408, 413, 416, 418 
Directorates, Interlocking, IV, 332 
Directors, Corporation, II, 18 
Disbursements, Cash (See "Cash disburse- 
Account, analysis of, I, 421 
Bank, I, 299 
Bonds (See "Bonds") 
Cash, I, 99, 275; II, 98; IV, 35, 244 

Problems, V, 11, 13, 23, 61, 70, 233, 345 
Abolishing, desirability of, I, 282 
Account, analysis of, I, 412 
Accounting treatment of, I, 277-280; IV, 

Bonus instead of, I, 282, 283 
Calculating, basis for, I, 276 
Cash book column for, I, 279, 280 
Cash book entry, I, 217 
Disadvantages of, I, 283 
JournaUzing, I, 277, 278 

Problem, V, 23 
Nature and elements of, I, 275 
Not deducted in ascertaining gross profit, 

IV, 35 
Not deducted in calculating bonus on total 

purchases, I, 277 
Provision for, in closing entry, I, 281 
Received, account, analysis of, I, 423 
Recording, I, 278, 279; II, 197-200 

Form, II, 199 
"Terms," I, 233 
Columns in cash book, I, 215-217 
Compound, IV, 149, 153 

Rule for finding, IV, 153 
Defined, I, 271 
Notes receivable, I, 299 

Problems, V, 13, 61, 70 
Accoimting covering, I, 300 




Discounts — Contin ued 
Paid in advance, IV, 14 
Trade, I, 100, 271-275 

Calculating, quick methods, I, 272-274 

Deducted in ascertaining gross profit, 
IV, 35 

Stating, methods of, I, 272 
Dish Breakage, Hotels and Restaurants, 

II, 442 
Dissolution, Partnership, I, 352-361 (See 

also "Partnership, dissolution") 
Distribution of Costs Direct to Product, 

Process Cost System, III, 44, 92 
Distribution of Expense (See "Expense") 
Distribution Sheet, Cash, II, 226, 227 

Form, II, 227 
Account, analysis of, I, 421 
Accounting for, IV, 77-94 

Problems, V, 137, 209, 215 
Applied to stock subscriptions, entries for 

IV, 87-89 
As liability on consolidation. 

Problem, V, 312 
Bond, IV, 7> 

Entries for, IV, 92 
Cash, IV, 72 

Entries for, IV, 82, 83 
Cumulative, IV, 89 
Problem, V, 233 

Entries for, IV, 89-91 
Declaration of, IV, 62-64 

Closing transfer books, IV, 63, 64 

Forcing, IV, 64 
Declared, status of, IV, 66 
Definition, IV, 55 
Dividend sheet or book, IV, 79 

Forms, IV, 80, 81 
Expenditures, revenue and capital, IV, 61 
Illegal. IV, 93 

Accounting for, IV, 93 
Interim, IV, 87 

Entries for, IV, 86, 87 
List, IV, 79 

Form, IV, 80 
New York law, IV, 56 
Notice of, IV, 69 
Participation in, IV, 65 
Payment, IV, 70-73, 77-79 

Form of, IV, 72 

Out of capital, IV, 93 

Procedure for, IV, 77 I 

DiVIDENM— Cofth'niMd 
Pay ment— C'on/in lud 
To whom paid, IV. i 
With borrowed money. IV, M 
Profit* avaiUble for. IV, 58 
Property, IV. 75 

Accounting for, IV, M 
Receivable, IV, U 
Scrip. IV, 74 

Entries for, IV, 85 
Sources of, IV, 56-58 
Special, IV, 86 

Entries for. IV, 86. 87 
Status of declared. IV, 68 
Stock, I. Ill; IV, 73 
Problem, V. 284 
Entries for, IV, 91 
Prohibited in Massachusetts, IV, 7S 
Subsidiary companies, elimiiuitioo oo cos* 

solidated balance sheet, IV. 96S 
"Wasting" enterprises, IV, 57 
English decision. IV. 58 
Double-Entrt BooKKEEPC«a (See **Book 

keeping, double-entry") 
Dbaftinq Expense Accoukt, IixcmraAniw 

III, 326 

Acceptance of, I, 304. 805 
Accounting covering, I, 805 
Collected by bank. I, 221 
Drawings (Sec "Withdrawals") 
Book, II, 336, 338 

Form, II, 338 
Sales, II, 336, 838, 840 
Customer's bill. II, 388 

Form, II, 339 
Tickets, accounting (or, II, 840 
Due Bill Reoister, II, 309, 870 
Dues, Cldb. II, 449 

Economics. Dbmneo. I. 80 
Economist, I. 80 

Educational DEFA»r»iE!«rr Lxnmm, Dis- 
tribution or, II, 469 
Efficiency, ^ ^ 

Increased by modern accottnlinf ■MlWHii. 

Records, application to wrwcOoo of tnvn^ 

IV. 430 



E FFiciEXC Y — Con tin ued 

Standard of, laid down by cost accounting, 
III, 5, 7 
Electrical Goods Factory, 

Illustrative production-center system. III, 
Electricity Expense, III, 233, 233 (See also 
generally "Fixed charges," "Light and 
Elevator Expense, Distribc^tion of, II, 469 
Emerson System, Wage Payment, II, 306 
Employer's Liability Insurance, III, 238 
Employment Bureau Expense, Distribu 

TioN of, II, 470 
Engineering Plant, 

Expense distribution, III, 260 
Engineering Trade, Anticipation of 

Profits, IV, 36 

Adjusting, I, 79-83; IV, 4-6 (See also 
Check-marking corrections, IV, 434-436 
Deferred charges, IV, 15-17 
Gross profit, determination of, I, 85 
Merchandise accounts, I, 81 
Mixed account, example and treatment of, 

I, 80-83 
Sinking fund, IV, 160 
Surplus (See "Surplus") 
Cash book, II, 195, 196 

Closing, I, 83-85, 91, 92, 100, 101; II, 234; 
III, 106-110; IV, 6, 7, 12 
Controlling accounts, process cost system, 

m, 106-109 
Example of, I, 84-86 
Preparation of, I, 91 

Proprietors' drawing accounts, I, 100, 101 
Provision for discounts, I, 281 
Work in process account, process method, 

m, 90 

Current, I, 265 
Journal (See "Journal") 
Offsetting, I, 64 
Opening, I, 180; II, 233, 234 
Form, I, 181 
ControlUng accounts, I, 263 
Corporation, I, 367, 368, 370, 371; II, 
233, 234 
Form, I, 367, 368 
Partnership, I, 339-343; II. 233 
Form, I, 339, 840 

Entries — Continued 

Fraudulent, avoiding, II, 30, 31 

Grouping into accounts, I, 39 
Unusual, I, 267 
Equipment, HI, 213, 217, 222 
Accounting for, IV, 237 
Depreciation, III, 244-252; IV, 237 

As to profits, IV, 93 

Problem, V, 59 
Classification, IV, 383-335 
Compensating, I, 73 
Corporation, IV, 389 
.Correction of, IV, 430-442 

Check-marking, IV, 434-436 

Fundamental principle, IV, 431 

Necessity^for, IV, 387 

Organization and efficiency records, IV, 

Rules of procedure, IV, 432 ' 

Rules of procedure, illustration of, IV, 

Three steps in making, IV, 433 
Detection oi, by bookkeeping department, 
1,73, 2r, 262; IV, 408-416 
Problem, V, 343 

Analysis of the ledger, IV, 409-413 

Articulation statement, IV, 413 

Importance of, IV, 403 

Kinds of mistakes to be expected, IV, 403 

Tests, IV, 414 

Trial balance differences, IV, 404-409 
Problem, V, 137 
Detection of, by executives, IV, 390-402 
Problem, V, 336 

Casual scrutiny, IV, 401 

Expenses, percentage of, IV, 398 

Graphic statements, IV, 399-401 
Form, IV, 400 

Gross profit, percentage of, IV, 392-394 

Inventory test, example of, IV, 395 

Percentage methods, IV, 391-399 

Turnover, percentage of, IV, 395-397 
Examples of, IV, 385-387 
Formal, IV, 384 
Intentional, IV, 383-386, 388 
Ledger, analysis of, illustrated, IV, 409-41§ 
Of principle, IV, 383-388 
Of tecnnique, IV, 384-387' 
Partnership, IV, 388 




Errors — Continued 

Prevention of, IV, 380-382 
Internal check, IV, 381 
Mechanical devices, IV, 380-381 
Proprietorship, sole, IV, 388-389 
Statistical, IV, 383-386, 388 
Substantial, IV, 384 
Trial balance differences, IV, 404 
Problem, V, 137 
Rules for locating, IV, 405-409 
Unintentional, IV, 382-386, 388 
Estate Accounting, II, 404-414 
Form, II, 411-413 
Administrator, II, 404 
Assets, II, 405-407 
Authority to act, II, 404, 405 
Debts and expenses, II, 407 
Executor, II, 404 
Final accounting, II, 410 

Duties subsequent to, II, 410, 414 
Income, II, 408 
Principal, II, 408 
Records, II, 402, 409, 410 
Trustee, II, 404 
Estimated Cost System, III, 63-65, 343-332 
Accounts illustrated. III, 353, 360 
Adjustment between actual and estimated 

costs. III, 359 
Basic principles. III, 352 
Closing inventory. III, 356 
Computing estimates. III, 353 
Conditions necessary for. III, 350, 351 
Cost of goods sold account. III, 357 

Illustrated, III, 360 
Factory ledger. III, 358 
Opening inventory. III, 354 
Estimated Material. Costs, III, 63, 1 19 
Estimated Supplies on Job, Unusual. 

Method, III, 222 
Estimation of Asset Values, IV, 7, 41-45, 

European Pian, Hotel, II, 482 
Bills of, I, 295 
Charges, I, 218 

Detection of errors by, IV, 390-402 

Problem, V, 336 
Functions, IV, 390, 391 
Importance of a budget to, II, 317, 318 
Organization by, IV, 390, 391 
Supervision, IV, 390, 391 

ExBcuTOB. n, 404 (S«« «bo "EaUU i 


Exhibits, Scbeduudi aicd SrATSMcsrrm. II. 

288. 289 

Capiul (Sec "Capita] expeoditorr*") 
Revenue, dwtinction between. aii4 rapitU. 
I, 107; IV, 45-49, 97. 2S5-«37 
Problem, V, 132 

Estimated co«t ayitem. III. MO 
Accounts, I, 68, 69, «Sfl; 111, 9S-105. f I ?. 
217, 221, 223, 234-242. 288. SIO 
"Catch-all," inadvisabtlity of, I, 161 
Chart, III, 212, 810, 

Forms, III, 19. 21, 214-216, 812, SIS 
Illustrated. Ill, 101-104 
Journal entries. III, 106-108 
Opening. III. 98 

Posting to profit and lorn acrouat. 1. 5t 
Process cost system. Ill, 89, 106-loa. fOJ, 

271. 844 
Production-center system, illustrated. III. 

Purchase journal. I. 286 
Reserve account. III. 28S 
Selling expenses, I, 97. 98 
Textile costs. Ill, 867, S0»-9M (Sm a!a» 
under "Textile costs") 
Accrued, III, 98. 100; IV. 27 

Problem, V. 123 
Adjustment between actual and appfied. III. 
212, 282-285, 295 
Flat percentage charge, m. 284 
Production-center system. III. 205 
Reserve account. III. 28S 
Administrative. I. 69; II. 298; III. 18. M. 
102. 168. 172. 187. 218. 220. 221 (Sm ako 
generally subheading **Labor, iaAmU" 

Problem. V. 841 
On distribution sheet. III. 224. 259. 220 
Process cost system. III. 160. 544 

Form. III. 844 
Production-center system. Ill, 291, »* I 
Standing expense orders. 111. 226 
Sub-departmenU. 111. 265 
Textile costs. III. 306, 397 
Advertising. II. 468; III. 217, 220 
Analysis, extent of. III. 211 
And expenditure, disllbctioa betww*. I. IVf 



Expense — Continued 

Applied (See subheading "Rates of distribu- 
tion, predetermined," below) 
Building, III, 236, 237 

Production-center system. III, 289, 319 
Textile costs. III, 395 
Capital, IV, 296, 297 (See also "Capital 

Capitalizing, danger of, IV, 46 
Chart, III, 212, 310 

Forms, III, 19, 21, 214-216, 312, 313 , 
Graphic, III, 407-415 

Forms, III, 408, 413, 416, 418 
Classification of, I, 99, 162; III, 18, 21, 213 
Classification of invoices. III, 217 
Subsidiary ledger. III, 218 
Form, III, 219 
Columns in purchase journal, II, 110-115 

Forms II, 111, 113 
Comparison of, graphic chart, IV, 401 

Form, IV, 400 
Deferred, I, 65, 98, 113, 119; III, 98, 101, 

217; IV, 12-19 
Delivery, II, 468 

Depreciation, II, 475; III, 98, 100, 244-252 
(See also generally subheading "Fixed 
charges," below) 
Account, III, 223 
Auxiliary equipment, HI, 246 
Journal entry, illustrated. III, 107 
Machinery, III, 290 
Obsolescence, III, 245 
Production-center system. III, 290 
Rates, III, 247 
Schedule, III, 224, 234, 249, 253 

Form, III, 250, 251 
Schedule, textile costs. III, 397, 398 
Sub-departments, III, 266 
Direct, II, 466; III, 18 
Distribution, II, 463, 467-477; III, 36, 98, 
212, 213, 225, 253-286 
Chart, III, 212 

Form, III, 214-216 
Non-productive departments exx)ense. III, 

Procedure outlined. III, 98, 212 
Process cost system. III, 89, 271 

Direct to product. III, 44, 92 
Sources for charges. III, 224, 253 
Distribution over departments, II, 467-477 
III, 99, 103, 104 
Problem, V, Sm 

Expense — Continued 

Distribution over departments — Continued 

Sub-departments, III, 265-268 
Distribution over product. III, 98, 213, 225, 
Problems, V, 351, 353, 355 
Adjustment between actual and applied 
expense. III, 212, 282-285 
Flat percentage charge. III, 284 
Reserve account. III, 283 
Machine-rate method. III, 272, 277-279, 
287-298, 301-327 (See also "Machine- 
rate method") 
Material cost method. III, 272, 281 
Percentage of labor method. III, 272-275 
Prime cost method. III, 272, 281 
Productive-hour method. III, 272, 275- 

Rates, predetermined. III, 42, 212, 271- 

Sold-hour method. III, 272, 279 
Distribution sheet. III, 29, 36, 38, 253-270 
Forms, III, 37, 254, 255, 258, 259, 262, 
Administrative expense, III, 260 
Depreciation (See subheading "Deprecia- 
tion schedule," above) 
Fixed charges (See subheading **Fixed 

charges schedule," below) 
Power plant. III, 260 
Standing orders and supplies requisitions 

distributed on, III, 224 
Statement of expenses, production-center 
system. III, 308 
Form, III, 307 
Stores department expense. III, 260, 264 
Stores department expense applied direct 

to material. III, 268 
Sub-departments, III, 265-268 
Educational department, II, 469 
Electricity, III, 233, 239 (See also subhead- 
ings "Fixed charges," "Light and heat," 
Elevator, II, 469 
Employment bureau, II, 470 
Equipment, III, 213, 217, 222 
Estate accounting for, II, 407 
Estimate of, departmental, II, 321, 322 
Estimated cost system (See "Estimated cost 

Fixed charges, II, 475; lit, 213, 217. 233- 
243 (See also "Fixed charges") 



Expense — Continued 

Fixed charges — Continued 

"Account" illustrated, production-center 

system, III, 320 
Schedule, III, 224, 233, 253 

Form, III, 235 
Schedule, process system. III, 341 

Form, III, 342 
Schedule, sub-departments. III, 266 
Floor space, II, 467 

Gas, III, 213, 233, 239 (See also generally 
subheadings "Fixed charges," "Light and 
General, II, 470 

Schedule of, I, 162 
"General expense account," 

Textile costs. III, 396 
Indirect, III, 18, 83 

Insurance, II, 470; 475; III, 98, 100,^213, 
217, 233, 238 (See also generally sub- 
heading "Fixed charges," above) 
Account illustrated, III, 102 
Furniture and fixtures. III, 475 
Journal entry illustrated. III, 107 
liability, II, 470 

Production-center system, III, 290 
Stock, II, 470 
Textile costs. III, 399 
Interest on investment. III, 240 (See also 
generally subheading "Fixed charges," 
Journal entries illustrated. III, 106-108 
Labor, indirect. III, 166, 168, 213, 220, 
Accounts, III, 221 

Administrative (See subheading "Admin- 
istrative," above) 
Chart, graphic, III, 191 

Form, III, 193 
Classification, III, 221 
Inspection, III, 226 
Repairs to machinery. III, 221, 226 
Standing expense orders. III, 224, 226-232 
Ledger, subsidiary, III, 218, 266, 267 
Form, III, 219 
Estimated cost system. III, 358 
Process cost system. III, 343 
Form, III, 344 
Light and heat, II. 473, 474; III, 226, 304 
(See also subheadings "Electricity," 
"Gas," above) 

ExPENSB — Continued 
Light and beat— Con/tntM^ 

Account illustrated, p^xliniina tmmUt 

system. Ill, S20 
Account illustrated, textile cxmU. III. tH 
Machine-rate method of distributiiMi C8w 

"Machine-rate method") 
Machinery, III. 21S. 217, 2«f (Sm ahs 
"Machine-rate method") 
Depreciation, III. 244-252, 290 
Expense account. III, 2M, SfS 
Insurance, III, 290 
Power expense, distribution. III, tit 
Taxes, III. 290 
Manufacturing enterprise. II, 46S 
Miscellaneous, accounts, analysis ol, I, 414 
Non-productive departments (See **A(lam»- 
istrative expense." "Building i 
"Power plant expense," 
partment expense") 
Accounts. III. 102. 268 
Chart. III. 212 

Form. III. 216 
Distribution of expense, m, M. 103, 101. 

Sub-departments, III, 265-268 
Office. (See subheading "Administrative.'* 
Account, textile costs. III, S97 
Organization, IV. 14, 17 
Problems. V. 207. 304 
Account, analysis of, I, 406 
"Overhead" account, illustrated. HI. I<H 
Plant assets. Ill, 213. 217, ftt 
Plant ledger. III. 220 
Power. II, 473, 474; III, S»i 
Power plant. III. 98. 99, 10« 
Account. III. 217 
Account, illustrated. III. lOS 
Journal entr> , illustrated. Ill, 107 
On distribution shret. III. 260 
Process cost system. III. 3*4 
Production-center system. III. 289, 290,319 
Prepaid. I, 63. 98, 113, 119; III. 98. 161. 
217; IV. 12-19 
Problem. V, 180 
Production-center system (See **llArfci«e- 

rate method") 
Productive departments. III. 105-I8i, tU 
Account illustrated. 111. 101 
Chart. III. 212 
Form, HI. 214. 215 



Expense — Continued 
Productive departments— CoreitnutJcZ 

Distribution of expense over. III, 99, 103, 
104 (See also subheading "Distribu- 
tion," above) 
Journal entry, illustrated, III, 107 
Purchase journal. III, 213, 217, 224, 253 
Purchasing department, II, 297, 298 
Rates of distribution, predetermined. III, 

42, 212, 271-285 
Recording, I, 63 

Records, III, 224 (See also individual sub- 
Rent, II, 471; III, 98, 100, 233, 236 (See also 
generally subheading "Fixed charges," 
Account illustrated. III, 101 
Journal entry, illustrated. III, 107 
Production-center system. III, 289 
Reserve for (See "Reserves") 
S-lling. I, 68. 97, 98; II, 299, 477 

As rate per pound or per* ton of product 

shipped, II, 301 
Disposition of, II, 301 
Items included in, II, 299 
Ratio of, to production cost, II, 300, 301 
Ratio of, to sales, 11, 299, 300 
Problem, V, 341 
Service, special, II, 469 
Sinking fund, treatment of, IV, 158 
Standing expense orders. III, 31, 224, 
Classification, III, 227, 229-232 
Distribution sheet. III, 221 
Distribution, sub-departments. III, 266 
List of numbers. III, 227, 229 

Form, III, 230 
Time tickets. III, 227 
Form, 111,228 
Statement of, production-center system, 
III; 308 
Form, III, 307 
Stock-in-trade, IV, 227 
Stores department. III, 98, 102 
Account, III, 217 
Account, illustrated, production-center 

system. III, 321 
Applied direct to material. III, 238, 297, 

On distribution sheet. III, 260, 264 
Sub-departments, III, 266 

Expense — Continued 

Stores, incurred before receipt. III, 150; 
IV, 227 

Stores ledger. III, 218 

Sub-departments, III, 265-268 (See also 
"Machine-rate method") 

Supplies, II, 469; III, 17, 213, 217, 221, 
Account, III, 81, 122 
Charged direct, unusual method. III, 222 
Included in term "stores," III, 23 
Journal entries, illustrated. III, 106 
Posting from stores issued book. III, 138 
Process cost system. III, 88 
Production-center system. III, 291, 325 
Requisitions, III, 221, 253 
Standing expense orders. III, 224, 226-232 
Form, III, 230 

Taxes, III, 98, 100, 213, 233, 238 (See also 
generally subheading "Fixed charges," 
Account, illustrated, textile costs. III, 399 
Journal entry, illustrated. III, 107 
Machinery, III, 290 
Production-center system. III, 290 

Telephone, II, 488; III, 213, 233 (See also 
generally subheading "Fixed charges," 


Production-center system. III, 291, 322 

Trading concern, II, 467-470 

Water, III, 233, 239 (See also generally sub- 
heading "Fixed charges," above) 

Window dressing, II, 469 
Extensions, Reserve for (See "Reserves") 
Extractive Industries, III, 91, (See also 
"Process cost system, brick-making 
plant") * 



Journal, II, 465 
Ledger, II, 465; III, 76 

Controlled by general ledger. III, 74 
Estimated cost system. III, 358 
Process cost system. III, 328, 343-348 
Forms, III, 345, 346, 348 
Records (See also "Records") 

Controlled by general ledger; III, 74 
Federal Reserve Board, 

Balance sheet form recommended, IV, 287 
Form, IV, 288, 289 



Federal Reserve Board — Continued 

Comparative profit and loss statement, IV, 
Form, IV, 300, 301 

Book, attorney's, II, 402 

Form, II, 402 
Initiation, club, II, 449 
Stock-broker's, II, 423 

Catalogue, II, 76 
Quotation, II, 76, 77 

Order record, II, 77 
Source, II, 77 

Data, informal, II, 73 
Invoices, purchase, II, 103 
Purchase orders, II, 95 
Financial Department, Functions or, II, 12 
Finished Goods, III, 40; IV, 37 
Account, III, 79 
Illustrated, III, 86 
Journal entry, illustrated. III, 108 
Process cost system. III, 91 
Production-center system, illustrated. III, 

Textile costs, illustrated, III, 391, 392 
Definition, III, 24 
Inventory or record. III, 75, 76 
Ledger, III, 77 
Form, III, 78 
Profit on, IV, 37 
Finished Parts (Stores\ III, 67 
Account, III, 86 
Definition, III, 24 
Fire Loss Adjustments, 

Problems, V, 194, 196, 199 
Accounting for, IV, 273 
Appraisers, IV, 268 
Coinsurance clause, IV, 268-271 
Apportionment of liability, IV, 270 
Object of, IV, 269 
Depreciation factor, IV, 274 
Evidences of value, IV, 265 
Insurance policy, II, 342-345; IV, 266 
Register for, II, 345 
Form, II, 344 
Inventory valuation, IV, 272 
Liability of insurance company, IV, 268-271 
Nature of problem, IV, 265 
Proof of loss, IV, 265 
Settlement of losses, IV, 267, 268 

Fiscal Pebiom, I, 2S«, tS9 

Fiscal Yeah, as Coiit Pnioo. Ill, tt 

Fixed Assets (See "Assets, ftscd") 

Fixed Charges. II, 467-<475; III. f IS, tS»-<l« 

"Account." illustrsted, pfniiurtioa naui 

system. Ill, 820 
Building expense. III. tS6, tS7 

Production-cenler lyitem. Ill, tSt. tit 

Textile costs. III, 305 
Cssh system expense, II. 447. 468 
Depredation, III, 98. 100, 844-fM 

Account, III. ««S 

Auxiliary equipment. Ill, t48 

Journal entry, illustrated. III, 18T 

Machinery, III, 290 

Obsolescence. III. 245 

Production-center system, III« tf§ 

Rates, III, 247 

Schedule. III. 224. 234, 240, t5S 
Form. III. 250. 251 

Schedule, sub-departments, HI, ti8 

Schedule, textile costs. III. 507. 808 
Electricity, III, 288, 289 (See also tntnOy 

subheading "Light and beat." belov) 
Elevator expense, II. 469 
Furniture and fixtures. II. 475 
Gas, III, 213, 238. 289 (See also geutnlfy 

subheading "Light and beat." below) 
Insurance. II, 470; III. 98, 100, flS. 117. 
233, 238 

Account, illustrated. III. 10« 

Journal entry, illustrated. Ill, 107 

Production-center system. III. 100 

Textile costs, account illustrated. III. Itt 
Interest on investment. III. 240 
Light and heat. II. 478. 474; III. ft«, tM 

(See also subheadings ''Electricity.'* 

"Gas," above) 
Power, II. 473; III. 894 
Rent, II, 471; III, 98. 100. tSS. tSf 

Account, illustrated. III. 101 

Journal entry, illustrated. III. 107 

Production-center system. Ill, 180 
Schedule. III. 224. 288. 258 
Form. III. 285 

Process system. III, 341 
Form. III. 842 

Sub-departments, III. 268 
Taxes. III. 98. 100. 218. 288, tSt 

Journal entry, illustrated. III. ItT 

Production-center tyttem. III. €88 

Textile costs, accouBt iUustratsd. HI. 188 



Fixed Ch.\bges — Continued 

Telephone, II, 468; III, 213, 233 
Window dressing expense, II, 469 
Water, III, 233, 239 
Fixed Percentage of Diminishing Value 
Method, Depreciation Rates, I, 322, 
324; IV, 173 
Problem, V, 168 
Fixed Proportion Methods, Depreciation 
Rates, IV, 170-172 
Problems, V, 16, 18, 168 
Service method, IV, 172 
Straight-line method, I, 322; IV, 171 
Working hours method, IV, 172 
Fixed Rate of Expense Distribution (See 

"Rates of expense distribution") 
Floor Space, Basis of Expense Apportion- 
ment, II, 467 
Flour Mill, III, 43, 87, 92 

Prices of stores. III, 142 
Weight or volume of material. III, 144 
Folios, Inserting, if, 27 
Follow-Up Systems and Devices, II, 94 
Forfeited Stock, IV, 210, 211 
Forms and Records, General Discussion, 

II, 52-58 (See also "Records") 
Foundry, III, 50 

Defective castings. III, 147 
Expense, III, 261 
Production order. III, 50 

Form, III, 51 
Stores classification, I'll, 154 
Four-Column Journal, II, 239-241 

Form, II, 240 
Franchises, IV, 263, 264 
Depreciation, IV, 264 

New York Public Service Commission's rul- 
ing as to, IV, 264 
Valuation, IV, 63 
Freight and Cartage, 

Charging to accounts, I, 97 
Deducted from sales, when, I, 96 
Stores, III, 150 
Inward, analysis of account, I, 411 

Problems, V, 23, 242 
Outward, I, 253 
Problem, V, 23 
Funds (See also "Reserves," "Sinking fund") 
Compared with reserves, IV, lOd-111 
Creation of, IV, 107 

Tv^us— Continued 
Nature of, IV, 107 
Trustee for, IV, 110 

Furniture and Fixtures, 
Problem, V, 90 
Account, analysis of, I, 409 

Gantt System of Wage Payment, III, 204 
Gas Expense, III, 213, 233, 239 (See also 
generally "Fixed charges," "Light and 
"General Expense Account," Illustrated. 

Textile costs. III, 396 
General Journal CSee "Journal") 
General Ledger (See "Ledger") 
''Gentlemen's Agreements," IV, 331 
Good-W^ill, I, 370; IV, 250-257 
Account, analysis of, I, 410 
Accounting for, IV, 256, 257 

Dissolution of partnership, I, COO 
Problems, V, 56, 140 
Advertising expense capitalized as, IV, 18 
Corporation accounting, I, 369, 370 

Problems, V, 140, 170, 202 
Defined, IV, 251 
Depreciation of, IV, 255 
Determination, method of, IV, 252 
Patents, IV, 258-260 
Premiums and, on consolidated balance 

sheet, IV, 361 
Relation to trade marks and patents, IV, 260 
Valuation of, IV, 253 

Problems, V, 183, 186, 187, 190, 202, 277, 
288, 312, 328 
Goods, Finished (See "Finished goods") 
Goods in Process (See "Work in process") 
Graduated Premium System of Wage Pay* 

ment, III, 206 
Graphic Charts (See "Charts'') 
Gross Profit (See "Profits") 
Guests, Hotel (See "Hotels and restaurants") 


IIalsey System, Payment of Wages, II, 315 
Harvard Bureau op Business RssEARCii, 

Bulletin No. 1, 
Conclusions as to gross profits, IV, 393 
Hat Factory, III, 55 

Form, III, 57 
IL\.uLiNG Expense, Stores, III, 150 



Heat and Light (See "Light and heat") 
Holding Company, IV, 333-352 (See also 
"Combinations and consolidations'") 
Advances to subsidiaries, IV, 343, 373 
Balance sheet, IV. 340-352 

Compared with consolidated balance sheet, 

IV, 340 
Complications, IV, 343, 344 
Illustrative statements, IV, 341, 342, 

Method of showing investments in sub- 
sidiaries, IV, 347 
Methods of presentation, compared, IV, 

Necessity for consolidated balance sheet, 

IV, 343 
Objection to, IV, 350 
Consolidated income statement, IV, 334-366 
Distinguished from combination by pur- 
chase, IV, 333 
Formation of, IV, 333 
Income, chief source of, IV, 350 
Not illegal per se, IV, 33 i 
Profit and loss statement, IV, 349 
Purpose of, IV, 335 
"Restraining" trade, IV, 333 
Statements, IV, 340 

Problem, V, 300 
Statutes permitting formation, IV, 333 
Working capital provided by subsidiaries, 
IV, 371 
Home Office, 

With agencies, II, 374 
With branches, II, 376 
Hotels and Restaurants, II, 432-445 
A la carte dining room, II, 433-435 
Check system, II, 433, 434 
Fraud, detection of, II, 434 
American plan, II, 432 
Breakage of dishes, II, 442 
Cash rece'ipts register, II, 440 

Form, II, 441 
Charge journal, II, 439 
Earnings, monthly, II, 444 
European plan, II, 432 
Expenditures, II, 441, 442 

Cash disbursements record, II, 441 

Form, II, 442 
Check register, II, 442 
Voucher register, II, 441 
Form, II. 441 

Hotels and RasTAPiu om Camtimttad 


Accumulation envelope. II, 440 

Form. II. 440 
Charge slip. II. 4S8. 450 

Form. 11. 430 
Complimentary. II. 44S 
Departure record, II, 44S 
Ledger. II. 437. 438 

Form. II. 438 
Recording services mnd cxpradilarw 

chargeable to, II, 433 
Register. II, 436 
Form. II. 437 
Office, arrangement of. II. 435 
Profit and loss staUment. form of. 11. 444. 

Records required, II, 436 
Room ticket, II. 436 

Form. II, 437 
Stores, II. 44i 

Inventory of. II. *M 
Report of goods {'♦•livered, II, 44t 
Table d'hote dining roooi, !I, 433 
Working hours. II, 433, 438 
Shifts, II, 435, 436 
House Accounts, Club, II, 450. 45« 


Ice Factory, Cost System. III. H 
Idle Time, Machines. Ill, «95 
Impression Book, II. 166, 167 
Imprest Fund. I. «29-«3l; II. IW. IM 

Problem. V. 7 

Accounts, I, 67 

Posting to profit and loss account. I. »« 

Accounting for. IV. iO-«4 
Adjusting entries. IV. <l <4 
Cash methods of handlin< accoimU l\ . I» 
Distinguished from drferrrd iiKO«» IV. 
Deferred. I. 66; IV. 1*. 30-3< 
Estate aecountinic for. II. 40« 
Miscellaneous, account, aiialystt of. i. «« 
Record. II. 348 
Form. II. 3*6 
Sales. I. 67. HO 
Sinking fund. Ireatroenl of. IN. »5» 



Income and Expense (See also "Profit and 
Capital, I, 99 
Income Statement, 

Consolidated, IV, 364-366 
Tie-up with balance sheet, IV, 292 
Income Tax, 

Bad debts, reserve for, law concerning, IV, 

Consolidated balance sheet, regulations 

covering, IV, 353 
Penalties for intentional errors, IV, 388 
Records, II, 348 

Allowable deductions record, II, 348 

Form, II, 347 
Income record, II, 348 

Form, II, 346 
Securities register, II, 348 
Form, II, 346 

Cards, II, 67 

For stock, II, 390 
Form, II, 390 
Of dealers, II, 76 
Indirect Expense (See "Expense") 
Indirect Labor (See "Labor, indirect") 
iNDraECT Material (See "Supplies") 
Initiation Fees, Club, II, 449 
Insolvency (See also "Bankruptcy," "Reali- 
zation and liquidation statement," "State- 
ment of affairs") 
Balance sheet illustrating, I, 134, 135 
Balance sheet inadequate, I, 130, 131 
Defined, I, 130 
Inspecting Material, II, 74 
Inspection Expense, III, 226 
Inspective Accounting, II, 6 
Installation of Accounting System, Time 

FOR, II, 48 

Instalment, Sales on, II, 185-187 

Form, II, 185 

Problem, V, 109 
Institutional Budget, Illustrated, II, 

Insurance, I. 65, 98, 117, 119; II, 342, 345, 

470; III, 98, 100, 213, 217, 233, 238; IV. 

265, 276 (See also generally "Fixed 

Accident, III, 238 
Account illustrated, III, 102 

Journal entry illustrated. III, 107 

Textile costs. III, 399 

Insurance — Continued 
Boiler, III, 238 

Fire, III, 238; IV, 265-276 (See also "Fire 
loss adjustment") 
Coinsurance clause, IV, 268-271 
Statement showing amounts and costs 
illustrated. IV, 314 
Furniture and fixtures, II, 475 
Liability, II, 476 

Merchandise inventory, advisability of in- 
suring, IV, 227, 228 
Policy, II, 342-345; IV, 266 
Register for, II, 345 
Form, II, 344 
Problem, V, 116 
Prepaid, I, 65, 98, 114, 119; IV, 14-17 

Account, analysis of, I, 407 
Production-center system, III, 290 
Register, II, 342, 345 

Form, II, 344 
Stock, II, 470 

Unexpired, statement of affairs. 
Problems, V, 66, 70 

Problem, V, 249 
Analysis of, I, 423 

Account, analysis of, I, 417 
Adjusting entries, IV, 23-24 
Distinguished from "accrued interest " 

IV, 13 
Expense, IV, 27 
Included in purchase price of security, IV, 

133, 134 
Income, IV, 1^ 

Interest period diflFerent from fiscal period, 
IV, 142 
Bank, I, 111, 220 

Bond, I, 110, 111; IV, 123-127, 140-142 
Problems, V, 146, 148 
Account, analysis of, I, 413 
Accrued (See subheading "Accrued," 

Effective, calculation of, IV, 127 
Effective, rate, IV, 126 
Effective, recording, IV, 132 
Instalments, IV, 126 
Marked rate, fluctuation of, IV, 125 
Nominal vs. effective, IV, 126, 127 
Paid on par value, IV, 123 
Payment of, IV, 140 



Interesi' — Continued 

Compound, IV, 144-146, 153 (See also 
Rule for finding, IV, 153 
Deducted, cash book entry, I, 217 
Due date coinciding with fiscal period of 

corporation, IV, 141 
Due date not coinciding with fiscal period of 

corporation, IV, 142 
Elimination of, on consolidated income state- 
ments, IV, 365 
Income derived from, on profit and loss 

statement, I, 100 

Problems, V, 66, 70 
Payable, account, analysis of, I, 413 
Notes receivable, I, 299 
On capital, I, 348 
Problem, V, 93 
Paid borrower of stocks, II, 426 
Partnership, adjustment of capital, I, 348- 
Problems, V, 27, 28, 31 
Prepaid, IV, 14 

Account, analysis of, I, 407 
Interest on Investment, Buildings and 
Machinery, III, 240 (See also generally 
"Fixed charges") 
"Interlocking Directorates," IV, 332 
Internal Checks for Prevention or 
Errors, IV, 380, 381 
Illustrative example, IV, 381 

Adjustments, IV, 226 

Problems, V, 70, 180 
Analysis of, I, 403 
Problem, V, 23 
At cost, II, 145 
At selling prices, II, 145 
Controlling accounts. III, 79 
Depreciation factor, IV, 223 
Ending, IV, 12 

Estimated, I, 204, 205; IV, 394 
Problems, V, 127, 130, 331 
Testing by use of gross profit percentage, 
I, 205; IV, 394, 395 
Finished goods. III, 75, 76 
Goods on consignment, IV, 222 
Insurance of, IV, 227, 228 
Invoices not received, IV, 223 

Problem, V, 90 
Manufacturing, IV, 21^ 

Inventory— Coiih'niMf 
Merchandiae. IV. Mt-tlt 
Problem, V, iS 
When itema should not be catcf«4 «• i^ 
books. IV, tiS 
Opening, trading entcrpriae. II. 471 
Overhead applicable, IV, «t7 

Advantages, III, 10 
Card form. I. «01 
Cost accounting maintaina. III, M 
Necessity for. III, 75 
Raw material. III. 76 
Schedule, I, 158 

Purposes and uses of, I, 158, IM 
Sheet, III, 121 

Form, III, 120 
Stores, III, 118 

Physical, III, 10, 121 
Valuation, I, 123; IV, 224-n6 

Problems, V, 108, 127. ISO, SSI 
Fire loss adjustment. IV, f7i 
Verification of, IV, 447 

Problem, V, 338 
Work in process. III. 74 
Investigations. Special, I, 9, 10 
Investment, Buildings aitd MAOinisaT, 

Interest on. III, 240 
Investment Ledoeb. II, «M 
Investments, (See also "Bonds." **Slock»'*) 
Accountancy of, IV, 
Corporations, in stock H other rocporatioMw 

IV, 334 
Interest on (See "Interert") 
Real estate, IV, 19. 2S9-tS4 
Schedule of, I, 159 

Sinking fund, IV. 9. 157 (Se« alM *'SniUa« 

Classification of, indirect expanse. III. tIT 
Subsidiary ledger. III. f 18 
Form, III, «19 
Creditors', procedure in haadUng. U , M 
Handling. II. 74 
Numbering, II, 89, 90 
Accuracy in handling, nccesdty ol. II. 9t 
Allowances, checking. II. 101 
Book. II. 108, 109 
Cash discount, II. 98 
Checking and approving. II, ••-lit, •• 
JS^tenaions, cbeckiag. II, 101 



Invoices — Contin ued 
Purchase — Continued 
Filing, II, 103, 370 
Freight charges, checking, II, 101 
Handling without record of creditors, II, 
Form, II, 121 
Numbering, II, 102 
Procedure in handling, II, 96-103 
Recording, II, 101-103 
Register, II, 97 
Form, II, 97 
Retail organization, II, 369 
Rubber stamp for checking and approv- 
ing, II, 98 
Form, II, 98 
Separate forms for checking and approv- 
ing, II, 99 
Stamping, II, 102 
Voucher system, II, 118 
Sales, II, 159-161 

Binding in book form, II, 167, 168 
Duplicate loose-leaf, II, 168 
Retail organization, II, 371 
Simplicity of form advantageous, II, 47 
Unpaid, Ust of , obtaining, II, 112 
IssxTiNG Material, II, 74 

Jewelry Manufacturing Concern, III, 350 
Job Cards, II, 307, 309 
Job Cost Sheets (See "Cost sheets") 
Job Order System, III, 13, 29, 41, 47-52 (See 
also "Cost accounting") 
Problem, V, 386 
Jobbing Organization, II, 150, 151 

Retail organization combined with, II, 152- 

Allowance, II, 336 

Form, II, 337 
Cash (See "Cash book") 
Cash sales. 

Chain stores, 11, 381 
Form, II, 386 
Columnar, I, 232-237, 306-309; 11, C3, 1C5, 
109-115, 164, 165, 236-242 
Forms, I, 234, 235, 309; II, ICG, 111, 
113, 164, 237, 238, 240, 212 
Posting facilitated by, II, 28 
Cut-sheet, II, 245, 246 
Form, II, 244 

Journal — Continued 
Development of, I, 306 

Closing, I, 313; II, 234 

Controlling accounts (See "Controlling 

Date and amounts, I, 174 
Equilibrium of, I, 175, 176 
Explanations covering, I, 173 
Form of, I, 170-172 
Illustrative, I, 171, 172, 179-187, 307. 

310-313; II, 233, 234, 245 
Items, adding, I, 174 
Kinds of, I, 306 
Object of, I, 172 
Opening, I, 180; II, 233, 23 1 

Form, I, 181 
Opening controlling account, I, 263 
Partnership (See "Partnership") 
Production-centersystem, III, 31 1,314-318 
Purchases and sales, I, 182, 183 
Receipts and payments, I, 183, 184 
Returns and allowances (See "Returns") 
Rules for, I, 175, 176 
Self-explanatory, II, 243 
Use of "to" and "by," I, 173, 174 
Factory, II, 465 
Form of, I, 170-172 
Four-column, II, 239-241 
Form, II, 240 
Transactions in two kinds of money, II, 
239, 240 
Function of, I, 170 
General, I, 177 
Form, I, 332 
Development of, I, 176, 177 
Entries included in, I, 177 
Hotels and restaurants, II, 439 
Ledger in relation to, I, 170 
"Left and right," II, 243 

Form, II, 244 
Posting to ledger, I, 175, 263, 264 
Purchase, I, 198-200. 232-239; II, 105-118; 
III, 81, 122, 130 
Forms, I, 200, 233; II, 107, 108 
Analysis of entries, I, 234 
Analysis of expense columns, II, 110 
And voucher register, distinction between, 
II, 116-118 
Forms, II, 117 
Checking accuracy of, U, 112 
Closing, I, 233, 237 



Journal — Continued 
Purchase — Continued 

Columnar, I, 232-237; II, 109-115 

Forms, I, 234, 235; II, 111, 113 
Columnar, when undesirable, II, 116 
Departmental, simple, I, 232 

Form, I, 234, 235 
Expenses included in, I, 236; II, 110-115; 
III, 213, 217, 224, 253 

Forms, I, 234, 235; II, 111, 113, 115, 117 
Folio-column, I, 236 
Form of, I, 198 
Function of, I, 198 

Posting to general ledger, II, 108; III, ISO 
Process cost system, III, 339 
Returns, I, 238 
Summary, I, 237, 238 
Use of, illustrated, I, 198-200 
Voucher register, I, 241 
Retail organization, II, 366 
Ruling when private ledger is used, II, 261 
Sales, I, 207, 208; II, 165, 166 

Forms, I, 208, 332; II, 166 
Advantages of, II, 166 
Analytical form of, I, 248 

Form, I, 250, 251 
Cash sales, I, 249-252 
Charge entries, I, 249 
C. O. D. sales, I, 254 
Consignment and general, II, 180 

Form, II, 176 
Containers, I, 253; II, 183 

Form, II, 184 
Entries by number, I, 249 
Form of, I, 207, 208 
Freight outward, I, 253 
Function of, I, 207 
Proprietor, sales to, I, 252, 253 
Returned sales, I, 254 
Special forms and methods, I, 255 
Sundry sales, I, 249, 252 
Terms of sale, I, 248 
Wholesale concern, 11^171 

Form, II, 171 
Simple, developed from day-book, II, 27 
Six-column, II, 241 

Form, II, 242 
Posting to ledger, II, 241 
Subsidiary, I, 188 

Advantages of, I, 188, 189 
Columnar, use of, I, 328-337 

Forms. I, 330-333 

JoDRNAL— -Con/mW 

Three-column, II, 105. IM, |65, tf7-| 
Forms. II, 106. IW, iS9 
With sales column, II. |ft4. 105 
Form, II, 164 
Two-column, II, W6, W7 

Form, II, 237 
Vouchers, 11, «S4. «35 
Form, II. 235 
Journal-ruled Leooer. II, 250 

Form, II, 251 
Journalizing, Rules roA. I. 173. 176, ; 

Labor, II, 303-315; III, 165-208 
Account, illustrated. Ill, 95 

Estimated cost system. Ill, S59 

Journal entry illustrated. Ill, 107 
Account, process cost system. Ill, 89 
Accounting for, building contnM-ton. II. 

457, 458 
Classification, III. 167. 168 
Cost period different from pay perind. III. 

Direct, III, 18 

Graphic chart. III, 407-417 
Forms, III. 408. 413. 416. 418 
Indirect (See "Labor, indirect." below) 
Manufacturing enterprise, charging. II, 4tff. 

Methods of distributing expenae over pn>d» 

uct based on. III. 272-282 
Pay-roll (See "Pay-roll") 
Piece-work basis. III. 169-171 
Production-center system. III. 306 
Records. II. 303-314: III. 165-lM 

Accuracy essential. HI. 165 

Construction work. II. SIS. 314 

Importance of. II, 303, 304 

Job order system. II. 307. 308; III. 23 

Original. II. 306. S07 

Process cost system. III. 166 

Purposes. III. 166 
Salaries and separate record, II. 303-611 
Time basis. III. 109 

Process cost system. III. 167 
Time records (See "Time records") 
Wage systems (See "Wages") 
Labor. iNoiRErr. ITT. 18. 166. 168. tIS, ttV 

232. S20 
Accounts. III. 221 



Labor, Indibbct — ConHnued 
Administrative ' (See "Adimnistrative ex- 
Chart, graphic, HI, 191 

Form, III, 193 
Classification, III, 221 
Inspection, III, 226 
Repairs to machinery. III, 221, 226 
Standing expense orders, III, 31, 224, 226- 
Classification, III, 227, 229-232 
Distribution, III, 224 
Distribution, sub-departments. III, 266 
List of numbers, UI. 227, 229 

Form, 111, 230 
Time tickets. III, 227 
Form, m, 228 
Account, analysis of, I, 408 
Accounting for, IV, 231-234 
And buildings, need for separate accounts, 
IV, 233 
Problem, V, 132 
Appreciation of, I, 326; IV, 231 
Depreciation, IV, 232 
Development and carrying costs, IV, 234 
Investments in, IV, 232, 233 
Purchased for resale, IV, 234 

At purchase price, items included in, IV, 

Fluctuations in, IV, 231 
L.vw Offices, Accounting fob (See "Pro- 
fessional accoimts") 
Lease, Combination by, IV, 337, 338 

Additions to leased property, IV, 338 
Amortization, IV, 168, 338 

England, method in, IV, 338 
Depreciation, IV, 167 
Repairs and improvements, charging, IV, 

Short-term vs. long-term, IV, 338 
Ledgeb, (See also "Account," "Accounts") 

Forms, I, 43 
Analysis of, I, 399-425 
Arrangement, I, 259; II, 270 
Balancing, I, 44 
Classification, I, 57-69. 259. 399-425 (See 

also "Accounts, classification") 
Forms of, I. 42-44 

Ledger — Continued 

Accounts — Continued 
Numbering, II, 271 
Payable, I, 267 
Planning, II, 46 
Receivable, I, 266 

Single-entry, insuflBciency of, I, 385 
Trial balance, I, 71-77 (See also "Trial 

Analysis of, IV, 409 

Attorney's, II, 401 

Balance column in center, II, 256 
Form, II, 254 

Bank depositors, II, 253 
Form, II, 252 

Branch and chain stores, II, 379, 380 

Card, I, 260; II, 67 

Cash account in, II, 194 

Cash book not a ledger account, II, 194 

Club membership. IIj 45'2 
Form, II. 451 

Columnar, II. 259, 260 

Content of, II, 29, 30 

Control, II, 262 

Controlling accounts (See "Controlling ac- 

Corporation stock, II, 261. 262 

Cost, II, 465; III, 76 (See also "Cost sheets") 
Controlled by general ledger. Ill, 74 
Estimated cost system. III, 358 
Process cost system, III, 90, 328, 343-348 

Forms, III, 344, 346, 348 
Summary, process system. III, 347 
Form, III, 348 

Creditors, inadequacy of, I, 240 

Dealers, II, 380 
Form, II, 383 

Debits and credits in center, 11, 250 
Form, II, 249 

Development of, II, 29, 30 

Expense. III. 218. 266, 267 
Form, III. 219 

Explanation column, wide, II, 253 

Factory, II. 465; III, 76 (See also subhead- 
ing "Cost," above) 

Functions of, I, 50; II, 29, 247 


"Account," III, 360 

Relation between cost accounts and. III, 
4, 73 

Hotel guest, II, 437, 438 
Form, II, 438 



Ledger — Continued 
Investment, II, 262 

Journal in relation to, function of, I, 170 
Journal-ruled, II, 250 

Form, II, 251 
Loose-leaf, I, 260 

Not accepted as evidence in courts, II, 27 
Plant, III, 220; IV, 180 

Form, IV, 182, 183 
Posting to. 

Advantages of columnar records, II, 28, 
105, 106, 164 

Controlling accounts, II, 200 

Cross-indexing, I, 175 

Defined, II, 26, 27 

Errors in, detecting, I, 74 

From cash journal, II, 223, 225 

From petty cash book, II, 218, 220 

From six-column journal, II, 241 

Labor-saving devices, I, 264 

Methods of, I, 196, 237, 263, 264, 291-293, 

Posting ticket, II, 159-161 

Time of, I, 267 
Private, II, 46, 260, 261 

Cash book, ruling, II, 261 

Controlling account, II, 261 

Journal, general, ruling, II, 261 
Purchases, recording, I, 200 
Record, insufficiency of, I, 167 

Problem, I, 167-169 
Recording accounts direct inadvisable, I, 

Example, I, 167-169 

Reasons why, I, 169, 170 
Retail organization, II, 371, 372 
Ruling, II, 30 

Development of, II, 248, 250 

Containers column in, II, 185 
Form, II, 184 

Special form, 11, 256, 257 
Form, II, 255 
Self-balancing, I, 243 
Single-entry bookkeeping, I, 381, 882 

Form, I, 382 
Size of, II, 30 
Standard form, II, 248 
Form, II, 249 

Balance column at right, II, 256 
Form, II, 255 

Ledo KB—Contin ued 
Standard lorxxk—Cmtimutd 
Double rolumnn, II, 457, t50 
Form. II, 258 
Stock (finished good*). Ill, 77 

Form. III. 78 
Stores. II. 138-145; III. 76-78, 81. ||f. \n. 
Forms. II. 140; III. 78. 1«8. 119 
Abstract of. II. 143. 144 
Adjustments. II, 143; III. 199 
Balance division. II. 142. 14S 
Control of. II. 143; III, 190 
Discrepancies. Ill, 199 
Entries. II. 190. 141 
Installing. II. 199 
Loose-leaf, II. 198 

Form, II. 140 
Posting from stores recdrgd book, HI. 

126, 130 
Process cost system. Ill, 88 
Purchased division. II. 190 
Reconciliation with general ledger, II, I4t 
Sold division, II. 141, 142 
Subsidiary, I, 259 

Controlling account in. I, 289 
Posting to, I. 265. 267 
Reconcilement of. with controltiaf •»> 
count. II. 267 
Problem. V. 11 
Self-balancing. I. 209 
Tabular. II. 251 
Transactions, illustrative. I. 41 
Trial balance. I. 268 
"Left and Right" Journal, II. 249 

Form, II. 244 
Letter Code of CLASsincATioN. III. 153. IM 

Standing expense orders. 111, 987 
Accounting for. I. M; IV. t4t 
Accrued. IV. 26 

Problems. V. 89. 192,178. 180.915.999. US 
Ascertaining, method ol, I. 49 
Balance sheet. 

Arrangement on. IV, 989 
Classification. IV. 249 
Contingent. I. 120; IV. 949. 947 
Problems. V. 178. 945 
Accommodation indorsrmrnt. IT. 9lt 
Kinds of. IV. 247. 249 
Notes receivable. discuuBlcd. I. IM. If. 
300.901; IV. 288 



Liabilities — Continued 

Current. I, 66; IV, 242-244 

Accounts payable, IV, 243 

Differentiated from fixed liabilities, IV, 

Discounts, treatment of, IV, 244 

Dividends declared but not paid, IV, 244 

Expenses accrued, IV, 27, 242 

Manufacturing business, IV, 243 

Notes payable, IV, 243 

Retail business, IV, 243 

Short-term loans, IV, 242 
Deferred (See "Deferred credits") 
Defined, I, 21, 66; IV, 242 
Fixed, I, 66; IV, 242 

Accounts with stockholders, open, IV, 244 

Bonds (See "Bonds") 

Collateral loans, IV, 19, 245 

Defined. IV, 242 

Notes payable, certain kinds of, IV, 243, 

Purpose of, IV, 242 

Real estate mortgages, IV, 244 
Floating (See subheading "Current," above) 
Secured, I, 133 
Showing of, on balance sheet, I, 119, 120; 

IV, 288 
Statement of, insolvency (See "Statement of 

Verification of, IV, 8, 428 
Verification of existence of, IV, 419 
Light and Heat, III, 226, 394 (See also 

"Electricity," "Gas"; also generally 

"Fixed charges") 
Account illustrated. 

Production-center system, HI, 320 

Textile costs. III, 394 
Expense, distribution of, II, 473, 474 
Liquidation, (See also "Realization and 

liquidation statement," "Statement of 

Partnership, I, 352-361 (See also "Partner- 
Receivership, I, 142 

Problem, V, 266 
Status of creditors in, I, 146 
Liquidators (See "Receivers") 
Loans, on Collateral, IV, 19, 245 
"Long" Account (See "Stock brokerage") 

Ledger, I, 260; II, 138 

Form, II, 140 

Loose-leap' — Continued 
Records, II, 60, 01, 64-66 
Advantages of, II, 63-65 
Binders, II, 60, 61 
Disadvantages of, II, 65 
Installing, precautions taken in, II, 66 
Marking sheets, II, 66 
Spoiled sheets, II, 66 
Unused sheets, II, 66 
Use of, increase in, II, 60 
Stores ledger, II, 138 (See also "Ledger, 
Form, II, 140 
Loss, Defined, I, 32 
Losses, (See also "Debts, bad") 

Distribution of, deficiency account, I, 140 

Problem, V, 61 
Expected, on accounts receivable and notes 

receivable, IV, 13 
Fire (See "Fire loss adjustments") 
Partnership, sharing, I, 358, 359 
Reserve for (See "Reserves") 
Lumber Industry, Cost Accounting, III, 
Problem, V, 377 
Lump Sum Budget, II, 316, 317 


Machine-bate Method of Distributing 
Expense Over Product, III, 272, 277- 
279, 287-298, 301-327 

Accounts, III, 310-327 
Chart, III, 310 

Form, III, 312, 313 
Elustrated, III, 319-326 

Chart of procedure. III, 303 
Form, III, 303 

Cost sheet. III, 308 
Form, III, 309 

Departmental division into production cen- 
ters, III, 98, 278, 287, 301 

Illustrative system. III, 301-327 

Journal entries. III, 311, 314 
Illustrated, III, 314-318 

Labor cost. III, 306 

Machine expense account. III, 296 

Material cost. III, 306, 309 

Parts classification. III, 305 

Production orders. III, 305 


Administrative expense. III, 291 



Machine-bate Method of Distributing 
Expense Over Product — Continued 
Rates — Continued 

Building expense, III, 289 
Charging, III, 293 
Checking, III, 294 ' 

Computing, III, 288-293 
Depreciation charge. III, 290 
Insurance charge. III, 290 
Power plant expense. III, 289, 290 
Rent, III, 289 
Repairs expense. III, 291 
Schedule of. III, 292 
Supplementary, for idle time. III, 295 
Supplies, etc., expense, III, 291 
Taxes charge. III, 290 
Tools expense. III, 291 
Statement of expenses, HI, 308 

Form, ni; 307 
Stock list. III, 304 
Form, m, 304 
Machinery, HI, 213, 217, 222 (See also 
"Machine-rate method of distributing ex- 
Depreciation, HI, 244-252, 290 
Expense account. III, 296 

Elustrated, III, 323 
Insurance, III, 290 
Power expense, distribution. III, 260 
Taxes, III, 290 

Checking enclosures, II, 214, 215 
Opening, II, 214, 215 
Reading, II, 214 
Receipts memorandum, II, 215 
Form, n, 214 

Accounting, II, 389-395 
Agent's order blank, II, 391 
C. O. D. register, II, 391 

Form, II, 391 
Creditors' accounts, II, 392 
Purchase register, II, 392 
Receipts and disbursements, cash, II, 39S 

Forms, II, 394 

Records required, II, 389, 390 

Stock record, II, 390 

Form, II, 390 

Business, II, 151, 389 

Advertising! II. 395 

M A I iMiUDKR— Continued 
Handlinfc of. 

Retail and jobbiof 

bined. II. IAS 
Retail bu«ne«. II, 140 
Maintenance or Builoom* (Sot 

expenje," "Repain aad roMwsk^) 
Management, Ernrisirr. II, 147 


Statement. III. 100 
Records. II. SOS-SI 4. 4«S, 46ft; Of. IW-n 
(See also "Records ") 
Form. II. 464 
Statements. IV. S0S-S08 (See «1m ""Slal*- 
Arrangement of. IV. SOS 
Constituent parts, IV. SOS 
IllustraUve. IV. S04-S09 

Problems. V. «l. W8. «S1. tSS 
"Manufactdbino Inventobt." DcmriBk tl* 
"Margin" Deposit, Stock Bbokouob. O. 

Married Women, ab STOcKBoukiaii. IV, m 
Material, (See also "Stowe," "^ppUtT) 
Account. lU. 79. 81. 86. Itt 
Entries, III. 81 
Estimated co«t system. Qhtftralcd, III* 

lUustrated. HI. 8S 
Journal entries, illustrated. Ill, lOi 
Production-center system. III. Si4 
TexUle costs, HI. S«7. 8«8 
BUI of. UI. 1S5 

Form. III. 1S5 
Contractors, buUdinf, i 

for, II. 457 
Estimated, III. SS 
Process method. III. 86 
EsUmatcd cost. III. •*-«. 149 (S« •*» 

"Estimated cost system") 
Included in term "stores," III. tS 
Indirect, III. 17 (See J 
Inspecting. II, 74 
Inventory or record. III. 7f 
Issuing. II. 74 (See also I " " 

sition." below) 
Parts classification. III. S05 
Purchasing. II. 87. W (See •!» 
purchase." "B«|ui*lkMi. pwrcke* ) 



Material — Continued 

Delivering to departments direct, II, 136, 

Receipt form, II, 134, 135 
Recording, II, 100 
Report, II, 135, 136 
Forms, II, 135, 136 
Receiving, II, 74, 134-137 
Record on cost sheets. III, 131, 306 

Proof of. III, 132 
Records, III, 76 (See also "Stores") 
Requisitions, II, 141; III, 39, 55, 133 
Forms, III, 34, 57, 134 
Analysis, III, 226 
Chain stores, daily, II, 380 

Form, II, 383 
Classification, III, 131, 136 
Contractor's, building, II, 457 
Parts, III, 67 

Posting to general ledger. III, 131, 136 
Process cost system. III, 134 
Production-center system. III, 306 
Purposes of, III, 134 
Record on stores ledger, HI, 127, 306 
Stock, II, 159 

Summarized in stores issued book, m, 131 
Supplies, on distribution sheet, HI, 224, 

When impracticable to use. III, 148 
Sheet, III, 135 

Form, III, 135 
Stock list. III, 135, 304 

Form, m, 135, 304 
Stores department expense applied direct 

to. III, 268, 297, 302 
Storing (See "Stores department") 
Material Cost Method of Distributing 

Expense Over Product, HI, 272, 281 
Materials Ordered Register, II, 86 
Mathews, George, Quoted on Supervis- 
ion, II, 50 
Maximum Stores, II, 133 
Mechanical Aids (See "Aids, mechanical") 
Membership Ledger, Club, II, 452 

Form, II, 451 
Mercantile Business (See "Trading busi- 

Problems, V, 23, 196 
^Adjusting, I, 81 

Merchandise — Continued 

Gross profit on, ascertaining, I, 81 

Problem, V, 127 
Inventory (See "Inventory") 
Sales to proprietor, I, 209 
Sold, determining cost of (See "Cost, goods 
Merchandise Returned Memorandum, II, 
123, 124 
Form, II, 124 
Merchandise Stock-in-Trade, Defined, IV, 

Messenger Service, III, 221 (See also gen- 
eral subject of "Labor, indirect") 
Methods of Cost Accounting (See "Cost 

Methods of Distributing Expense Over 
Product (See "Expense, distribution over 
Minimum Stores, II, 132, 133 
Mining, III, 91, 328 (See also "Process cost 

system, brick making plant") 
MiNORiTr Interests (See "Corporation, 

Mixed Accounts, I, 79-83 
Problem, V, 23 
Adjusting, I, 80-83 
Mnemonic System of Stores Classifica-* 

tion, III, 159 
Modernization of Accounting Methods, I, 
Purposes of, I, 4 
Monthly Reports of Production, HI, 336 

Form. Ill, 337 
Mortgages, I, 124, 125; IV, 244, 245 
Accrued income from, IV, 19 
Compared with corporate bonds, IV, 121 
Interest (See "Interest") 
Payable, account, analysis of, I, 418 
Recei viable, account, analysis of, I, 404 
Schedule of investment, I, 159 
Treatment of, statement of affairs, I, 138 
Problems, V. 66, 70 


"Needle" Industries, Estimating Cost in, 

III. 65 

Net Profit (See "Profits") 
Net Worth (See "Capital") 
New York Public Service Commission, 
Ruling as to charges to franchise account, 

IV, 264 



Nominal Accounts, I, 59 
Non-productive Departments, (See aUo 
"Administrative expense," "Building ex- 
pense," "Power plant expense," "Stores 
department expense") 
Accounts, III, 102, 268 
Dfetribution of indirect expense. III, 99, 
103, 104, 257-270 
Sub-departments expense. III, 265-268 
Expense, indirect, 
a»rt. III. 212 
Form, III, 216 
Non-productive Labor (See "Labor, in- 

Collected by bank, I, 221 
Compared with bonds, IV, 122 
Discounted, I, 299, 300 

Contingent liability, I, 120, 157, 300, 301 
Dishonored, I, 302 

Payment of, journal entry, I, 301, 802 
Dishonored, I, 296, 302 

Accounting covering, I, 298 
Interest, I, 297, 298 
Paid for depositor, I, 222 
Payable, I, 294, 304; IV, 243, 244 
Account, analysis of, I, 415 
Register, I, 303; II, 334 

Form, II, 335 
Schedule of, I, 157 

Treatment of, statement of affairs, I, 139 
Promissory, defined, I, 294 
Protest of, I, 221, 298 
Charging fees, I, 221 
Receivable, I, 294; IV, 13 
Account, analysis of, I, 402, 40S 
Accounting covering, I, 296 
Collected, accounting covering, I, 297 
Discounted, I, 299-302 

Problems, V, 13, 61, 70 319, 345 
Discounted, account, analysis of, I, 418 
Schedule of, I, 157 
Register, I, 297, 303; II, 334 
Form, II, 335 
Notions Manufacturing Concern, III, 350 
Number, Order, III, 33 
Numbering Contracts, II, 454 

Machine, II, 358 
Numerical System of Classification, 
Accounts II, 268, 271, 277-283 

NuMmcAL Sr»rsM or ^' — fnriTicwi Cje 

Standing exprnae 
List. III. W7. 
Form, III, 290 
Stores, ill. 155 


Obsolescence, I, 815, 816; III, ttf 
Administration department, II, It 
Arrangement, hotels, II, 485 
Blotter, attorney's, II, 890. 89T 

Form, II, 897 
Expense (See also "Admtnislrativ* csp*w*1 
Account, illustrated, textile cmU, III, 
896. 397 
Routine, II, 49, 50 
Opening Entries (See "Entries, t 
Operating Departmentk. (See 
ductive departments") 
Subdivided into productioa cestera. Ill, 
278, 287, 301 

Operative Accountino, II, 6 
Follow-up systems and devton. II, 9i 
Record, kept in quoUtion file. II, 77 
Register. II. 840, 841 

Form. II. 339 
Shipments on, II, 04. M 
Order Method or Coar-nwiMiMi, m. ||^ 
41. 47-52 (See also "Cost accooali^^ 
Entries in controUioc noeottaU III. tl-tl^ 

Production. III. tO. 50. 55. SOC 

Forms. III. Si. 51. 57 

Authorization of, III. 9i 

Form. III. Si 
Combination. III. 55 

Form. III. 57 
Cost sbeeU (See "Coat slweU**) 
Coupon. III. 58 

Form. III. 59. flO 
Numbering. III. 88 
Parts product. III. 67 
Process cost syttrm. III. ISt 

Form. III. 187 
Sources of. III. SI 
Summary of storea km t d, HI. Iti 



Orders — Continued 
Purchase, II, 88-93; III, 124 
Form, II, 89 

Checking, II, 95 

Copies, number of, II, 90 

Filing, II, 95 

Handling of, II, 74 

In duplicate, II, 91 

In quadruplicate, II, 92 

In triplicate, II, 91 

Numbering bills and invoices to corre- 
spond with, II, 89 

Papers accompanying, numbering, II, 90 

Placing, II, 87, 88 

Procedure in handling, II, 90-93 

Punching, II, 90 

Receiving clerk's copy, II, 92 

Register, II, 93, 94 

Used as material received form, II, 100 
Replacement, III, 146 
Sales, II, 156-161 

Accounting department, routine in, II, 
160, 161 

Acknowledgment of, II, 159 

Approval of, by credit department, II, 157 

Duplicate copies, II, 158-160 

Handling of, importance of careful, II, 156 

Interpretation by order department, H, 

Invoice, II, 159-161 

Order blank, II, 172 
Form, II, 172 

Order department copy, II, 159 

Package labels, II, 159 

Posting ticket, II. 159-161 

Recording, uniform blank, II, 156 

Sales register, entering on, II, 157 

Shipping tickets, II, 159, 160 

Stock requisition, II, 159 
Standing expense (See "Standing expense 

Obqanization, II, 4, 9-23; IV, 390 
Business, H, 9-23 (See also "Business") 
Capitalization, II, 4 
Chart, II. 21-23 

Form, II, 22 
Control of, II, 4, 12, IS 
Corporation, II, 18-20 

Form, II, 19 
Expense, IV, 14, 17 

Problems, V, 207, 304 

Account, analysis of, I, 406 

Organization — Continued 
Jobbing, II, 150, 151 

Retail combined with, II, 152-154 
Lines of. general, II, 20, 21 
Officials, importance of a budget to, II, 318 
Partnership, II, 13, 17 
Forms, II, 14, 15, 16 
Place of accounting in, II, 4 
Proprietorship, II, 13 
Purchase department, II, 69-75 (See also 

"Purchasing department") 
Retail (See "Retail organization") 
Sales department, II, 148 (See also "Sales 

Scope of, II, 9 
Types of, II, 12, 13 
Wholesale (See "Business, wholesale") 
Original Entries, I, 39-41; H, 30, 31 
Original Entry, Books of (See "Books of 

account, original entry") 
Overhead (See "Expense") 

avoiding in partnership dissolution, I, 356- 
Problems, V, 35, 37 
Refunds for, I, 112 
Overtime, Effect on Expense Distribu- 
tion Rates, III, 282 

Package Labels. II. 159 
Paper Mill. Ill, 43, 50 

Accounting. I. 338-361; II, 17, 18 

Problems, V, 27, 31. 56. 116. 140. 183, 
186, 187. 190 
Capital indefinite, opening entry. I, 341, 

Features of, special, I, 338 
Interest. I. 348-350 

Problems. V, 27. 31 
No capital contributed, opening entry, I, 

Opening entries, I, 339-343; II, 233 
Form, I, 339, 340 
Problem, V, 88 
Agreement, II, 13, 17 

Accounts, I, 338 

Problems, V, 116, 183, 187 
Adjustments, I, 348-350 



Partnership — Continued 
Capital — Continued 

Assets other than cash, I, 339 
Denned, I, 18 
Dissolution, I, 352-361 

Problems, I, 355; V, 34, 35, 37, 39, 42, 
Accounting covering, I, 354 
Causes of, I, 352, 353 
Debit balance against partner, I, 358, 359 
Distribution of assets, I, 353 

Problems, V, 34, 35, 42 
Distribution of proceeds, I, 356 
Distribution of proceeds, instalment 

method, I, 356 
Losses, sharing, I, 357-359 
Methods of, I, 352 

Overpayment of partners, avoiding, I, 
Problems, V, 35, 37 
Procedure, I, 353 
Sale of business, I, 359-361 
Good-will, accounting for, I, 360 

Problems, V, 56, 140 
Net profit retained as capital, IV, 95 
Organization, II, 13-17 
Charts, II, 14, 15, 16 
Articles of, II, 13 
Profits and losses, division of, I, 343 
Problems, V, 27, 31, 183, 187 
Bases of, I, 344 

Capital and time, basis of, I, 345-347 
Capital invested, basis of, I, 344 
Fixed percentages, I, 344 
Salaries, I, 348, 350, 351 

Considered as expense, I, 351 
Sale of business, I, 359-361 
Withdrawals, I, 348, 349 

Account illustrated, production-center sys- 
tem, III, 324 
As stores. III, 115 
Classification, III, 305 
Finished, III, 67 
Account, III, 86 
Definition, III, 24 

When "stores" and when "stock," III, 24 
Parts Product, III, 66 

Accounting for, IV, 259, 260 
Defined, IV, 257 
Depreciation on, IV, 258 

Patents — Continued 

Relation to good-irill and tnil».MAfkji, IV 


Pattern Costs, III, 5«, t81 
Pat Pebiod. II, 804; III. tS 
Pay-Roll, II, 309-31 S. 437. 474; III. IfT. |«. 
172. 187 - 193. SS9 (Sc« sl» "Ubcr. 
Forms, III, 188-100, S40 
Account, III, 89. 94 

Process cost system. III. 89 
Account illustrated. III. 95. 107 
Journal entry illustrated. III. 107 
Production-center system. III. MS 
Textile costs. III. 400 
Accounting procedure for. II. S1I. Sit 
Analysis. II. 475; III. 172. ttS 
Charts, graphic. III. 100 

Forms, III. 192. 19S 
Contractor's, building. 11, 4d7, 4S8 
Cost period different from psy period. III. 

Departmental distribution. D. 478; III. IM, 

168. 220, 226-232 
Padding, guarding against. LI, 81t 
Period. II, 304; III. 23 
Process cost system. III, 88. 390 

Form, III, 340 
Record, chain stores, II. 881 

Form. II. 887 
Routine. II. 309-812 
Sources of data. III. 88 
Time sheets, II, 310, 811; III. 178. Itt 
Pay Systems (See "Wages") 

And disbursements, distinctkm b«t«««a, I. 

Cash. I. 104-115; II. 192. 803, 401. HI (8m 
also "Cash disbursements." "SUIraMSU. 
receipts and pay menu") 
Febcentaoe or DiMiN»niMO VAtim Uwfmem 
orCAuroLATiNo DsrftacuTWii.l.M** 
824; IV. 178. 174 
Problem. V. 108 
Percentage or Gross PRonr. IV, SN SSI 
Based on sales. IV. 88<-8»« 
Harvard Bureau of BoiiasM RtMSft^ 
IV, 895 
Estimated inventory, tcstinf. IV. SM 
Test for detection of errors, IV. aSt-SM 



Percentage op Labor Method of Dis- 
tributing Expense over Product, III, 
Percentage of Turnover, IV, 395-398 

Illustrative calculation, IV, 397 

Based on cost, compared with selling price 

basis, II, 293 
Predetermined, detecting errors by, IV, 391- 

399 (See also "Errors") 
Use of, for comparison tests, IV, 398 
Use of, in statements, II, 292, 293 
Period, Cost (See "Cost period") 
Perpetual Inventory (See "Inventory") 
Personal Accounts, I, 58, 59 
Petty Cash (See "Cash, petty") 
Photographing Machine, II, 357 
Physical Inventory of Stores, III, 121 
Piice-Rate Method of Wage Payment (See 
also "Piece-work," below) 
Differential piece-rate method, II, 305; 

m, 200 
Straight method. III, 197-200 
Fixing rate. III, 198 
PIECE-WORK, III, 169-171 
Chart, graphic. III, 191 

Form, III, 192 
Pay-roll, III, 187 
Form, III, 188 
Time card. III, 170, 184 
Forms, III, 184. 186 
Coupons, III, 185 
Form. Ill, 186 


Account, IV. 181 184 

Assets, III, 213, 217, 222; IV, 179 

Building expense (See "Building expense") 

Cost should be entered in full, IV, 233 

Depreciation (See "Depreciation") 

Items, classification of, IV, 179 

Ledger, IV, 180 

Form, IV, 182, 183 
Losses on, accounting for, IV, 235 
Repairs and renewals, IV, 235-237 (See also 

"Repairs and renewals") 
Valuation at cost includes what, IV, 231 
Plant and Sundry Assets Account, I, 371 

Problems, V, 170, 202, 277, 281 
Pledge Record, II, 341 

Form, II, 341 
Pledgee's Right to Dividends, IV, 68, 69 

Policies, Insurance, II. 342-345; IV, 266 
Register for, II, 345 
Forms, II, 344 
Pools, IV, 331 

Posting (See "Ledger, posting to") 
Power Expense, 

Account illustrated, textile costs. III, 394 
Power Plant Expense, 
Account, III, 217 
Account illustrated, III, 103 

Journal entry illustrated. III, 107 
Distribution of, II, 473, 474; III, 260 
Process system, III, 344 
Production-center system. III, 289, 290, 319 
Account illustrated. III, 319 
Premium Basis, Payment of Wages, II, 305 
Premium System of Wage Payment, III, 202 

Graduated method. III, 206 

Bond (See "Bonds") 
Insurance, paid in advance, IV, 14-17 
Stock (See "Stock") 
Preferred Claims, Statement of Affairs, 
I, 133; IV, 323 
Problem, V, 61 
Prepaid Expense, I. 63, 65, 98, 113, 119; III, 

98, 101, 217; IV, 12-19 
Price Agreement with Supply House, II, 88 

Securing, purchasing department, II, 73 
Selling (See "Selling price") 
Stores, III, 123, 128 

Fluctuations in. III, 142 
Prime Cost, Elements of. III, 16 
Prime Cost Method of Distributing Ex- 
pense Over Product, III, 272, 281 
Principal, Estate Accounting for, II, 408 
Printing Plant, III, 42 
Problem, V, 386 
Daily time sheet. III, 182 

Form, III, 183 
Production order. III, 33 
Form, III, 32 

Cash book, II, 228 

Form, II, 229 
Ledger, li, 260, 261 
Process Cost System, III, 12, 43-49, 86-95. 
^-oblems, V, 3t7, 351, 353, 357 s 
Account cla§§ifiv:ation, III, 323 



•Trocess Cost System — Continwd 
Accounts, III, 271 
Problem, V, 357 
Brick-making plant. III, 46, 50, 87, 328-348 
Accounts, III, 328, 343-347 

Forms, III, 344, 346 
Administrative expense account. III, 344 

Form, III, 344 
Brick production record, daily, III, 334 

Form, III, 334 
Broken brick record, daily, III, 335 

Form, III, 335 
Broken brick record, monthly. III, 336 

Form, III, 337 
Cost-estimating for special orders, III, 

329, 330 
Cost ledger, III, 328, 343-348 

Forms, III, 345, 346 
Cost ledger summary, III, 347 

Form, III, 348 
Drawing report. III, 332 

Form, III, 333 
Fixed charges schedule. III, 841 

Form, III, 342 
Kiln record, III, 337 

Form, III, 338 
Pay-roll, III, 339 
Form, III, 340 
Power plant expense. III, 34S 
Purchase journal. III, 339 
Setting report. III, 332 

Form, III, 333 
Time ticket, III, 179, 331 
Form, III, 180 
Cement plant. III, 87 
Classification of stores. III, 131 
Closing controlling accounts. III, 90, 106- 

Combined with order system. III, 48 
Compared with order system. III, 95 

Problems, V, 347, 351 
Cost ledger. III. 90 
Defined, III, 41 
Distribution of costs direct to product. III, 

Distribution of expense, over product, III, 

Distribution of manufacturing costs, III, 92 
Entries in controlling accounts. III, 86-96 
Expense, indirect. 

Accounts, III, 89, 106-108, 269, 344 
Distribution, III, 89, 271 

Pboci»9 Co»iT SYtTCM — ComHm^ 
Expense. Indirect— CoMlimMrf 

Distribution dirrrt to product. III. 44, H 
Flour mill. III. 87 

Journal entries, illustrated. III. 10«-1M 
Labor. III. 88. »4. 165 

Account, illustrated. III. M 
Records. III. 10« 
Time basis of payment. III, Iff? 
Material cost. III. 86 
Material requisitions. III, ISi 
Pay roll. III. 839 
Form. III. 340 
Account. III. 89 
Analysis. III. 712 
Per unit of product. Ill, 47 

Problems. V, 353. 357 
Production reports. Ill, 4S 

Form, III. 45 
Purchase journal. III. SS9 
Stores classification. III. ISI 
Stores issued book. III. 198 
Stores ledger. III. 88 
Supplies account. III. 88 
Textile costs. III. 363 (See alw Tcstib 

Textile costs, illustrated. Ill, 8« 
Work in process account. III. 88 
Closing, III, 90 
Illustrated. III. 90 

Distribution of expense over. III. ••. tl*. 
225. 271-280 (Sc« also under Exprntr**) 
Pboddction-Center Mcthoo or Di«Tmi»trr- 
iNo Expense (Sec "Machine-rate 
Pboddction Chabt. GRAraic. III. 4IS 

Form, III, 4 IS 
Production Orders (See •'Orders") 
Production Reports. III. 44. SS« 5S9 
Forms. III. 45. SSS-SS5. SS7. S98 

Daily. III. 337 

Form. III. 338 
Monthly. III. SS6 
Form. III. SS7 
Weekly. III. 44 
Form. III. 45 , 

Productive Departheitts, 
Functions of, II. 10 
Indirect expense, III, til 



Productive Departments — Continued 
Indirect Expense — Continued 
Chart, III, 212 

Form, III, 214, 215 
Distribution over departments. III, 99, 
103, 104 (See also "Expense, distribu- 
Indirect expense account, 
Illustrated, III, 104 
Journal entry, illustrated. III, 107 
Productive-center sub-departments, HI, 
278, 287 
Productive-Hour Method of Distributinq 
Expense Over Product, III, 272, 275- 
Professional Accounts, II, 396-403 

Card system for laying out daily work, II, 

397, 398 
Collection, II, 402, 403 
Estate records, II, 402 
Fee book, II, 402 

Form, II, 402 
Journal, cash, II, 399-401 

Form, II, 400 
Ledger. II, 401 
Office blotter, II, 396, 397 

Form, II. 397 
Payments, cash, II, 401 
Time cards, II, 398, 399 
Form, II, 398 
Profit and Loss Account, I, 83-87; II, 264; 
III, 109 
Form, I, 86 

Problems, V, 132 215 253, 266, 377, 399 
Adjusting entries, I, 85 
Analysis of. I, 425 
Closing entries, I, 83-85, 91, 92 
Nominal, I, 59 

Subsequent facts, recording, I, 49-51 
Time of opening, I, 84 
trial balance, I, 89-91 

Form, I, 90 
Use of, I, 52 
Profit and Loss Statement, I, 89-103; II, 
290; III, 109; IV, 294-302 
Form, I, 336, 337 

Problems, V, 45-112, 132, 190, 337. 395 
Accounting procedure, I, 95-102 
And account, distinction between, I, 95 
Capital expenses, IV, 296, 297 

Problem, V, 395 

Profit and Loss Statement — Continued 
Compara ti ve — Contin ued 

Federal Reserve Board form, IV, 300 
Form, IV, 300, 301 
Corrected, I, 101, 102 

Form, I, 101, 102 
Definition, IV, 294 
Form of, I, 94, 95 

Hotel, II, 444, 445 
Function of, I, 89 
Holding company, IV, 349 
Illustrative form, IV, 298, 299 

Form, IV, 299 
Incorrect, I, 92 

Form, I, 92. 93 
Manufacturing company, illustrative state- 
ments, IV, 299, 307 
Mercantile business, illustrative statement, 

IV, 316 
Operating expenses, IV, 296 
Profit or loss resulting from operations, IV, 

Purpose. IV, 294 

Supporting schedules, IV, 301, 302 
Title of, I, 93, 94 
Profit, Book, II, 871 
Profit or Loss, 

Determination of, I, 79-87 
Double-entry, I, 79 
Proving correctness of, I, 87 
Shown by cost accounting, III, 4 
Single-entry bookkeeping. 

Asset and liability method, I, 392, 393 
Formulas for determining, I, 390-392 
Inadequacy of, I, 394 
Method of determining, I, 389, 390 
Summary of changes of assets and liabili- 
ties, I, 389 
Form, I, 389 
Tangible and intangible assets, I. 393, 394 
Profit-Sharing, Partnership, I, 343, 347 
Profits, (See also "Surplus") 
"^Anticipation of, IV, 36-38, 53, 60, 61 
Apportionment, IV, 6 
Available for dividends, IV, 58-61 
Capital, IV, 34 
Classification, IV, 34 

Contingent, in branch accounting, IV, 38, 31), 
366, 367 
Problems, V, 106, 108, 119 
Corporations, IV, 59-61, 95 

Close, distribution of profits, IV, 56 



Profits — Continued 

Corporations — Continued 
^ - DiflFerences of opinion as to what con" 
stitutes, IV, 60 
Errors affecting, IV, 93 (See also "Errors") 
Expenditures for betterments, IV, 61 
Invested profits, IV, 59, 60 
Irregular distribution, IV, 56 
Ownership of, IV, 55 
Passed over to surplus, IV, 59, 60, 95 
Source of dividends, IV, 56-58 
Subsidiaries, prior to consolidation, IV, 
359, 360 
Problem, V, 293 
Cost of production and, II, 70 
Definition, I, 31, 32; IV, 33 
Determination of, II, 365; IV, 6, 33-5S 
Appraisal of asset values, IV, 41, 42 
Aspects of value, IV, 42, 43 
Asset and liability method, IV, 52 
Capital profit, IV, 34 
Capital vs. revenue expenditures, IV, 45, 

Problems of, IV, 40 
Profit or loss, I, 79-87, 389-394; IV, 52 
Repairs, renewals and replacements, IV, 

Summary of principles of, IV, 53 
Valuation, basis of, IV, 44 
Valuation, kinds of, IV, 42, 43 
Valuation, sources of data for, IV, 45 
Division of partners', I, 343-347 
Problems, V, 27, 31, 183, 187 
Effect of appreciation on, IV, 50 
Effect of depreciation on, IV, 49 

Problem, V, 132 
Eliminations, on consolidated income state- 
ments, IV, 365 
Expected, and realized, discrepancy be- 
tween. It, 145 
Factors on which dependent, II, 14G 
Gross, I, 81, 85, 96, 110, 200, 201; II, 144, 
475-477; IV, 35 
Problems, V, 23, 127, 341 
Harvard Bureau of Business Research, 

Bulletin No. 1, IV, 393 
Manufacturing profits differentiated from, 

IV, 35 
Percentage of, test for detection of errors, 
IV, 392-394 (See also "Percentage of 
gross profit") 
Increasing, II, 70 

Profits — Continued 
Instalment nalcs, fT. IS5-187 

Problem. V, 100 
Intercompany, IV, 366 
Interdepartmental, IV, S8 
Manufacturing, IV, 35 

Problems. V. 88. 97, 841 

Corporations, IV, 59, 95 

Defined, IV. 39 

Determining. I, 85. 86 

Partnership. IV, 95 

Sole proprietorship, IV, 95 
On finished goods, IV, 37 
On sales, analysis of, II, 477-470 

Form. II. 478 
On work in process, IV. 36 
Prepaid expenses as affected by trc«iaeai 

of, IV. 14 
Recording items affecting, I, 50-52 
Retained as capital, IV, 95 
Trading, IV. 85 
Profits of Different Linhk 

Cost accounting indicates. III. 5, 6 
Property Dividends, IV, 75, 9i 

And business, relation between, 1, 19^ •• 
Drawings by I. 100, 114 

Problems, V. 93, 242 
Information necessary to, I, 84 
Sales. I. 209, 252. 253 
Proprietorship, I, 18; II. IS 
Protesting Notes. I. 221, 298 
Punching Machine. II. 354 
Purchase, (See also "Purchoaes," below) 
And sales records, stock broker's, II, 440 

Form. II. 420 
Elements of a. II. 78 
Invoice (See "Invoice, purchase") 
Journal (See "Journal, purchase") 
Order register. II. 93. 94 
Orders (See "Orders, purchase") 
Records. II. 104-129 

Retail organization. II, 868-S70 

Voucher system. II. 116 (Ss« a!so 
"Voucher register") 
Register. II, 392 

Requisition (See "Requisilio0, purckaas") 
Specifications. II. 70-8i 

Object of. II. 79 

SUndard. advanlafea of. II, iO. SI 
System, requirements of, II. T? 



Purchase ftooK ^ee "Journal, purchase") 
PuBCHASED Division of Stores Ledger, II> 

Purchases, (See also "Purchase," above) 

Problem, V, 93 
Account, I, 200 

Analysis of, I, 403 

Closing, I, 202, 203 
Forms, I, 202, 203 

Operating of, I, 202 
Analysis of, II, 475 
Cash, I, 113; II, 122 
Departmental distribution, II, 475 
Discount on, not deducted, I, 97 
Material (See also "Orders, purchase," "Req- 
uisition, purchase") 

Placing the order, II, 87 

Price agreement, II, 88 

Quotations, new, securing, II, 88 
Rebates and allowances, account, analysis 

of, I, 424 
Returned (See "Returns") 
Summary of, monthly, II, 123 

Form, II, 123 
Purchasing Agent, and Stores Keeper, 

Relation between, II, 82 
Purchasing Department, II, 76-103; III» 

116, 124 
Activities of, II, 73-75 
Card system, use of, II, 87 
Cost of goods sold, II, 70 
£xi)enditures, careful, importance of, II, 

69, 70 
Expense, II, 297, 298 
Filing data, II, 73 
Inspecting material, II, 74 
Invoices, handling, II, 74 
Issuing material, II, 74 
Loose-leaf system, use of, II, 87 
Order record, II, 77 
Orders, purchase, handling, II, 74 
Organization, II, 69-75 
Preparation for purchasing, II, 76 
Price information, recording, II, 76 
Prices, determining, II, 73 
Receiving material, II, 74 
Requisitions, purchase, handling of, II, 75 

(See also "Requisition, purchase") 
Routine of, II, 76-95 
Small vs. large business, II, 72 
Storing material, II, 74 

Purchasing Department — Continued 
Traffic, directing, II, 75 
Unscientific purchasing methods, results of, 


Quotation File, II, 76, 77 
Quotations, New, Securing, II, 88 

Rate Card, II, 304 

Rates, Depreciation (See "Depreciation") 
Rates of Expense Distribution Oveu 
Product, III, 42, 212, 271-285 
Adjustment between actual and applied ex- 
pense, III, 212, 282-285, 295 
Flat percentage charge. III, 284 
Reserve account. III, 283 
Machine-rate method. III, 272, 277, 279, 
287-298, 301-327 (See also "Machine-rate 
Material cost method. III, 272, 281 
Percentage of labor method. III, 272-275 
Prime cost method. III, 272, 281 
Process system. III, 271 
Productive-hour method. III, 272, 275-277 
Sold-hour method. III, 272, 279 
Ratio Charts, III, 406, 410-418; IV, 399, 401. 

Forms, III, 413, 418; IV, 400 
Raw Material (See "Material") 
Real and Personal Accounts, I, 58, 59 
Real Estate, (See also "Land") 
Mortgage, I, 124, 125 

Bond distinguished from corporate bond, 
IV, 121 
Realization and Liquidation Statement, 
I, 142-152 
Form, I, 145 
Problems, V, 78, 83, 266 

Realized, I, 147, 148 
To be realized, I, 146 
Cash included among assets, I, 147 
Credits, supplementary, I, 148 
Debits, supplementary, I, 149 
Form of, I, 143 

Information required, I, 143, 144 

Liquidated, I, 148 
To be liquidated, I. 147 
Unliquidated, I, 149 
Preparatory statements, I, 143 



Rebates (See "Allowances," "Discounts") 
Record, cash, II, 211 

Form, II, 211 
Sheet, sales, II, 172, 173 
Forms, II, 174 ' 

Arrangement of items, order of, I, 109 
Deposit of, daily, II, 192 
Register, mail-order house, II, 893 

Form, II, 394 
Statement of, I, 104-115 
Journal entries, I, 183 

Problems, V, 266, 271 
Appointment of, I, 142 
Balance sheet, I, 143, 149 

Form, I, 151 
Cash account, I, 149 

Form, I, 150 
Deficiency statement, I, 140, 141; IV, 319- 
Illustrative examples, I, 140; IV, 329 
Duties of, I, 142 

Realization and liquidation statement, I, 
142-152 (See also "Realization and liq- 
uidation statement") 
Form, I, 145 
Reports, I, 143, 149 

Statement of affairs (See also "Statement of 
affairs") I, 129-141; IV, 319, 324 
Form, I, 136, 137 
Clerk, duties of, II, 92, 134 
Material, II, 74, 134-137 
Reconciliation of Cash Book with Bank 
Balance, I, 225-227; IV, 425 
Problems, V, 3, 4 
Books of original (See "Books of aooount* 

original entry") 
Capital stock transfer, II, 336 

Form, II, 337 
Pledge, II, 341 
Form, II, 341 
Recording Business Information, I, 22, 2S 
Arrangement and classification of items, II, 

Auxiliary, II, 47, 48 

Rxcobda— Conh'n usd 
Books and. for braocliM uhI ehaim i 
II. 880-388 
Forms. II. 882-888 
Bound. II. 61-08 
AdvanUges of, II, 61, 0« 
Disadvantages of, II, M 
Cards, II, 66, 67 

Advantages of, II. 67 
Cash (Sec "Cash records") 
CJub. II. 448 (See also "Clubs") 
Columnar, advantages of, II, tS. \M IM 

Contractors, building. II, 458 (S*« 

"Contract," "Contractors, building") 
Cost, III, 29 (See also "Cost acrounUBf ") 
Cost sheets. III. 80, 88, 76 (See also "Cost 

sheets." "Ledger, cost") 
Detail, amount of, II, 55 
Development of, II, 25-81 
Estate, II, 402, 409. 410 
Estimated cost system (See "Estimated rast 

Expense, indirect. III, 224 
Form of, II, 52-58 
Adaptable to more than one purpose, 

Columns. II. 57. 58 
Designing. II, 56. 57 
How determined. II, 58 
Relation of. to system. II, 5fl-M 
Ruling. II. 56-58 
Uniformity of. II, 54 
Grouping. II. 36. 87 
Hotels and restaurants, H. 486 (See also 

"Hotels and restaurants") 
Income tax. II. 848 

Forms. II. 846. 847 
Inventory sheet. III. 121 

Form. Ill, 120 
Job order system. Ill, 29 
Labor (See "Labor records") 
list of. II. 85, 86 
Loose-leaf. II. 60. 61. 64-M (Se« abo **Lom». 

leaf records") 
Mail-order accounting. II. 889, 890 
Manufacturing enterprise. II. 35. 808-314. 
463-465: III. 165-194 
Form. II. 464 
Mercantile business (Sec 'Traiiiac Wii- 

Primary purpose of, 1. 14 



Records — Continued 

Process cost system (See "Process cost sys- 
Production-center system (See "Machine- 
rate method") 
Purchase (See "Purchase records") 
Reports (See "Reports") 
Retail organization, II, 34, 35, 365-372 
Sales (See "Sales records") 
Special, II, 33^348 

Forms, II, 335, 337-339, 341, 343, 344, 
346, 347 
Spoiled and returned goods, II, 380 

Form, II, 384 
Stock, general, II, 380 

Form, II, 382 
Stores, III, 115, 118-141 (See also "Stores") 
Subsidiary, I, 328-337; II, 47, 48 

Forms, I, 330-333 
Summarization, II, 247, 248 
Textile costs (See "Textile costs") 
Time (See "Time records") 
Trading business (See "Trading business") 
Refunds, (See also "Returns and allowances") 

For overpayments, I, 112 

Automatic, II, 356, 357 
Cash, II, 177, 215, 358 

Disbursements, mail-order house, II, 393 
Form, II, 394 

Receipts (See "Cash receipts register") 
Check, II, 209-211 

Form, II, 208 
C. O. D., II, 391 

Form, II, 391 
Commission merchant's consignment, II, 

345, 348 
Contract, II, 454 
Diamond, II, 342 

Form, II. 343 
Due biU, II, 369, 370 
Hotel guest, II, 436, 437 

Form, II, 437 
Insurance, II, 342, 345 

•Form, II, 344 
Invoice, II, 97 
Materials ordered, II, 86 

Payable, I, 303; II, 334 
Form, II, 335 

Receivable. I, 297, 303; II, 334 
Form, n, 335 

Order, II, 340, 341 

Form, II, 339 
Purchase order, II, 93, 94, 392 
Rent, II, 253 

Form, II, 254 
Return and allowance, II, 125 

Form, II, 125 
Sales, II, 157 
Securities, II, 348 

Form, II, 346 
Storage, chain stores, II, 381 

Form, II, 388 
Subcontract, II, 454 

Voucher (See "Voucher," "Journal, pur- 
Registering Stock, II, 415 
Regulations, Stock Exchange, II, 415 
Renewals (See "Repairs and renewals") 
Rent, III, 98, 101, 233, 236; IV, 14, 19, 21, 27 
(See also generally "Fixed charges") 
Account illustrated. III, 101 

Journal entries, III, 107; IV, 21, 22 
Distribution of expense, II, 471-473; III, 107 

Production-center system. III, 289 
Register, II, 253 
Form, II, 254 
Rents of an Annuity, IV, 146 (See also 

Repair Shops, Records in. III, 30 
Repairs and Renewals, 
Problems, V, 15, 16, 18 
Accounting covering, I, 319-321 
Buildings, improvements to, IV, 235-237 
Chargeable to capital, when, IV, 45-49, 61, 

97, 235-237 
Depreciation and, IV, 167 
Machinery, III, 221 (See also general sub- 
ject of "Labor, indirect") 
Production -center system. III, 291 
Standing expense orders. III, 226 
Replacement Order, III, 146 
Replacements (See "Repairs and renewals") 
Reports, (See also "Statements") 
Cash, daily, II, 227, 228 

Form, II, 228 
Material used. III, 148 
Production (See "Production reports") 
Time (See "Time records") 

Credit, II, 141, 142 
Delivery, II, 83 



Requisition — Continued 

Material (See "Material requisitiona**) 
Purchase, II, 82-87 

Accuracy of content, checking, II, 83 

Colors, different, when used, II, 83 

Contents of, II, 85, 86. 

Copies, number of, II, 85 

Defined, II, 82 

Form of, II, 84 
Form, II, 84 

Handling of, II, 73, 86, 87 

Materials ordered register, II, 86 

Signing, II, 87 
•Reserve Fund," (See also "Reserves," 

Canadian term for surplus, IV, 95 
Compared with "reserve account," IV, 106, 

Reserves, (See also "Funds") 

Problems, V, 19, 21, 207, 271, 293, 319, 331 
Accounting for, IV, 101-103 
Accounts, IV, 180 
Available, when, IV, 109 
Bad debts, IV, 105, 115, 216 
Problems, V, 19, 21, 328 

Income tax requirements, IV, 220 
Balance sheet treatment of, IV, 105 
Compared with funds, IV, 107-111 
Contingent, IV, 105 
Created from surplus, IV, 104, 105 

Problem, V, 207 
Damage claims, IV, 118 
Definition, IV, 104 
Depreciation, IV, 105 

Accounts, IV, 181, 184, 187, 188 
Form, IV, 183 

Amount inadequate, how handled, IV, 99 

Fixed assets, IV, 115 

Journal entries, illustrative, IV, 184-187 

Revaluation of assets, IV, 101 

Stock-in-trade, IV, 115 
Disposition of, on payment of bond issue, 

IV, 161 
Equivalent to surplus, in Germany, IV, 95 
Estimated losses, IV, 115 
For expense account, III, 283 
For extensions, IV, 105 
Injuries to employees, IV, 118 
Kinds of. IV, 104, 105, 114, 115 
Nature of, IV, 107 
"Necessary," IV, 114 
Presentation on balance sheet, IV, 284 

Reserves — Continiud 
Purpose of, IV, 104 
Relation to profit*. IV, 6 
Secret. IV, 111-114 
Problem, V. 319 
Arguments for and liffaiiut. IV, IIS 
How created. IV. Ill 
Propriety of, IV. 112 
Shown on balance ahcct. IV, «4 
Sinking fund, IV, 156 (Sc« abo '^Siakiaf 

True, IV, 104, 105, 114 
Entries for. IV. 115 
Factors determining. IV, 115 
Valuation. IV. 104. 105. 114, 115. 117 
Accounting for, IV, 117, 118 
Shown on balance sheet. IV, 105 
Voluntary, IV, 114 

Wasting assets, depletion of, IV, 115. 440 
"Rest." English Term for SiBPLts. IV. M 
Restaurants (See "Hotels and restaurants") 
Restraining Trade, Br HoLoiNa Com* 

PANIES, IV, 333 
Retail Organization, II. H&-150. S6S-87t 
Advertising department. II, 149 
Branch stores, organizing, II, 153-154 
Cash accountability. II, 366-368 
Classification methods, II. 268 
Cost accounting for (See "Costiiif acrouBl- 

ing for trading enterprise") 

Purchase, II, 369 

Sales, II, 371 
Jobbing combined with, II, 15t-154 
Journal, II. 366 
Ledger. II. 871. 372 
Mail orders. II. 149 
Profit book. II. 371 
Records, II, 365 

Purchase, II. 368-870 

Sales. II. 370. 371 
Small, II, 150 
Statements. II, 366 

System of accounts for, problrm of. II. M3 

Adjustment of, II. tiS 
And allowances. 

Analysis sheet of allowaocM, II, IM 
Form. II. 126 

Journal entries. I, 184 

Refund ticket. II. iiS 
Form. II. ii6 



Returns — Continued 

And allowances — Continued 
Register, II, 125 
Form, II, 125 
Purchases, I, 184, 238; III, 1S9 
Account, analysis of, I, 424 
Method of handling entries, I, 288 
Memorandum of, II, 123, 124 
Form, II, 124 
Sales, I, 210; II, 175-177 
Form, II, 176 
Account, analysis of, I, 411 
Cash memorandum for, II, 225 

Form, II, 226 
Entering in journal, I, 254 
Spoiled and returned goods record, II, 880 
Form, II, 381 
Stores, III, 133 

Estimate of, II, 320, 321 
Expenditures, compared with capital ex* 
penditures, IV, 45-49, 61, 97, 235-237 
Room Ticket, Hotel, II, 436, 437 

Form, II, 437 
Rooms Occupied, Hotel, Vebification of 

Receipts from, II, 443 
RoPB Making, III, 50 

Automatic, II, 49 
Completeness of, essential, II, 54 
Office, rules for, II, 49, 50 
Rowan System, Payment of Wages, II, 305 

Defined, IV, 262 

Minimum payment per year, IV, 18, 263 
Paid in advance, IV, 14 
Rules, Office Routine, II, 49, 50 
Rulings and Columns, II, 56-58 (See also 
"Journal, columnar") 

Salaries. (See also "Labor," "Pay-roll,' 
Partners', I, 3il8, 350, 351 
Problem, V, 42 
Sale of Partnership Business, I, 859-361 

Account, I, 208 

Analysis of, I, 422 
Allowances I, 99 
Analysis of. I. 160 

Sales — Continued 
Cash, I, 110, 249-252 

Accounting procedure, I, 249-252; II, 204 
Income for period, I, 110 
Receipts for, duplicate, II, 177 
Recording, II, 163 
Charge, I, 249 

C. O. D., I, 110-254; II, 181-183 
Route ledger, II, 183 

Form, II, 182 
Route sheet, II, 181 
Form, II, 182 
Commission on, accounting procedure for, 

11,340, 341; IV, 27 
Containers, I, 253 
Cost of, II, 144 

Overhead distribution of, II, 475 
Coupon books, use of, II, 187 
Deductions from, I, 95-97 
Department, II, 146-155 

Advertising department, relation to, 11,154 
Functions of, II, 10, 147 
Jobbing organizations, II, 150, 151 
Organization of, II, 148 
Retail and jobbing organization com- 
bined, II, 152-154 
Retail organization, II, 148-150 
Traffic department, relation to, II, 15 1, 155 
Discounts, I, 99 
Drivers', II, 336, 338. 840 

Form, II, 338 
Fixed asset, I, 112 
Impression book, II, 166, 167 
Instalment, II, 185-187 
Form. II, 185 
Problem, V, 109 
Tickler file, II, 185 
Invoices, II, 159-161 (See also "Invoices, 

Journal (See "Journal, sales") 

Containers column in, II, 185 

Form, II, 184 
Special form, II, 256, 257 
Form, II, 255 

Problem, V, 93 
Overhead distribution of, II, 475 
On approval, II, 180, 181 
On consignment, II, 177-179 
Sales book for consignee, II, 180 
Form, II, 176 



Sales — Continiied 

On credit, records of, II, 163, 164 
Order blanks, II, 172 

Form, II, 172 
Orders (See "Orders, sales") 
Percentage of gross profits based on, IV, 

Profit on, II, 365 
Problem, V, 23 

Analysis of, II, 477 
Form, II, 476 

Gross, II, 475-477 
Ratio to selling expense, II, 299, 300 

Problem, V, 341 
Rebates, I, 99 
Rebates and allowances account. 

Analysis of, I, 411 
Recapitulation, II, 172, 173 

Forms, II, 174 
Recording, by tabulating machine, I, 160 
Records, II, 162-188 

Alternate order system, II, 172 
Form, II, 172 

Journal (See "Journal, sales") 

Ledger (See subheading "Ledger," above) 

Mechanical account system, II, 173, 175 

Necessity for, II, 162, 163 

Retail organization, II, 370-371 
Register, II, 157 
Returned (See "Returns") 
Schedule of, I, 160 
Sundry, I, 249-252 
System, alternate, for a small concern, II, 172 

Form, II, 172 
To proprietor, I, 209, 252, 253 
Sales Book (See "Journal, sales") 
Salesmen's Commissions, II, 340, 341 
Schedule, (See also "Statements") 
Accounts receivable, I, 157, 158 
Capital or surplus adjustments, I, 159, 160 
Cost of goods sold, I, 161 
Depreciation, III, 22 1. 234, 249, 253 
Form, III, 250, 251 

Textile costs. III, 397. 398 
Expenses, general, L 162 
Fixed charges. Ill, 224, 233, 253 
Form, III, 235 

Process system. III, 341 
Form, III, 342 
Functions of, II. 288, 289 
Inventory, I, 158 

Purposes ajxd uses of» 1, 1^8, 150 

Schedule— Con/miMrf 
Investmenta, I, 159 
Miscellaneouii, I, lOf 

Payable. 1. 157 
Receivable, I, 157 
Sales, I, 160 
Supporting, I, 153-1 6S 
Desirable, when, I, 16S 
Example of, I, 155. 156 
Presentation, interpretative, prinripjr* 
and method of. I, I5S-I55, 169 
ScHEDiLiNa Work in DEPARTUKjm, Fott 

Even Capacitt, III. 6i 
Scrap, I, 319, 320: III, 147 

Problem. V, 23S 
Scrip Dividends (See "Dividend***) 
Secret Reserves (See "Reserve*") 
Securities. (See also "Bonds." "Slock**) 
Account, analysis of, I, 404 
Handled on the exchange, II, 415 
Register, II, 348 
Form, II, 346 
Schedule of investments. 1, 150 
Verification of, IV, 427 
Segregated Budget, II, 316 
Expense (See "Expense, aelliaf '*) 

Elements of. III, 25 

Form. Ill, 25 
Fixing. Ill, 5, 6 
Inventory at, II, 145 
Relation to production coats. II. 70; III. 
5, 6 
Profitable, factors in. II. 146 
Service Departments (See *'Adiium«trativ« 
expense " "Power plant rtpenae" **SliM«t 
department expense") 
Service Metuod. Dcpretutiom RAxai. IV, 

Service. SpeciaLi, Distmibution or ExroMl 

or. II, 460 
Services Expcmbc, IV, «7 
Cost (See "Cott sbceU**) 
Dxpenae distribution (Se* "ExprtM* db- 
tribution sheet") 
Sherman Anti-Tmust L4W or 1880. IV, SS» 
Shipduiloino T«aok, AjmciFAnoii or 
PnoriTa. IV. 36 




Between branches, II, 877 
On order, II, 94, 95 

Account illustrated, textile costs, HI, 393 
Checking goods in, II, 160 

Chart, graphic, III, 417 
Form, III, 418 
Tickets, n, 159, 160 
Shoe Factory, 

Day's work sheet. III, 62 
Estimated cost of material. III, 149 
Estimated costs in, III, 63 
Shoe tag, III, 58 
Form, III, 59, 60 
"Short" Account (See "Stock brokerage") 
Single-Entry Bookkeeping (See "Book- 
keeping, single-entry") 
Sinking Fund, IV, 143-164 

Problems, IV, 162, 163; V, 152, 160, 
207, 300 
Account, analysis of, I, 410 
Accounting procedure, IV, 155-163 
Adjusting entries, IV, 160 
Disposition of fund after payment of 

debt, IV, 161 
Expenses, IV, 158 
Income, IV, 158 
Investments, IV, 9, 10, 157 
Payments into fund, IV, 156 
Redemption of debt, IV, 159 
Sinking fund reserve, IV, 156 
Amortization of debt, compared with sink- 
ing fund method of payment, IV, 153, 154 
Annuity method, IV, 144-154 (See also 
Computing, IV, 144-148 
Future worth of annuity, IV, 146, 151, 153 
Present worth of annuity, IV, 148-151, 
Compound interest method of calculating 

depreciation, IV, 175-177 
Creating, methods of, IV, 144 

Problem, V, 207 
Debt, redemption of, IV, 144, 151-154, 159 
Defined, IV, 143 
Disposition of, IV, 161 

Entries, IV, 161 
Expenses, due to, IV, 158 
Income derived from, IV, 158 

Sinking Fund — Continued 
Investments, IV, 9, 10, 157 

Entries, IV, 158 
Methods of creating, IV, 144 
Payments into, IV, 156 
Purpose of, IV, 143 
Reserve, IV, 156 

Problem, V, 300 
Account, analysis of, I, 420 
Trust deed, provisions of, IV, 155, 157 
Trustee, report of, IV, 157 
Sinking Fund Method, Depreciation 

Rates, I, 324, 325; IV, 175-177 
Six-Column Journal, II, 241 

Form, II, 242 
Slide Rule, II, 355 
Soap Factory, By-Products,' III, 148 
Sold Division of Stores Ledger, II, 141 
SoLD-HouR Method of Distributing Ex- 
pense Over Product, III, 272, 279 
Problem, V, 386 
Sole Proprietorship, I, 18; II, 13 (See also 

Sorting Machine, II, 355 
Source File, II, 77 
Specifications, Standard, Advantages of, 

II, 80, 81 
Spinning Mill, III, 46 (See also "Textile 
Problems, V, 351, 353, 355, 357 
Weekly production report. III, 44, 45 
Form, III, 45 
Spoilage of Material, III, 146 
Spoiled and Returned Goods Record, II, 
Form, II, 384 
Stamp Affixer, II, 357 
Standing Expense Orders, III, 31, 224, 
Classification, III, 227, 229-232 
Distribution, III, 224 

Sub-departments, III, 266 
Numbering, III, 229 
List of. III, 227, 229 
Form, III, 230 
Time tickets. III, 227 
Form, III, 228 
Statement of Affairs, I, 129-141; IV, 319, 
Form, I, 136, 137 
Problems, V, 61, 66, 70 



Statement of ArPAiRS — Continued 

Assets, valuing and stating, I, 132 
Problems, V, 66, 70 

Deficiency statement, I, 140, 141; IV, 819- 
Problems, V, 61, 66, 70 
Illustrative examples, I, 140; IV, 329 

Example of, I, 136-140 

Form of, I, 141 

Illustrative example, IV, 327-329 

Information required, I, 135, 136 

Liabilities, stating, I, 133 

Treatment of, I, 138-140 
Statement of Condition, I, 385-387 
Form, I. 387 

Comparative, I, 387-389 
Form, I, 388 

Form of, I, 386 
Statement Voucher, II, 121 
Statements, (See also "Balance sheet") 

Account form, I, 117; II, 290; IV, 285 

Articulation, IV, 413 * 

Assets and liabilities, I, 46-49 
Forms, I, 46-49 
Problem, V, 336 
Summary of changes of, I, 389 

Balancing, I, 49 

Bank, form of, I, 224, 225 
Form, I, 224 

Basic, II, 289 

Cash discount, treatment of, I, 280, 281 

Comparative, II, 294 

Contents of, I, 25 

Deficiency (See "Statement of affairs") 

Defined, I, 25 


Importance of, II, 287, 288 
Time of, II, 288 

Exhibits, schedules, and, II, 288, 289 

Expenses, production-center system. III, 308 
Form, III, 307 

Form and arrangement of, I, 26 


Consolidated, IV, 364-366 
Tie-up with balance sheet, IV, 292 
Problems, V, 132, 221, 336 

Manufacturing business (See "Manufactur- 
ing enterprise") 

Mercantile business (See "Trading busi- 

Of going business, I, 47-49 
Form, I, 48, 49 

Statcmsnts— ConiiniMJ 
Pay-roU (See 'Tay-rolT*) 
Percentage. u«e of, II. «M. AM 
Preparation of. I. 885; IV, 10. II 
Problem. V. 28 

ClaasificatioD of accotuta. aid to. I« il( 
n, 284-:«8« 
PresentatJon. interpretive, I, t» lit 

Method of, I. 155 

Principles of. I. 154. 168 
Profit and loss (See "Profit and Iims i 

Purpose and use of, I. 25. 154 
Realization and liquidation (See ** 

tion and liquidation statement") 
Receipts and payments, cash, I. lOf-115 
Form. I. 106 

Dates of. I. 107 

Details included. I. 108 

Form and content of. I. 105 

Items, arrangement of, I, 100 

Items not disclosed, I. 114 

Profit and loss not disclosed by, h 1*i> lU 

Purpose and use of, I, 104, 115 

Title of, I. 106, 107 
Report form, I, 117; II. 201; IV, tSt 
Retail organization. II, 8M 
Schedules, exhibits, and, II, tM, t8t 
SuUsUcal. III. 405. 414 
Time periods covered by, 11, fOl, ftt 

Monthly. II, 292; UI. 28 

Weekly. II. 292 

Yearly. II, 291 
Units used in, II. 298 
Statistical Ckabts (See "Charts. grapWen 

Comparison of. II. f08. 104; IV. 800-401 

Form. IV, 400 
Cumulation of, II, tM^ tif 
Steel Industbt. CnAnoM Aftuid to Eaw 

Matsbial, UI. 150 
Stock. III. 40 (See also "MaterUl" "S^mrnD 
Index card for auul-octlsr necowMini. tU 

Ledger (finished foods). III. 77 

Form. III. 78. 
List. III. 185. 804 

Forms. III. 185. 804 
Record, general. II. ••• 

Form, II«88t 



Stock — Continued 

Turnover, I, 210, 211; IV, 395-397 

Calculating, I, 211; IV, 397 
Problem, V, 341 

Defined, IV, 395 
Stock Brokerage, II, 415-431 

Records, II, 419, 420 

Status of, II, 415 
Balance sheet, II, 428-431 
Blotter, II. 420-423 

Forms, II, 421 
Clearance sheet, II, 417 
Form, II, 418 

Time of delivery, II, 417 
Clearing house ticket, II, 416 
Exchange memberships, II, 429 
Fee, II, 423 
Inventories, II, 427 
"Long," II, 423-425 

Account, II, 424, 425 
Margin deposit, II, 423 
Profit and loss account, II, 431 
Purchase and sales records, II, 420 

Form, II, 420 

Disposition of, II, 427 

Handled on the exchange, II, 415 

Inventory of, II, 427 
"Short," II, 423, 425-427 

Account, II, 426, 427 

Borrowing stocks, II, 425 

Delivery, clearing house procedure, II, 425 

Interest paid borrower of stocks, II, 426 
Stock exchange clearing house, IT, 410, 417 
Trading on the exchange, II, 413 
Stock, Capital, 
Accounting for. 

Different kinds, IV, 196 

Issues, actual, IV, 190 

Problems, V, 170, 173, 176 

Nature of problem, IV, 8, 9 

Total authorized issue, IV, 192-194 
Problem. V, 176 

Analysis of, I. 422 

Purpose of. IV, 189 
Acquired from other CMporations. IV, 19, 

For purposes of control, IV, 335 

For purposes of investment, IV, 334 

Illegal, when, IV, 331 

Stock, Capital — Continued 

Acquired from other (.-orporations — Contin- 

Not illegal, IV, 334 

Statutes allowing, IV, 333 
Bank, IV. 200 
Bonus, IV, 209 

Certificates, I, 364, 365; II, 415 
Closing transfer books, IV, 63, 64 
Common, I, 366 

Problem, V, 60 
Discount on, IV, 9, 199 

Accounting for, IV, 200 

Not allowable in State of New York, IV. 
Dividends (See "Dividends") 
Dividing into shares, I, 364, 365 
Donated, I, 372, 373 

Problems, V, 173, 176, 277 
Exchange (See "Stock brokerage") 
Exchanged between corporations, IV, 339 
Forfeited, IV, 210 

Surplus from, IV, 211 
Instalment account, analysis of, I, 406 
Ledger. II, 261, 262 

Form, II, 258 
Owned, account, analysis of, I, 404 
Owned for purposes of control, IV, 335 
Owned for purposes of investment, IV, 334 
Ownership, forms of, IV, 334 
Payment for, by instalment, IV, 194 
Preferred, I, 366, 367; IV, 65 

Account, analysis of. I. 424 

Accounting for. IV. 199 

As good-will, IV, 361 

Disposition of, IV. 199 

Method of treating, IV, 9 

Surplus of subsidiary, IV, 358, 361 
Problem, V, 312 
Registering, II, 415 
Schedule of investments, I, 159 
Stock book, II, 336 

Form, II, 337 
Subscribed, account, analysis of, I, 418 

Problems. V, 59, 152, 170 

Account, analysis of, 1, 405 

Di\ndends applied to, IV, 87 

Paid subsequently or in instalments, I, 369 
Transfer record, II, 338 

Form, II, 337 



Stock, Capital — Continued 

Treasury, I. 371-373; IV, 201-208 
Account, analysis of, I, 406 
Accounting for, IV, 202-205 

Problem, V, 277 
Balance sheet treatment, IV, 208 

Problem, V, 152, 277 
Defined, IV, 201 
Purchase, above par, IV, 207 
Purchase below par, IV, 200 
Purchases, IV, 205 
Surplus account, analysis of^ I, 421 
Problems, V, 173, 176 
Trust company, IV, 200 
Without par value, IV, 200 

Balance sheet reference to, IV, 201 
Entries, IV, 201 
Defined, IV, 215 
Depreciation on, IV, 223, 224 

Reserve for, IV, 115 (See also "Reserves") 
Overhead applicable to, IV, 227 

Corporate control, II, 18 
Estates, IV, 69 
Married women, IV, 68 
Notice of dividends, IV, 69 
Of record, IV, 66 
Pledgees, IV, 68 
Straight-Line Method, Depreciation 

Rates, IV, 171 
Storage Register, Chain Stores, II, 381 

Form, II, 388 
Stores, (See also "Material," "Supplies") 

Illustrated, III, 83 
Journal entries, illustrated, III, 106 
Accounting, II, 137-145; III. 122-141 
Accuracy essential. III, 123 
Adjustments, III, 139 
Arrangement, III, 117 
Bill of material, III, 135 

Form, III, 135 
Bin tag. III, 132 
Form, III, 133 
By-products, III, 147 
Card, II, 139 

Form, II, 140 
Charging, II, 462; III. 150 
Classification, III. 122. 138, 153-16* 
Advantages. Ill, 154 
Basis for system used, Ili, 160 

Sron M—Contin utd 

Classification — ConHnutd 
"Block" tyctem. III. IM 
Catalogue. III. 101 
Combination of letter* and nualiera. III. 

155. 160 
Dewey decimal •>'stein. III. \M 
Letter system. HI. 155. 159 
Mnemonic system. III. 159 
Numerical system. III. 1A5 
Symbols used. Ill, 154 
Control, factors in. II. ISS. 1S4 
Controlling account. III. 81, \ti 
Defective work. Ill, 14« 
Defined. II. 131, 13«; III, 23. llS 
Control centralized. II, ISl 
Development of. II, 1S£ 
Functions of. II. 74 
Separate, II. 131 
Uniformity in, II. \Si 
Department expense. III. 98. 104 (Sc« ako 
generally "Non-productive dtpart* 
Account. III. 217 
Account illustrated. produrtioB-«Mil«r 

system. III. 321 
Applied direct to material. III, MS, €97. 

On distnhution sheet. III. MO. M4 
Sub-departments. III. 2W 
Estimated quantity. III. 149 
Expense, incurred before reiTipt, III. IJO 
Finished parts. III. 24. 07, 80 
Fluctuations in weight or volume. III. 141 
Hotel. II. 442 

Inventory (See "Inventory") 
Issuance of. II. Ill: III. 131-lSS 
Issued book. III. 131. ISO 
Form. III. 137 
Control of. III. 131 
Posting to general ledjcrr. III. IM 
Requisitions summariicd in. III. ISl. IM 
Keeper. III. 118 
Ledger (See "Ledgrr. ftofm") 
Maximum. II. ISS 
Minimum. II. 1S<. ISS 
Organization. II. ISO. ISl 
Prices, III. lis. 1« 
Estimated, shoe fatiory. 111. lit 
Fluctuations in. III. I4< 
Purchase order (See "iXTtlcr*. pvnkmm") 



SronEa— Continued 

Purchasing department (See "Purchasing 

Received book, III, 124 
Form, III, 125 
Agreement with purchase journal. III, ISO 
Posting to stores ledger. III, 126, 130 
Received report, II, 134-136 

Forms, II, 135, 136 
Record on cost sheets. III, 131 

Proof of. III, 132 
Records, II, 137-145; HI, 115, 118-141 
Requisitions (See "Material requisitions") 
Retail, organizing, II, 153, 154 
Returned, III, 138 
Scrap, I, 319, 320; III, 147 
Shrinkage, adjustment on books. III, 140 
Spoilage. Ill, 146 
Supplies (See "Supplies") 
Systems, II, 130-145 

Planning, factors to be considered in, II, 
Used, report of. III, 148 
Waste, III, 142, 145 

Adjustment on books. III, 140 
Before use of stores, III, 150 

Accountability, II, 137 

And purchasing agent, relations between 

Duties of, II. 134 
Stobino Material (See "Stores") 
Straight-Line Method of Calculating 
Rates, I, 322 
Problems, V, 16, 18, 168 
Subcontract (See "Contract") 
Subcontractors, II, 453 (See also "Con- 
tractors, building") 

Non-productive, II, 10, 12; III, 265-268 
Productive (machine groups). III, 278, 287, 
301 (See also "Machine-rate method of 
distributing expense over product") 

Special, club, II, 452 
Stock (See "Stock") 

Departments (See "Sub-departments") 
Journal (See "Journal, subsidiary") 
Ledgers (See "Ledger") 
Records. I. 328-337; II, 47, 48 
Forms, I, 330-333 

Subsidiaries (See "Corporation, subsidiaries") 
Summarization, Records or, II, 247 

Analysis of sales, IV, 317 
Cost, cost ledger, process cost system, III, 
Form, in, 348 
Daily work sheet. III, 62 
Journal entries, I, 237 
Daily, UI, 337 

Form. Ill, 338 

Monthly, III. 336 

Form. III. 337 

Weekly, III, 44 

Form, III, 45 

Purchases, II, 123 

Form. II, 123 
Time tickets, III, 171, 173, 177 
Sundry Expense Account, III, 291. 322 
Supervision, Accounting System, II. 50 
Supplies, II, 74, 141, 469; III, 17, 213, 217, 
221, 226-232 
Account, III, 81, 122 

Journal entries, illustrated, III, 106 
Process cost system, III, 88 
Charged direct, unusual method. III, 222 
Department expense, distribution of, II, 469 
Included in term "stores," III, 23 
Issuing, II, 74, 141 

Not exhausted (See "Deferred debits") 
Office, account, analysis of. I, 408 
Posting from stores issued book. III, 138 
Production-center system, III, 291 

Account illustrated. III, 325 
Requisitions (See "Material requisitions") 
Standing expense orders. III, 224. 226-232 
Form, m, 230 

Problems, V, 137, 173, 176, 277 
Analysis of, I, 421 
Compared with undivided profits account, 

IV, 97, 98 
Entries to, IV, 98 
Accounting for, IV, 101-103 

Effect of entries on balance sheet, IV, 102 
Adjustments, I, 159; IV. 95-103 

Problems. V, 15, 16, 18, 21, 125, 132, 
148, 180, 266, 271, 284, 312 
Schedule of, I, 159, 160 



Surplus — Continued 

At organization, IV, 96 

Provision for, IV, 200 
Definition, IV, 95 

Dividends declared froin, IV, 55-59 
Forfeited stock, payments on, IV, 211 
Nature and sources, IV, 95-103 
Reserve from, IV, 104, 105 (See also "Re- 

Advisability of, IV, 60 

Factors determining, IV, 115 
Revaluation of assets, IV, 100 
Sale of assets, IV, 99 
Sources of, IV, 96 

Items other than realized profits, IV, 95 
Special accounts, IV, 51, 96 
Specially created on organization of an 

enterprise, IV, 96 
Subsidiary (See "Corporation, subsidiaries") 
Unearned, special account for, IV, 51 
Suspense Accounts, IV, 22, 27 
Systems, Accounting, (See also these head- 
ings throughout index) 
Agencies, II, 373, 374 
Branches, II, 374-388 
Chain stores, II, 374-388 
Clubs, II, 446-452 
Contractors, building, II, 453-460 
Cost accounting, II, 461-477; III, 801-400 
Estates, II, 404-414 
Hotels and restaurants, II, 432-445 
Mail-order business, II, 389-395 
Manufacturing enterprise, II, 461-465 
Professions, II, 396-403 
Retail business, II, 363-372 
Stock brokerage, II, 415-431 
Stores, II, 130-145 
Trading enterprise, cost accounting, II, 

Wholesale business, II, 363-372 
Suspense Account, IV, 22, 27 

Problem, V, 137 


Table D'hote Dining Room, II, 43S 

Tabular Ledgers, II, 251 

Tabulating Machines, Operation of, II, 

Tasx System of Wage Payment, III, 204 
Tax, Income (See "Income tax") 

Taxes ExractB. Ilf. M. 100. fit. ftl. tM; 
IV. 29 (See alao geoeraUy *'FbW dwfv *) 

Account, analyitfl o(. I. 410. 417 
Account, illustrated. 

Textile cotU. III. SM 
Journal entry, illustrated. III. 107 
Production <enter system. UI, <90 
Taylob Systkm, PATMDrr or Waovk II* 310 
Telephone Expxnbb. 11. 468; III. tlS. flti 

(See also "Fixed chargct") 
Textile Costs. III. 4S. 01 . S09-401 

Problems, V. 847. 851, 888. SM. 887 
Analysis sheets. 

Cost of cloth knit, HI. 887. 888 
Cost of cloth woven. HI. 881. 884. 888 
Cost of mixes. III, 872. 378 
Cost of yam carded and spoa. III« 878. 878 
Finished cloth. III. 887. 890 
Conversion cost distributed uvrr jrsni casl« 

III, 378 
Depreciation schedule. III. 897. 888 
Dyeing and finishing. III. 806 
Expense accounts, indirect. III. 867. SS9-8^ 
Boarding house. III, 896 
Building expense. III. 895 
"General expense." Ill, 896 
Insurance. Ill, 399 
Light, heat, and power. III. 394 
Office expense. Ill, 397 
Taxes, III. 399 
Finished cloth account. III. 891. 80t 
Fluctuations in weight and ^-olums ol i 

rial. III. 144 
Knitting process. III. 864 
Non-productive departments. III. 366 

Accounts. III. 393-399 
Operating department*. Ill, 866 
Pay-roll account. III. 400 
Raw material account. 111. 86T 
Shipping expense account. III. 888 
Spinning, III. 46, 47 

Production report, weekly. III, 44. 48 
Form. 111. 45 
Waste account. III. 867 
Weaving process. III. 364 
Work in process accounts. 
Dye house. III. 369. 870 
Knitting. III. 385. 386 
Mixes. 111. 369. 371 
Weaving. III. 380-888 
Wet and dry fi.iiskinf . 111. 887. 888 



Textile Costs — Continued 

^Vork in process accounts — Continued 

Yarn, III, 374-376 
Yarn spinning. III, 46, 47, 364 
Theory of Averages, IV, 20, 26 
Three-Column Journal, II, 105, 164, 165, 
Forms, II, 106, 164, 238 
Ticket, Hotel Room, II, 436, 437 

Form, II, 437 
Tickets, TiifE (See under "Time records") 
Tie-Up Between Statements, IV, 292 

Problems, V, 78, 132, 221, 336 

Basis of wage payment, II, 305; III, 169 

Mechanical, II, 306-309; III» 167, 168, 176 

Form, III, 181 
Non-mechanical, II, 313, 398, 399; III. 
29, 35, 167-182, 331 
Forms, II, 398; III, 35, 178, 180 
Clock, II, 307-309, 358; III, 176, 179 
"In and out," II, 307, 308; III, 167, 168, 176 
Time Records, 

Pay-roll (See "Pay-roll") 
Production-center system. III, 306 
Time clock card, ll, 306-309; III, 167, 168, 
Form, III, 181 
Time sheets, II, 310, 311; III, 175, 182 

Form, III, 183 
Time tickets, II, 313, 398, 399, 462; III, 29. 
35, 167-182, 331 
Forms, II, 398; III, 35, 178, 180 
Checking accuracy of. III, 169, 173 
Lost time. III, 175 
Piece-work, III, 170-184 

Forms, III, 184, 186 
Piece-work, coupons. III, 185 

Form, III, 186 
Standing order. III, 227 

Form, III, 228 
Summary, lU, 171, 173, 177 
Tools, Expense, 

Production-center system, III, 291 
Account illustrated. III, 322 
Total Cost, Elements of, III, 16, 25 
Towne Plan, Payment of Wages, II, 305 

Acceptances, I, 304, 305 
Discounts (See "Discounts") 

Defined, IV, 260 

Relation to good-will and patents, IV, 260 
Trade Secrets, IV, 261 
Trading Account, I, 203, 204 

Problems, V, 23, 83 
Trading Business, (See also "Retail organiza- 
tion, "Wholesale business") 
Budget for, illustrated, II, 327-333 
Cash book, general, II, 201-204 

Form, II, 203 
Cost accounting for, II, 466-477; III, 24, 
25, 74 CSee also "Cost accounting for 
trading enterprise") 
Records, II, 34, 35, 365-372 
Statements, IV, 310-318 

Illustrative, II, 476; IV, 311-318 

Problems, V, 242, 249, 253 
Trading account, I, 203, 204 
Stores accountability, II, 141, 142 
Trading on the Stock Exchange, II, 416 

(See also "Stock brokerage") 

Department, 11, 154, 

Relation to sales department, II, 154, 155 
Directing, II, 75 
Transfers Between Banks, I, 228, 229 
Traveling Expenses, IV, 27 
Treasury Stock (See under "Stock, capital") 
Trial Balance, I, 71-77, 127 
Form, I, 336 
Problems, V, 45, 119, 137, 304, 319, 336, 

Problems, V, 137, 319, 343 
Controlling accounts, I, 261 
Locating, I, 73 
Illustrative, I, 74-77 
Limitations of, I, 73 
Method of showing balances, I, 72, 73 
Monthly, I, 268 
Post-closing, I, 127, 123 
Form, I, 90 
Problem, V, 45 
Analysis of, I, 400 
Preparation, methods of, I, 71 
Preparation of balance sheet not obviated 

by, I, 127, 128 
Purpose and use of, I, 71, 72, 73 
Repetitions, avoiding, I, 72 - 
Trust Companies, Investments in Stocks 
OF OTHER Corporations, IV, 334 



Trust Deed Securing Bond Issue, Provi- 
sions OF, IV, 155, 157 
Trustees, (See also "Receivers") 
Problems, V, 78, 83 
Deficiency statement, I, 140, 141; IV, Sl»- 
Problems, V, 61, 66, 70 
Illustrative examples, I, 140; IV. 329 
Estate of deceased person, II, 404 (See also 

"Estate accounting") 
In bankruptcy, IV, 319, 322 
Accounts and reports, IV, 322 
Appointment and duties, IV, 319 
Sinking fund, IV, 157 

Statement of affairs, 1, 129-141; IV, 319, 324 
(See also "Statement of affairs") 
Form, I, 136, 137 
Trusts, (See also "Holding company") 
Clayton Act, IV, 333 
Development of, IV, 331 
Sherman Anti-Trust Law, IV, 333 
Turnover, I, 210, 211 

Calculating, I, 211; IV, 397 

Problem, V, 341 
Defined, IV, 395 
How stated, IV, 396 
Twine Factory, III, 42, 91 
Two-Column Journal, II, 236, 237 

Form, II, 237 
Typewriter, II, 356 


Undervaluation, IV, 41, 42 

Underwear Factory, III, 187 
Form, III, 188 

Undivided Profits (See "Surplus") 

Unearned Surplus, IV, 51 

Uniform Cost System, III, 12 

Unit Cost of Product or Service, III, 47 
Problems, V, 353, 367 

United States Supreme Court, Profits 
Out of Wuich Dividends May Be De- 
clared, Defined, IV, 58 

UxiTS Used in Statements, II, 293 

Universal System of Numberino Accounts, 
II, 271, 277-279 

Up-Keep of Buildings (See "Building ex- 


Valuation, (See also "Profits, determination 
Accounts, IV, 101 

Valuation — Continued 
Accounti receivabU, IV, tl8 

Problem, V, 70 
A«mU, IV, 7, A\-46. 198, tl»-tM 

Innolvency or bankrui^Ujr, 1, 191. IMe 
IV, 82« 
Basis of. IV, 44. 45 
Bonds, IV. W4-U9 

Investment value method. IV. IM-IM 
Copyrights, IV. ««1 
Effect of depreciation on, IV, 49 
Fluctuations, method of rccordiag. IT, 7 
Franchises, IV, 265 
Good-will. IV. 25S-i57 

Problems, V. 183. 186. 187. IM. «M. 
277. 288. 312. 928 

Advertising, IV, 251 
Inventory, I, 123; IV, S2WM3 (Sc« aOm 

Fire loss adjustment. IV. 27< 
Kinds of, IV, 42. 43 
Land. IV. 231. 234 
PatenU, IV, 257-261 
Reserve, IV. 104. 105. 114. 115. 117 (8m 

also "Reserves") 
Royalties. IV. 262. 263 
Sources of data for. IV, 45 
Trade-marks, IV. 260 
Trade secrets. IV. 261 
Verification. IV. 377-44« 
Account. IV. 418 
Accounts receivable. IV, 4W 
Assets and liabilities, IV, 417-4« 

Existence of. IV. 418-421 
Assets, fixed, IV. 428 
Bank balance. IV. 425 

Problems. V. 3, 4 

Balance. I, 225-227 
Problem. V. 4 

In hand. IV, 422 

Payments. IV, 425-425 

Receipts. IV. 422 
Controlling accounts. baUnce, I. §44 

Problem. V. 11 
Facts vs. opinion*. IV. 417 
Fundamental »tei». IV. 417 
Importance of. IV. 417 
Inventories. IV, 426 

Problems. V. 127. 130. SSI. SSi 
Ledger account. IV. 418 
Note* rtceivable. IV. 4«e 




VEBiricATiON — Continued 
Securities, IV, 427 
Trial balance, IV, 405-410 
Problem. V, 343 

Canceled checks, I, 241 
Checks, I, 247; II, 212, 213 

Form, II, 213 
Folder, I, 241 

Form, I, 242 
Journal, II, 234, 235 

Form, II, 235 
Journal entry, canceling, I, 246 
Payment of, I, 245-247 

Allowances and discounts, I, 246 
Petty cash, II, 220, 221 

Form, II, 220 
Register, I, 241; II, 116; III, 130. 213, 339 
Forms, I, 244, 245; II, 117 
Problem, V, 9 
And purchase journal, distinction be- 
tween, II, 116, 117 
Forms, II, 117 
Contractor's, II, 455-457 

Form, II, 456 
Hotel, II, 441 

Form, II, 441 
Items entered on, II, 118 
Operation of, I, 241 
Posting from, I, 243 
Purchase journal as, I, 240, 241 
Statement. II. 121 
System, I, 240-247; II. 118-121 


Wages, I, 113; H. 304-306; III, 169, 195-20 

(See also "Labor," "Pay-roll") 
Bonus plan, II, 305; III, 204 
Day-rate method, advantages of, III, 195- 

Emerson system, II, 306 
Gantt system. III, 204 
Halsey system, II, 305 
Pay period, II, 304 
Payment, methods of, II, 305, 306 
Piece-rate, II, 305; III, 197-200 

DiflFerential, II, 305; III, 200 

Fixing rate. III, 198 
Premium method, II, 305; III, 202 

Graduated, III, 206 
Rowan system, II, 305 

Wagks — Contin ucd 

Task and bonus system. III, 204 

Taylor system, II, 305 

Time basis, II, 305 

Towne plan, II, 305 
Waste, III, 142, 145 

Account, textile costs. III, 368 

Adjustments on books. III, 140 
Control of. III, 65 

Preventable, III, 8 

Stores, before used. III, 150 
Wasting Assets, IV, 238, 239 
Problem, V, 207 

Reserve for, IV, 115 
"Wasting" Enterprises, 

Dividends may be paid out of capital, when, 
IV, 57, 58 
AVater, III, 233, 239; IV, 27 (See also gener- 
ally "Fixed charges") 
Weight of Material, Fluctuations in, 

m, 144 

Wholesale Business, II, 152-154, 268, 3G3- 
372 (See also "Trading business") 
Classification methods, II, 268 
Combined with retail, II, 152-154 
Cost accounting for (See "Cost accounting 

for trading enterprise") 
Sales book, II, 171 
Window Dressing Expense, Distribution 

OF, n, 469 
Withdrawals, I, 33 

Accounting covering, I, 209 
By proprietor, I, 114 

Problems, V, 93, 242 
Closing accounts, I, 100, 101 
Directly, I, 33 
Indirectly, I, 33 
Partnership, I, 348, 349 
Wood- Working Industries, Scrap, III, 148 
Woolen Mill (See also "Textile costs") 
Expense accounts, chart. III, 212 
Form, III, 214-216 
Work in Process, 
Account, III, 79, 83 
Entries, III, 83 
Illustrated, III, 85, 90 
Journal entry, illustrated. III, 107 
Process method. III, 90 
Production-center system, illustrated. III 

Textile costs. III, 369-376, 380-389 



Work in Process — Continued 

Definition, III, 23 

Inventory or record. III, 74, 76 

Profit on, IV, 36, 37 
Work Sheet, Daily, III, 62 
Working Capital, I, 124 
Working Hours, Hotels and Restaurants, 

II, 435, 536 
Working Hours Method, Depreciation 
Rates, IV, 172 

WoBKiNo Oboamixatioii (Sm *t>r|»aii«tiaa*^ 
Working pArnw. II. 40. 41 

Analysis paper, II, 40 

Cross-section paper. II. 41 

Legal cap, II. 41 

Yabn MANurACTTJms (See **TciUle eoeU" 






JUN 12 1937 

LD 21-100m-8,'34 

. i